I was a debt collector for two years. When I lost my job, I became the debtor on the other end of the phone. What can a debtor do to best deal with a debt collector? There are just a few options.
You do not want to ignore them forever. Some collection agencies could eventually start calling your family and neighbors to try to get in touch with you if you never answer your phone. They are allowed one phone call to a known relative in an effort to try to reach you; anything more is a violation of the Fair Debt Collection Practices Act, or FDCPA.
A debt collection agency has to be licensed in both their state and yours or it is illegal for them to be calling you in the first place. All states are bound to the FDCPA but many have their own separate, stricter rules and regulations. For instance, many states carry a Seven Day Hang Up Policy. If your state is one of them, hanging up on a debt collector will buy you seven days before they are allowed to contact you by phone again. In some states, they are allowed an immediate return phone call to verify that you did intentionally terminate the call.
If you can afford to repay the debt over time you can offer your solution. It does not matter what amount you offer, whether it be 10% or 30%, they are going to try to talk you into a higher amount. When an amount is agreed upon, or rather if it is, most debt collectors will then tell you that payment schedules are not acceptable unless you set up automatic payments from your debit card or checking account.
Many agencies will have their own rules, but the law is the law. You are not obligated to give them your financial information and you do not have to, by law, give them automatic payments. Many agencies will flat out say they will not accept anything smaller than a payment in full. Even if you ask them if they will return your payments if you send them and they say yes, they cannot do this. When I was a debt collector I had the sweetest woman send $1 a month on her overdue credit card. That is what she could afford, and the data entry clerks credited her account each month.
Many debts, especially unsecured credit cards, are payable via settlement. Most agencies will offer an 80% – 90% settlement amount if you make one lump sum payment. As a debt collector I found that offering a settlement between February and April got more delinquent accounts paid then offering payment schedules. If you are offered this, or you ask a debt collector to do this for you and they agree, always get a Letter of Settlement before paying. You should be given a minimum of 30 days to complete the transaction from the date on the Letter of Settlement.
This option is best if you want to get a nice chunk off your credit report and can spare the funds. Your credit report will show the account was settled and it will no longer be considered a bad debt.
Refusal To Pay
You can be down right blunt with the debt collector and tell them you are refusing to pay. Naturally they will ask questions but after a debtor refuses to pay the debt they cannot continue aggressive credit collection actions. Many states will require you send this refusal in written form before any phone calls would cease.
Cease and Desist Letter
You can write a cease and desist letter to the agency. The letter should state clearly that is a letter that requires them to cease and desist all communications, both oral and written, immediately. They are allowed to contact you one more time to confirm your wishes and inform you that they received the letter.
Dispute and Proof
If the debt is disputable, as in not yours or $4000 more than the original debt, you can send a dispute letter requesting proof of the debt. In the event that they cannot provide validation they will have to cease communication. You will also then be able to have this debt removed from your credit report, legally.
Validation proof should not take more than thirty days. If you have not heard back from them in thirty days from the day you send the letter you should contact them to be sure they received it and are working on it. If they can show that they were working on obtaining the proof they do have more time. If you seem to be getting the run around contact the credit bureaus directly to file a dispute on your credit report. During this process you will be allowed to request documentation proving the debt, and if none is found the debt will be cleared from your credit report.
Although I receive calls from debt collectors I do know what it was like on the other end of that phone. Many debt collectors are rude, some may even curse which is illegal as well, but many have the same feelings as you and I. When I was behind the phone calls it broke my heart. I heard some of the worst stories ever and found myself weeping for my account holders.
The job became so stressful that I would eventually walk away from it. Of course we got the phone calls that were sob stories that were just plain untrue, but most times you could tell in their voice if they were really in a situation.
My best advice is to try to work with the debt collector. If they get rude hang up and write a refusal letter. Any time you send anything to a debt collection agency be sure to send it certified, registered, delivery confirmation, or signature confirmation. You need proof that they received what you sent them to cover yourself in the future if bigger problems would arise.
If a debt collector threatens you in any way, portrays them self as an attorney when they are not, or curses at you, you should contact an attorney. Most violations of the FDCPA are punishable by a $1500 fine and if there are enough cases and complaints they could lose their licensing.