Owing money to lending and credit card companies expose a person to the debt collection tactics of the debt collectors that are both legal and illegal. When one falls behind in paying his dues, a debt collector will contact him to pay the delinquent debt or face the consequences. In an attempt to convince a person that owes the company some money, they can be annoying, predatory, shameful, or even illegal in their methods of collecting payments. To spare oneself the stress of dealing with these people, one should know how to get out of paying debt collectors effectively.
Types of Debt Collectors and How They Work
Getting calls from a debt collector can either be a frustrating or unnerving experience. They tend to bully a person to pay by using threats like suing the debtor for non-payment. If one knows his rights as a consumer he could not be easily intimidated into paying the first time he receives a call and can take control of the situation that he’s in.
There are three types of debt collectors that a consumer in debt might encounter until he settles the account. These are the internal debt collectors, third-party debt collectors, and the debt buyers. Let’s discuss how they work.
1. Internal Debt Collectors
These are the collectors who work for the company where you incurred debt. Sometimes called as first-party collectors, internal debt collectors are the company’s way of maintaining more profitability by not hiring immediately third-party debt collectors to collect delinquent debts to consumers. This type of collectors is not monitored by the Fair Debt Collection Practices Act which gives them more freedom to go after the people who owe their company amounts of money.
2. Third-Party Debt Collectors
Also known to be as the traditional debt collection group, they are hired by companies to collect in their behalf money owed by consumers. They usually take over an account that has already hit the charge-off stage. They work on a commission-based fee structure wherein they can only get paid if they are successful. One will find them less friendly than the internal debt collectors because they don’t have to maintain brand integrity as the former. This group is regulated by the Fair Debt Collection Practices Act.
3. Debt Buyers
When the company failed to collect after several attempts, it can either file a lawsuit against the consumer or sell the debt to the groups that buy them for a lower fee – which are the debt buyers. Debt buyers buy the accounts in bulk through online auctions. Once they have the accounts, they will contact the names on those accounts and demand for payment.
Consumers must be extra careful in dealing with debt buyers because of the lack of information on their part can endanger their finances. By learning how to get out of paying debt collectors
fast, one can take back control of his life and rid himself of the stress of transacting with these people.
Dealing with Debt Collectors the Right Way
A debt collector will call the consumer to inform him about the outstanding debt he has with a certain company. Here’s how to handle it properly.
• Don’t succumb to the pressure of paying on the first contact.
Whatever the debt collector says over the phone, one must not easily provide personal information or promise to pay without thinking things over. Any information that he can get on the first contact might be used later if necessary. The right thing to do is to check the facts by asking information about the debt and tell them that they will be contacted later to discuss it.
A debt collector preys on people’s shame and pain on having debts. They work on a quota basis which is why they will create a sense of urgency to convince the debtor to pay, if not in full, at least a part of the outstanding balance.
• Collect the facts about the debt.
Due to the system of selling the debt to the debt buyer which may resell it again to another debt buyer, there’s the probability that recordkeeping is not done carefully. Errors as to the amount owed or who owed it is highly possible.
The first step is to ask the debt collector to provide a validation letter if it was not yet given within 5 business days from the first contact. The letter should contain the name of the collection company, the details of the debt, and how a consumer challenges the debt.
The second step is to collect one’s records on the debt which includes information on what company it was originally incurred and the payment history.
Lastly, organize all records of previous payments made and communications with the debt collector. The best documentation would be to utilize certified mail.
• Learn and exercise legal rights.
A consumer’s rights vary as these depends on the U.S. state he is living in. The Fair Debt Collection Practices Act (FDCPA) bestows some important protections at the federal level, and some states have their laws as far as debt collection practices are concerned. To be certain that the rights are employed timely and properly, one can consult a lawyer for further clarification.
Here are the legal rights of a consumer that he can use when a debt collector finally calls.
1. Right to proof of debt. FDCPA mandates that consumers have the right to ask for information about the debt in writing within 5 days from the day that initial communication was made by the debt collector. The notice must state the following information:
- The total amount of debt
- The creditor’s name
- A statement that the alleged debt will be considered correct and authentic if the consumer will not contest its validity within 30 days of receiving the notice.
- A statement that the debt collector will divulge the name and address of the creditor if the current creditor is not the original one.
- A statement that if the consumer challenges in writing the debt being collected or any portion of it within the 30 days from the first contact, the debt collector will procure a copy of the judgment against the consumer or the verification of the debt and mail it to the consumer.
2. Right to know the name of the agency or company that the debt collectors are working for. Legitimate debt collectors can provide their business name and address which a consumer can check for authenticity. Information can be verified with the consumer affairs office or the state’s attorney general’s office.
3. Right to avoid harassment. FDCPA states that debt collectors are prohibited from shouting, swearing, or making crude remarks; call from 8 a.m. to 9 p.m.; threaten a consumer with arrest, termination, deportation, physical harm, public shaming, etc.; and do anything that can be considered as harassment.
These rights can protect the consumer against illegal debt collecting tactics. The debt collectors have rights too under the FDCPA, and these are the things that a consumer should watch out for.
- Ask the consumer to pay in a way that is under FDCPA rules.
- Offer consumer payment plans or settlements to fix delinquent accounts.
- Report the debt to credit bureaus if it is less than 7 years old. This will show up in one’s credit reports and may drag down his credit score.
- Sue a consumer while the statute of limitations is still active which could lead to wage garnishment. Many states in the U.S. have the statute limitations of 3 to 6 years.
How to Get Out of Paying Debt Collectors
Getting out of paying debt collectors is possible in some cases. Even if the account is already listed in one’s credit report, there are still ways to have it removed.
- Dispute the debt if it belongs to someone else. File a credit report dispute to the credit bureaus will permanently remove it from one’s report.
- The debt can be removed from one’s credit report if the debt collector can’t provide proof that the debt is owed by the consumer within 30 days after the former first contacted the latter.
- Dispute the debt if seven years have passed since the date of delinquency. Show proof to strengthen dispute.
The Bottom Line
One should not rush into an agreement with a debt collector on the first call as there are other things to consider. He can save himself the trouble of dealing with debt collectors if he knows his rights under the law and the actions he can make to protect himself from undue harassment.
Not all debt collectors are legit, scammers proliferate this industry. If a consumer does owe the debt, there are still means on how to get out of paying debt collectors. The key is to do extensive research to gather all the important information and to consult a financial advisor or legal professional to be able to deal with debt collection the right way.