Living with outstanding debts can be uncomfortable. At any moment the rug can get pulled from under you. Bank accounts can be frozen, wages can be garnished, and forget any kind of line of credit. Every time the phone rings, a rush of nerves flood your body with the hope a debt collector isn’t on the other end.
Inevitably, a debt collector calls. What do you do?
Most importantly, stay calm. This brief guidebook will help you navigate debt collectors and give you the best chance at creating a favorable outcome.
Scam or Legit
In a world of ever-evolving scams, it can be helpful to have a healthy skepticism when calls like this come in. That doesn’t mean you should disregard legitimate debt collectors. Verify they’re legitimate before taking any further steps.
The Fair Debt Collection Practices Act (FDCPA) is the federal law that governs debt collection practices. Scammers don’t always follow the rules. In fact, they’re often overly aggressive over the phone and all but demand payment before verifying their identity.
Start by getting their phone number and address. Find out if they have a license number, if applicable in your state. Look them up online. If they have no online presence or become reluctant to share their information, you’ve likely got a scammer on the line.
Claim Your Rights
A legitimate debt collector will follow the letter of the law outlined in the FDCPA. Although debt collectors have the right to collect, given the debt is yours and not beyond the statute of limitations, you are protected from abusive practices.
Debt collectors are required to follow these parameters:
- Can not call before 8 am or after 9 pm (in your time zone).
- Can not lie about what you owe.
- Can not lie about their company name.
- Can not provide credit information about you to anyone else.
- Can not contact a 3rd party to get your contact information.
- Can not pose as law enforcement.
- Can not threaten to seize property or garnish wages without legal rights.
If you’ve verified that a legitimate company has called you, but violated your rights contact the Consumer Financial Protection Bureau and file a complaint. It doesn’t hurt to contact your state attorney general as well.
A law called the statute of limitations has a clearly defined maximum amount of time a debt collector has to legally collect. Although the amount of time can vary from state to state, six years is typically the limit. Verify the limitations in your state of residence and the state you acquired the debt. If your debt is beyond both of them, you have no benefit in paying the debt.
The constant calls might get overwhelming, even if they are playing by the rules. If you send a letter to the debt collector requesting them to stop contacting you, they have to honor that request. Given that the debt is yours, the liability is still in your hands, but those uncomfortable calls will stop.
Verify the Debt
An ideal debt collector should provide you with the information you need to verify whether or not the debt is yours. Before you verify, do not accept ownership of the debt verbally or in writing unless you’re 100% sure it belongs to you.
When the debt collector provides the information about your debt over the phone, request that information in writing. According to the FDCPA they have 5 days to send the information in writing. Any promises made over the phone by the debt collector should be requested in writing as well.
A good rule of thumb is to create a paper trail or email thread for every request you make and every request they make of you. Should a dispute happen down the road, all actions taken and promises made can be proven in written communication.
Once you’ve verified the debt collector is legitimate and the debt is within the statute of limitations, it’s time to consider how you’re going to pay. Take some time to review how much you can realistically pay every month. Then contact the debt collector, explain your financial situation, and propose your repayment plan. If you can reach a mutual agreement, have them send it in writing. This keeps both parties on the same page and prevents future liability issues.
Ways to Pay
Negotiations don’t always go our way. Perhaps the debt collector wants more than you can pay and won’t budge. Get a professional involved. You can work with a credit counselor at Advocate Debt Relief to develop a debt management plan. They can review your financial situation, go through your options, and give you peace of mind that the right steps are being taken.
Running from phone calls by unfamiliar numbers is no way to live. Get in front of it by knowing your rights and how to exercise them. You’ll save yourself a lot of time, and money, and you’ll sleep better.