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.
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