Debt collectors are still entitled to ask you to repay your lawful debts, despite your FDCPA rights. There are a few things to keep in mind while you go through this procedure.
Check your credit reports for collection accounts
It’s critical to understand the age of any genuine bills you owe. This is because negative information on your credit reports, such as debt outstanding, is normally kept for seven years.
A late payment or a past due account will have a negative influence on your credit history. In fact, because payment history is the most important element in determining your FICO and VantageScore, overdue accounts with a past due balance can have a significant negative impact on your ratings.
The Fair Credit Reporting Act allows everyone in the United States to view each of their three credit reports for free at least once a year. You can check if you have any collection accounts by getting a copy of your free credit report from each of the main credit agencies Equifax, Experian, and TransUnion.
Keep in mind that even if you pay off a debt that appears on your credit reports, it may appear as a paid collection on those reports for up to seven years.
Know the statute of limitations for your debt
You can assess if you still have legal duty by looking at the age of your debt. Even though debt collectors threaten you, once the statute of limitations has expired, they will be unable to prosecute you for collection unless the debt is revived.
The statute of limitations that the debt collection agency must follow is likely determined by where you live and the sort of debt you have. According to the Consumer Financial Protection Bureau, most statutes of limitations last three to six years, though they may go longer in other jurisdictions.
Contact your state attorney general’s office if you want to learn more about your state’s debt collection laws.
Making a payment could restart the clock on your debt
Making a partial payment on your debt may restart the statute of limitations in several states. As a result, before you agree to a payment plan, make sure you’re fine with the idea of having to pay off all of your debt at some point. It’s also a good idea to write down your payback plan and double-check it for correctness.
Debt collectors may be more ready to reach a settlement with you if your debt is approaching the statute of limitations in your state, according to the Consumer Financial Protection Bureau.
Respond to lawsuit notices
It’s critical that you don’t dismiss a debt collection endeavor. If debt collectors are unable to contact you and negotiate a settlement, they may be entitled to sue you.
If you ignore a summons, even if you believe the debt is too old, the debt collector may obtain a judgment and pursue your assets or garnish your earnings, depending on your state’s laws.
If you’re concerned that you won’t be able to pay a counsel to defend you against a debt collector’s lawsuit, the Consumer Financial Protection Bureau gives information on state legal aid offices.
Send a ‘drop dead’ letter
Are you fed up with debt collectors calling you all the time? You have the right to request that they refrain from contacting you. You can do so by sending a “drop dead letter” to the debt collector, which is a formal notice alerting them that you don’t want to be contacted any more.
Debt collectors are compelled by law to comply with this request. However, keep in mind that this letter will not prevent a debt collector from filing a lawsuit against you to recover a debt.
Research debt settlement and debt counseling services
Debt settlement and counseling services may be beneficial, but don’t overpay for things you don’t require.
You might want to look into a well-known credit counseling agency that might help you with your finances. The National Foundation for Credit Counseling and the Financial Counseling Association of America are two choices.
There are other debt payback services that are for profit. According to the Consumer Financial Protection Bureau, any service that requests an advance payment or urges you to stop making payments to creditors should be avoided.
Find out more about the debt settlement and debt relief options accessible to you.
Beware of scam artists
Unfortunately, some criminal actors may try to take advantage of people who are in debt. When someone reaches you and asks for money, it’s crucial to be cautious.
Here are some telltale signals that the debt collector or debt counseling agency you’ve been contacted by isn’t who they say they are and is actually a con artist.
- They employ high-pressure techniques (such as threats of arrest, alerting authorities, physical harm or shaming).
- They refuse to answer inquiries or provide you with information such as the company’s name, address, or phone number.
- They are looking for financial information about you (such as bank account or Social Security numbers).
- They require payment methods that are less traceable (such as gift cards, wire transfers or bitcoin).
How likely is a debt collector to sue?
According to a 2017 survey by the Consumer Financial Protection Bureau, roughly 15% of Americans who have been approached by a debt collector about a debt have been sued. Only 26% of those who were summoned to court showed up, which is a major no-no.
