Debt Collection

Debtors are discovering the problems of dealing with debt collection agencies. After going into default on their debts, lenders frequently “sell” the debt to a collection agency. The agency is the entity that actually attempts to collect on the debt. These agencies can be very fierce and rude, despite federal regulations. The Federal Trade Commission passed the Fair Debt Collection Practices Act to protect consumers from unscrupulous, rude or nasty debt collection tactics.

This law often doesn’t prevent agencies from pulling out all the stops to get debtors to pony up. Threatening them with jail time or taking away their home, using obscenities and calling at all hours are just some of the tactics used. Debtors have limited recourse available to them, but when the debtors come calling, here are some tips.

1. Verify Debts

Debt collectors must only attempt to collect debts the debtor actually owes. Every debtor has the legal right to request written documentation of the debts they owe. This must be done within thirty days of being contacted by a collection agency. The debt collection agency will report delinquency to the credit bureaus, which can remain on the debtor’s credit report for up to seven years. Verification is the first step towards dealing with debt responsibly.

2. Find A Consumer Lawyer

Lawsuits filed by collection agencies are often based on scanty evidence or proof of the original debt that was owed. Many of them are later thrown out of court. A good consumer debt settlement lawyer can represent the debtor. The chances of having the suit thrown out are much greater if the debtor appears in court with representation. The collection agency can win if the debtor does not contest the suit. In essence, the agency wins by default.

3. Keep Bank Accounts Safe

Never give any collection agency information such as bank account numbers or routing numbers. This gives them too much of a temptation to “collect” more than the agreed-upon amount. It may be a good idea to keep a separate bank account for everyday expenses and an additional one for Social Security or disability benefits. Fortunately, both Social Security and disability income are exempt and cannot be used to pay delinquent debts, even if a court rules against the debtor. (1)

4. Record Everything

Keep records of all phone conversations, voicemail messages, emails and written correspondence. This will come in handy if the debt collection agency violates the FTC rules. Get any agreements to pay the debt in writing before sending the debt collector any money. This avoids “miscommunicating” about the time period or the agreed-upon payment amount.