The phone rings. You cancel the call. After several unpleasant experiences with debt collectors, you’ve learned to ignore them. While ignoring debt collectors may seem like a great short-term strategy to keep your sanity, it doesn’t work out very well long-term.
Avoiding debt collectors won’t make your debt magically disappear. Depending on your situation, it could actually lead to wage garnishment or unpleasant legal issues.
If you have student loan debt or any other type of debt in collections, it’s important to learn how to handle debt collectors and know your debt collection rights.
How to handle debt collectors
First things first. If you are in student loan debt or credit card debt, you do have a legal obligation to pay back your debt. Unless you qualify for student loan forgiveness or certain types of bankruptcy (both of which have their own pros and cons), you must pay back your debt.
The good thing is that as a borrower, you have rights.
1. Know how much you owe
An important first step is knowing exactly how much debt you owe. A debt collector may be demanding payments for debt you didn’t even know existed.
If you have federal student loans, you can find your loan balance using the National Student Loan Data System. Private student loan holders can check recent statements or their credit report on AnnualCreditReport.com. (You can also sign up for a Student Loan Hero account and sync all your loans in your dashboard).
The same goes for credit card debt as well. You can typically find how much you owe through your credit card statements or online portal, as well as your credit report.
Once you know how much you owe, you’ll want to compare this with what the debt collector has on file.
2. Get everything in writing
Within five days of your first contact with a debt collector, you should receive a “validation notice” notifying you of how much you owe.
If you have any doubts, disputes, or concerns about the debt in question, you can ask for proof of verification for the debt you owe.
“[Borrowers] have the right to request verification or proof of a debt within 30 days of first being contacted by a debt collector,” said author and debt collection consultant Michelle Dunn.
Dunn said that if a collector is unable to verify the debt in question within 30 days, they will no longer be able to collect that debt. In addition, borrowers can dispute the debt in question if they believe they do not owe it (think of instances like identity theft). However, upon written verification, debt collectors can continue to contact you.
3. Ask about your options
If you do, in fact, owe money and your debt is in collections, ask about your repayment options. There may be additional fees on top of the debt you already owe. According to the Federal Trade Commission, you are entitled to let the debt collection agency know how you want your payment applied if they are collecting on more than one debt.
Once you’ve settled on a payment plan, it’s important to protect yourself when it comes to making payments.
Since there are some shady debt collectors out there, you don’t necessarily want to pay with your primary bank account or a check. Instead, consider opening a separate checking account just for debt collections or using a prepaid card to make payments. Just be sure you’re aware of any fees.
The most important thing is to create a paper trail so that you can verify your payments. It’s crucial to keep good records; as a borrower, you should save all of your communications, including payments, letters, emails, and voicemails.
If there are any fees related to making a payment, see if you can have them waived. It doesn’t hurt to ask.
Your debt collection rights
Dealing with debt collectors is no cup of tea, but it can turn downright ugly in some cases. However, under the Fair Debt Collection Practices Act, it is illegal for debt collection agencies to employ certain behaviors, such as using abusive language to coerce you into making a payment or blowing up your phone at all hours of the day and night.
“The Fair Debt Collection Practices Act prohibits debt collectors from using abusive, deceptive, or unfair practices,” explained Nina Heck, Director of Counseling and Client Services at Guidewell Financial. “This law can help you avoid being taken advantage of.”
So if your debt collector is your arch nemesis who makes you hate your life and want to keep your cell phone turned off, that is not okay.
“If you’re behind on student loans or credit card payments, debt collectors can contact you by phone, email, or in writing as long as they clearly identify who they are,” said Heck. “However, they can’t pretend to be someone else or call you at inconvenient times, such as before 8 am in the morning or at work. They also don’t have the right to harass or threaten you,” she said.
But what if your debt collection rights are being violated? It’s time to report them to higher authorities.
According to Heck, borrowers who are harassed by debt collection agencies can report any issues to the Consumer Financial Protection Bureau, the Federal Trade Commission, as well as the state Attorney General’s office.
If you’re wondering how to handle debt collectors, use these steps to take action and get your debt under control. If at any point you feel your debt collection rights are being violated, don’t be afraid to say something.
Once you learn how to deal with a collection agency and get a plan in place, you can take the steps required to move on and not have your cell phone become a battlefield.
Interested in refinancing student loans?Here are the top 6 lenders of 2019!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.97%1||Undergrad & Graduate|
|2.47% – 6.99%3||Undergrad & Graduate|
|2.68% – 8.77%4||Undergrad & Graduate|
|3.24% – 6.66%2||Undergrad & Graduate|
|2.61% – 7.35%5||Undergrad & Graduate|
|3.01% – 9.75%6||Undergrad & Graduate|