The circumstances surrounding the decision to launch a lawsuit differ from one case to the next. However, because litigation can be costly, collection agencies often do not sue straight away. Instead, they’ll try various strategies before filing a lawsuit once they’ve exhausted all other options.
When, on the other hand, will a debt collector file a lawsuit? This can happen after several months of collection attempts or immediately after you request that they no longer contact you, depending on the circumstances.
As a result, it’s critical to be cautious as soon as you make touch.
What do I do if I am being sued by a debt collector?
It’s critical to explore your alternatives for dealing with the debt after you’ve responded to the notice of claim and before the court date.
Most people cannot afford to risk having their paycheques garnished, as creditors often take 30% of their gross income until the debt is paid in full. It is preferable to act quickly and consult an expert about your payment alternatives.
If you’ve been sued by a credit card company or a debt collector and you have the financial means to pay the creditor in full, contact the creditor as soon as possible.
If you are unable to pay them in full, you must look into your other options. Because time is of the essence, it’s important to schedule an appointment with a non-profit credit counselor right now to get an unbiased assessment of all of your choices.
Why you should never pay a collection agency?
At first look, paying off a debt collection agency seems like a good idea. After all, isn’t it the simplest way to get them to leave you alone?
No, not at all. Sure, paying a debt collection agency can help you get rid of them. But that’ll be the extent of it. Your credit report will include evidence of the unpaid debt for additional seven years. It makes no difference how much money you owe. Whether the debt is for $100 or $100,000, collections raise the same red flag on your credit record. This may have an impact on your capacity to obtain loans in the future.
Worse, in debt collection cases, intent is irrelevant. Many debtors aren’t trying to avoid paying their bills. They simply aren’t aware that they owe money. This happens on a regular basis. An overdue debt notification may be sent to a borrower’s old address by a creditor. The borrower never receives it and goes on with their lives, completely oblivious that they are being pursued by a debt.
This lingering debt can have some unexpected consequences. It will be more difficult to obtain fresh loans as a result of this. With terrible credit, getting a loan for a car, a mortgage, student loans, or home improvements is much more difficult. That’s not all, though. It can be tough to rent a property or even get an internet streaming account if you have bad credit.
Paying a debt collection agency for an outstanding loan, on the other hand, can harm your credit score. Yes, you read that correctly. Even paying back loans might have a negative influence on your credit score if it appears on your credit report. If you have a debt that’s been outstanding for a year or two, it’s better for your credit report if you don’t pay it.
Can debt collectors threaten to sue you?
A debt collector cannot threaten to sue you to force you to pay a debt faster under the FDCPA. When a collection agent or lawyer threatens to sue, it’s usually to scare you into making greater payments or agreeing to an unworkable and financially unsustainable payment schedule. Under the FDCPA’s rules, threatening legal action in these circumstances is definitely harassment, and any debt collector who does so is breaching the law.
Can you go to jail for debt?
Not being able to satisfy payment responsibilities can cause anxiety and stress, but in most situations, you will not be sentenced to prison if you are unable to repay your debts.
You cannot be jailed or imprisoned just because you owe money on a credit card or a student loan. However, if you haven’t paid your taxes or child support, you may have cause for concern.
What debt collectors Cannot do?
You cannot be harassed or abused by debt collectors. They are not allowed to swear, threaten you or your property with illegal harm, threaten you with illegal activities, or falsely threaten you with actions they do not intend to take. They also can’t phone you repeatedly in a short amount of time to annoy or harass you.
Debt collectors are not allowed to make false or misleading claims. They can’t, for example, lie about the debt they’re trying to collect or the fact that they’re trying to collect it, and they can’t use phrases or symbols in their communications to you that make them appear to be from an attorney, court, or government agency.
Debt collectors are not permitted to contact you at inconvenient or odd times or locations. They may call between the hours of 8 a.m. and 9 p.m., but you may request that they call at a different time if those hours are difficult for you.
Debt collectors are permitted to send you notices or letters, but the envelopes must not contain information about your debt or any information meant to embarrass you.
