How To Deal With Debt Collectors

If you owe money and can’t pay it, you will hear from a debt collector. Simple as that! As lenders take risks with borrowers, they need debt collectors to help them when borrowers fail to follow through on their promises.

Stated by a credit repair company, while many debt collectors play by the rules, there are several who do not. If you fall into a situation where you cannot make your payment, then you need to know what to do when debt collectors start calling.

Creditors use debt collectors to recoup late payments. Some creditors use their own debt collectors. The rest will hire an agency or a law firm to collect on a debt.

Debt collectors also contact borrowers if they have purchased past-due accounts from other creditors. Some debt collectors work for medical offices because most health care providers are unable to collect debts on their own.

If you find yourself in a situation where you have debt collectors knocking down your door here are a few tips to help you out this tricky situation, and see the light at the end of the tunnel.

Know Your Rights

When you are contacted by a debt collector, you should understand that you have rights as a consumer. The Fair Debt Collection Practices Act protects consumers by providing a set of rules for debt collectors. Creditors have protections under this act, too.

Most debt collectors follow the rules, but others try to push them to the limits. You should not receive any phone calls before 8 AM or after 9 PM.

You should also not be contacted at work, and they should not get information about you through a third party. They should only tell the truth about your debt, and they should never harass you.

Pay Attention to the Calls and Ask for Written Information

You might not like the calls, but you should not ignore them. If you do not deal with the issue, then the debt collector could come after you with a lawsuit. Before you make any deals with the debt collectors, ask them to send you the information to you in writing.

When they send you the information, you should see the credit and the amount you owe. You should also have a phone number and address you can use to dispute the debt. The information should be sent to you within five days of the original phone call.

Do not make any agreements or deals until you receive the information in writing.

Don’t Give Out Information

Usually, when debt collectors call, they will tell you that everything you tell them can be used to help them collect the debt. Most have a script they follow deliberately.

So:

You should not give them any of your financial information over the phone.

If you are making a payment, you should only use a third-party payment service that does not connect to your bank account. You should not offer any information, either. Simply answer questions and ask for information in writing.

Check the Legitimacy

Most debt collectors are legitimate, but there are several that are not. As soon as you hear from a debt collector, ask them to mail information to you. Once you receive the information, conduct an internet search to see if the debt collector is real.

If they will not send anything to you, then the debt collector is a scammer and you should report them to the Consumer Financial Protection Bureau or the Federal Trade Commission.

Figure Out How to Pay

There are several ways to stop debt collectors from calling you. One is to pay the debt, but if they are calling you, it’s clear that you can’t right now. Therefore, you need realistic alternatives.

One is to work with a credit counselor. These are experts who can help you manage your finances so you can pay your debts. Choose a non-profit credit counselor and be honest with them about your situation.

If your debt is overwhelming, you might want to research bankruptcy. It might not be your first choice, but depending on your circumstances it might be your only choice. Keep in mind that there are different types of bankruptcy, and a lawyer can help you decide if either is a good choice for your financial situation.

In most cases, you can liquidate your debts or develop a payment plan that lasts a handful of years. If you file for bankruptcy, debt collectors are required to stop calling you.

After you receive the written information about your debt and have verified that the debt collector is legitimate, you can negotiate your payments. You should know that unpaid debts will negatively affect your credit history and make it difficult for you to get credit in the future.

Many debt collectors will work with you to settle for a lower amount than you actually owe. If you do negotiate, start low as the debt collector will come back with a higher amount than you offered. You can expect medical debt collectors to be rigid about the amount, but credit card debt collectors will have some room to move.