If you’ve made late payments or you haven't made any payments for many months, then your accounts can be assigned or sold to collection agencies.
Who are debt collectors?
Debt collectors collect payments from you on behalf of your creditor. They become legal owner of the account after it is sold to them.
Your account may get passed around various collection agencies. You may get multiple harassing collection calls and many chances to resolve the accounts.
Here are some tips to handle debt collectors in different cases.
Case 1: You owe the debt
- Stop avoiding collectors: Respond to the collection calls to negotiate payments on the debt. If you ignore the calls, then your account can be placed with a collection attorney who can take you to court.
- Don't reveal much: Any information you provide should be limited to the fact that you can’t pay your bills.
- Record your conversation: Keep a record of the collectors you've spoken to, the time, and a summary of your conversation. You can use this as proof when they violate the federal laws.
- Verify or validate the debt: Send the debt validation letter to ask for validation of the debt in writing. This is crucial as collectors often contact debtors for the time barred accounts; invalid debts, for amounts that are over inflated.
- Ask for some time: If you’re unable to pay off a valid debt, ask the collector to give you some time to develop a payment plan. Check out how to settle your debts yourself or pay off bills through a debt consolidation program.
- Use a Cease and Desist Letter: Send a Cease and Desist Letter to stop the collector from contacting you. In case the SOL period has not expired, then the collector can send your account to an attorney to sue you.
Case 2: You've already paid off the account
If your account is paid off, then you’ve 2 options :
- Dispute the debt: Dispute the debt within 30 days of receiving a notice (with creditor's name) telling you how much you owe. Send this letter via certified mail.
- Send in proof of your bill payment: You can attach proof of your bill payment (payment notice from creditor, payment arrangement letter from another CA, etc) with your dispute letter.
As per the FDCPA laws, a bill collector can’t renew collection activities unless he can prove you owe the debt. If a collector still harasses you, then file a complaint with the FTC or contact an attorney or your State Attorney General.
Case 3: Your debt is too old
If the collector contacts you after the SOL has expired, they cannot legitimately take you to court. You’re still responsible for the debts, but the risk of wage garnishment is reduced.
Check out the SOL period in your state carefully. In some states, SOL clock is reset once you admit to a debt or begin making payments after default.
Don’t acknowledge a time barred debt. Simply ask the collector to stop contacting you, through a SOL Expiration sample letter.
Case 4: Your debt has been discharged in bankruptcy
In this case, dispute it on your own. Include a copy of your discharge order. File a complaint with the bankruptcy court with the help from an attorney. You can also file complaints with the FTC, your attorney general, the CFPB.
Case 5: You actually don't owe the debt
Send the collector a validation letter. The collector has to prove that you owe the debt or stop contacting you. Send a Cease and Desist letter if he fails to validate the debt. File complaint with authorities if you still get collection calls.
Dealing with creditors and debt collectors become easier when you're aware of their tactics, your state's collection laws, and your consumers rights.