If you are drowning in debt and receiving daily phone calls from at least one debt collector, it’s important that you know your rights. Thanks to the Fair Debt Collection Practices Act (FDCPA), there are laws designed to protect you from that unwanted communication.
What collectors can’t do
The FDCPA spells out several things debt collectors are prohibited from doing. For example, they cannot call you before 8 AM or after 9 PM or call you multiple times a day. In addition, they are not to call you at work without your permission. The collector is also not to discuss your debt with friends or family members and is prevented from misrepresenting the status of a debt or claiming to be affiliated with some governmental entity.
How to stop those harassing phone calls
According to the FDCPA, you can stop phone calls by sending the debt collector a cease and desist letter. This letter communicates to the debt collector that he or she is not to contact you anymore. You need to send your letter registered mail and return receipt requested so you can prove that it was received.
What collectors can do
Once the collector receives this letter, they can only reach out to inform you that they will not be contacting you anymore or to notify you that they plan on taking legal action, such as starting a lawsuit against you.
If they contact you for any other reason, you can report it to your state’s attorney general’s office or to the Better Business Bureau. And if the harassment continues, you could hire an attorney and try filing a lawsuit against the collection agency. However, this can be difficult as many agencies are headquartered offshore.
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The worst thing they can do
Let’s suppose you owe $5,000 to a credit card company that has sold your debt to a collection agency. The agency may have paid less than $100 for the debt but that doesn’t change the fact that you still owe $5,000. If you fail to pay it off, the collection agency could file a suit. If you were to fail to show up for your court date, the debt collector could get a summary judgment. If you make an appearance, the collector might still get a judgment.
Once the agency has a judgment, they may be able to put a lien on your home. If you were to ever sell the home, that $5,000 would come off the top. In other words, if you thought you had $10,000 in equity, you would end up getting only $5,000 while the collection agency received the other $5,000. This makes it a lot more challenging to sell your home since you would have to deal with this first.
Bankruptcy or debt settlement?
Bankruptcy or debt settlement could be better options than letting a debt collection agency get a judgment and put a lien on your house. A Chapter 7 bankruptcy would discharge most of your unsecured debts including personal loans, lines of credit, medical and credit card debts.
Many people choose debt settlement instead of filing for bankruptcy as an alternative to bankruptcy. A debt settlement firm can negotiate settlements to reduce the debt amount on your unsecured debts.
Legitimate debt settlement companies
Keep in mind that a legitimate debt settlement company will not require any payments upfront. It is actually illegal! The money you send them should be deposited into an FDIC- insured trust that only you can manage. You will pay nothing until and if the company successfully settles your debt and provides you with a payment plan you approve.
If a debt collector oversteps their bounds, report them immediately. But the best way to make them go away is by resolving your debt.
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FAQs
While they may be allowed to call you at home, a debt collector cannot do so in a way that is harassing or abusive. For example, they cannot call 20 times in a row or let the phone ring indefinitely. They also cannot call you names, use obscene language, or threaten you with imprisonment or physical violence.
What can a debt collector and cannot do? ›
Debt collectors cannot harass or abuse you. They cannot swear, threaten to illegally harm you or your property, threaten you with illegal actions, or falsely threaten you with actions they do not intend to take. They also cannot make repeated calls over a short period to annoy or harass you.
What's the worst a debt collector can do? ›
Debt collectors are not permitted to try to publicly shame you into paying money that you may or may not owe. In fact, they're not even allowed to contact you by postcard. They cannot publish the names of people who owe money. They can't even discuss the matter with anyone other than you, your spouse, or your attorney.
What should you not say to a debt collector? ›
Don't provide personal or sensitive financial information
Never give out or confirm personal or sensitive financial information – such as your bank account, credit card, or full Social Security number – unless you know the company or person you are talking with is a real debt collector.
What debt collectors don't want you to know? ›
Debt collectors don't want you to know that you can make them stop calling, they can't do most of what they tell you, payment deadlines are phony, threats are inflated, and they can't find out how much you have in the bank. Furthermore, if you're out of state, they may have no legal recourse to collect.
What is a weakness as a debt collector? ›
Lack of current information on debtors. Difficulty identifying and contacting debtors. Difficulty in accessing the most valuable information. Takes too long to locate debtors when sorting through all the data.
What debt Cannot be erased? ›
Filing for Chapter 7 bankruptcy eliminates credit card debt, medical bills and unsecured loans; however, there are some debts that cannot be discharged. Those debts include child support, spousal support obligations, student loans, judgments for damages resulting from drunk driving accidents, and most unpaid taxes.
Why should you never pay a collection agency? ›
The debt will likely continue to accrue interest and fees, increasing the total amount owed over time. Persistent attempts to collect the debt may result in increased pressure from the collector, including frequent phone calls, letters, or even legal actions such as a debt collection lawsuit.
How to get rid of debt collectors without paying? ›
You can sue the debt collector for violating the FDCPA. If you sue under the FDCPA and win, the debt collector must generally pay your attorney's fees and might also have to pay you damages. If you're having trouble with debt collection, you can submit a complaint with the CFPB.
What proof do debt collectors have to provide? ›
But what must the creditor provide by way of documentation? At a minimum, it must produce: A copy of the original written agreement between the parties, such as the loan note or credit card agreement, preferably signed by you.
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
Why should you never pay a charge off? ›
Your credit could be damaged for seven years.
Missed payments, charge-offs and collections remain on your credit report for seven years. Their mention on your credit reports and their effect on your credit scores could impact your ability to get new credit in the future, though their effect diminishes over time.
What is the lowest debt collector will take? ›
Not all debt collectors are the same, and that can affect your debt settlement. "Every creditor is different. Some creditors will accept pennies on the dollar, others will not settle for less than 80% in a lump sum payment," says Jessika Arce Graham, partner at Weiss Serota Helfman Cole + Bierman.
What kind of debt never goes away? ›
The IRS has substantial authority to collect on debts such as student loans or unpaid taxes. It could intercept your tax refund or take your paycheck or bank account. Consumers often can work out a repayment plan to resolve these debts. Like child support, they generally never go away, even in bankruptcy.
Can debt collectors see your bank account balance? ›
Collection agencies can access your bank account, but only after a court judgment. A judgment, which typically follows a lawsuit, may permit a bank account or wage garnishment, meaning the collector can take money directly out of your account or from your wages to pay off your debt.
What powers do debt collectors have? ›
That's why it's so important to know what debt collection agencies can and cannot do. Remember: They have no special legal powers, they can't enter your home without your permission, and they have no legal right to seize your property.
What are the illegal tactics of debt collectors? ›
use or threaten to use violence or other criminal means to harm you, another person, or your or another person's reputation or property. use obscene, profane, or abusive language. publish your name as a person who doesn't pay bills (child support collection agencies are exempt from this restriction in some states)
