Tuesday, January 8, 2013

How to deal with debt collectors

There are many people out there that simply cannot pay some debts that they have. For instance, hospital bills, credit cards, etc. Hospital bills are the worst because you didn't ask to get sick. If you take a trip to the ER without insurance you are looking at a minimum of $2,000. Who is going to be able to pay that? Credit cards are another thing that has gotten people into trouble. MOST people who run up a credit card bill did so without intentions of doing that. There have been people (including myself) who have run up several thousands in credit card debt just by simply buying food, toilet paper, and bills so they don't have their electric and/or heat shut off. These are not people who went off and bought all kinds of stuff that they didn't need.

So the question is what do you do when you cannot pay a bill? Some credit card companies are willing to work with you. However, a lot of them such as American Express isn't willing to work with you until they write your debt off and send it to a collection agency. Then you can get a settlement offer. Hospitals are usually willing to work with you more then credit card companies.

If you owe back student loans make sure you STAY IN CONTACT WITH THE STUDENT LOAN COMPANY. I cannot stress this enough. Student loans are debts that you do not want to ignore. Since your student loan is a federal debt they can garnish your wages (yes social security as well), take your taxes, freeze your bank account, etc. They do not need to take you to court and get a judgment on you to do that like other creditors. Also, a lot of wages such as social security, retirement benefits, and pensions are exempt from being garnished from most creditors but not student loans.

Now if you are contacted by a collection agency make sure you get your debt validated in writing. As a former debt collector I have seen good collection agencies and bad ones that break the laws all the time. Collection agencies are required by law to send you validation of the debt. If you are being contacted by a collection agency by phone and haven't received any letters from them then I would answer the phone and request the letter. Do not be rude, but be firm. Do not let them intimidate you. If they threaten to sue you then tell them you are expecting to be served papers by the end of the day. If you are not served papers then you will take them to court for an Fair Debt Collections Practices Act (FDCPA) violation.

I personally recommend not dealing with collection agencies. You are not required to deal with a collection agency to pay off your debt(s). Once you receive the information of the collection agency including your account number send them a Cease and Desist Letter. Send this letter certified so you know that they received it and someone signed for it. Make sure to keep this for proof. If the collection agency contacts you to collect on this debt again they will be in violation of the FDCPA. You are entitled to $1000 for every violation. For each account you have with a collection agency you must send a Cease and Desist Letter for each one. Many people think just cause they sent a letter out that it prevents the agency from contacting them for all their debts. That is not true and they are permitted by law to contact you on an account that you have not send them a letter for.

You may encounter collection agencies that have bought the debt. This means that the original creditor sold off your debt to the agency so now the agency owns it. Usually when this happens your debt is out of statute. Statute of Limitations is the amount of time that you can pursue legal action on a debt. In NH it is 3 years for debts unless they are judgments. This will not stop collection agencies from contacting you though. Agencies will try to get you on a payment arrangement because that will reopen the statute and then they can take you to court. Never admit to owing a debt to a collection agency.

Under the FDCPA collection agencies must follow the following rules:

1. They can only contact you between the hours of 8am-9pm.

2. They cannot disclose your debt to anyone else aside from you (maybe your spouse depending on state laws).

3. If you would like them to communicate with someone else then you must give them permission. Sometimes verbal communication but many collection agencies want something in writing to protect themselves.

4. They must say the mini miranda every time they communicate with you which is "This is an attempt to collect a debt and any information obtained will be used for that purpose".

5. They are allowed to contact your neighbors and family to try and locate you. They cannot give them any information on the debt though.

6. They must obey Cease and Desist Letters. They are allowed to contact you once more after they received your letter. They can not attempt to collect on the debt though, they can just give you more options.

7. If you tell them not to call you at work or at a certain number then they must obey that.

8. When they send you a letter in the mail it cannot disclose that it is about collecting a debt on the outside. For instance if the collection agencies name is "Worldwide Collection Agency" they cannot have that anywhere on the envelope. Most collection agency letters will just have a PO Box on the outside of it.

I hope this helps you out. I want to point out that I am not an attorney and this information I gave is to the best of my knowledge. If you need legal advice please contact an attorney. 



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