You can ask a debt collector to only contact you by mail or through your attorney, or you can put other restrictions in place. Make sure your request is in writing, that it is sent certified mail with a return receipt, and that you preserve a copy of the letter and receipt. You also have the right to request that a debt collector cease all communication with you. If you do this, the debt collector can only contact you to affirm that it will stop contacting you and to warn you that it may file a lawsuit or take other legal action against you. Remember that even if you urge a debt collector to cease contacting you, the debt collector may still sue you and disclose your debt to credit reporting agencies, damaging your credit.
See Debt Collector Contacting Your Employer or Other People for information on when a debt collector can contact your employer or other people.
Can I look up if I’ve been sued?
Find out if anyone has filed a lawsuit against you by going to the Court Clerk in your county of residence. A record search can be done by the Court Clerk to see if you have a pending lawsuit or judgment.
Hopefully, you’ll find out if a case has been filed before the court renders a default judgment. The Court Clerk, on the other hand, can furnish you with pertinent information if you failed to react before the deadline and have a default judgment against you. You can learn the plaintiff’s name, the amount you owe, and whether or not interest has been added to your account. The clerk can also explain the collection process. The Court Clerk, for example, will notify you if the judge has imposed a wage garnishment or a lien against your property.
If the litigation is still continuing or if a judgment has been given, the next actions you do will be different.
Can a collection agency take your house?
Trying to keep up with debt payments is unquestionably difficult. Because the strain mounts, it’s extremely difficult when you start receiving calls from collection agencies.
In response to your query about credit cards and your residence. Yes, to put it succinctly. If a creditor receives a court judgment, they might place a lien on your house. If you don’t pay, they have the legal right to seize a portion of the revenues from the sale of your house to recover the money you owe them.
What should you not say to debt collectors?
It’s also critical to keep track of what you shouldn’t discuss with debt collectors during the collection process. The following are three things you should never tell a debt collector:
Never Give Them Your Personal Information
The agent will request personal information in order to verify your identity and debt ownership.
You are not required to respond to these questions. Instead, request that the agent exclusively communicate with you by email.
Never Admit That The Debt Is Yours
There’s no reason to do this, and it could get you in hot water later if you try to dispute the amount as erroneous on your credit report.
Many old debts have bogus interest charges that you aren’t required to pay, but debt collectors will try to collect nevertheless.
It’s advisable to hang up after telling the collection agent to provide you the information in writing. You have the legal right to do so, and we’ll get to that in a moment.
Never Provide Bank Account Information
While you’re on the phone with a debt collector, they’ll try to persuade you to make a payment, even if it’s a tiny one. To complete the transaction, the agent will need your bank account or credit card details. It may appear to be a simple and quick way to end the call and get off the phone. However, this can lead to a number of serious issues:
- You Lose Leverage: Your payment is your leverage when it comes to dealing with debt collectors in the future. So don’t pay too soon and lose your most valuable bargaining chip. Save it for a time when you can receive something in exchange, such as requesting that the creditor delete unfavorable items from your credit report in exchange for a payment.
- You Share Account Information: The agent may claim that he or she will not keep your bank account or credit card information on file. You, on the other hand, have no way of knowing whether or not this is true. Additionally, debt collectors have charged you more than you committed to pay.
- The Statute of Limitations on the Obligation is Reset: Making a payment resets the statute of limitations on the debt. This provides the creditor additional time to file a lawsuit against you for losses.
It’s fine if you wish to pay off the debt or sign a payment plan, especially if it’s part of a larger debt management strategy. But first, acquire a written agreement.
How can I get out of debt collectors without paying?
There are three options for getting rid of collections without paying: 1) Write and submit a Goodwill letter requesting forgiveness, 2) research the Fair Credit Reporting Act and Fair Debt Collection Practices Act and draft dispute letters to oppose the collection, and 3) have a collections removal professional erase it for you.
Collections can stay on your credit record for up to seven years, making it difficult to obtain a car, a home, personal loans, credit cards, or even certain professions. It’s a wise option to do whatever you can to get rid of them as soon as possible.
How do creditors find your bank accounts?
A creditor can simply look through your prior cheques or bank drafts to find your bank’s name and serve the garnishment order. If a creditor knows your address, it may contact local banks to obtain information on you.
