Are Creditors Calling You?
Debt collectors are busy these days. If you are receiving calls from debt collectors there are a few things you should know. They can call all day long and they are getting desperate. When they play dirty, it is time to do something about it. Each one of us should know what collectors are allowed to do and what they are not. There are laws that regulate the behavior of debt collectors but very often they count on the fact that you don’t know what those rules are.
As more and more Americans are losing their jobs and defaulting on their credit cards, car loans and mortgage payments, the tactics used by the debt collectors get stronger. They are fighting harder and harder to get the money from those who don’t have it.
The main weapon in their arsenal is the phone calls. They can call your home starting at 8 AM every morning and will continue those calls until 9 PM at night, using repeat calling for days, weeks and even months. They are allowed by law to do so.
The Federal Trade Commission has estimated that the number of complaints about repeat phone calls grew 50% in 2009 and will grow even more this year. The number one complaint is the repeated calls by collectors.
When you answer the phone to a debt collector, you may expect to hear strong cautions about what not paying your bill is doing to your credit. You can expect to hear them ask what you intend to do about the unpaid balance and hopefully you will hear about programs to help you get back on some sort of a payment plan. However, the longer you are behind in your bills, the more you may hear stronger tactics and nastier language.
Complaints of collectors using abusive language in their collection practices have also increased, up 33% from last year. These tactics are against the law. They may not be abusive on the phone, this includes cussing and swearing. It also includes calling you names. Many complaints are issued by people, who state that collectors have called them names such as loser, scumbag or deadbeat.
Threatening speech is against the law, period. They may tell you what happens when your bill is not paid but they cannot threaten to do so. Some collectors have carried their abusiveness just too far by threatening physical violence to the debtor and to the debtor’s family members.
Clearly, this is a violation of the law. Collectors can call family members if you listed them as references on your credit application so keep that in mind. Complaints of threatening violence doubled last year.
These threatening calls should not be ignored. Remember, they have your address and a lot of other information about you. They know where you work. They have your personal information. The threat of ‘dire consequences’ is something that the FTC’s Fair Debt Collection Practices Act keeps track of.
If you have defaulted on your car loan, they may tell you that the next step is having your car taken away and repossessed. But they cannot threaten you with jail time, prosecution or threaten your job.
As any of you who are late on a payment know, lenders can attach late payments and they can increase your interest rate. But they cannot add indiscriminate fees or charges to your loan or credit card that are not spelled out in your contract. The details of what they are allowed to do are spelled out in the small fine print of your contract. If you have questions about the tactics used by collectors calling your home, you should check with the FTC.
If you have lost your job, the collectors may call your former place of employment to verify that you are no longer working there but they may not continue to call that business in an attempt to reach you.
If your unpaid bill is sent to a collection agency, they too may call your former place of business to verify but under normal circumstances, that information is in their notes and it would be a pointless call. Repeated calls to former places of employment constitute harassment and are not allowed.
Another very important thing you must realize when speaking to a creditor or a collection agency is that any information you give them will be used against you. I know that sounds odd but it is true. They will ask for cell phone numbers, emergency phone numbers, email addresses and other ways of contacting you. If you give them those numbers, rest assured, they will use them. They will then call your house, your cell, and send you emails daily.
Creditors will probably ask about your ability
to borrow from friends and neighbors, your retirement account, or even tell you
to use your house payment to pay them instead. They may not ask you why you may
be reluctant to ask family or friends for money.
Do not make payment arrangements with them if you know you are unable to keep those arrangements. Stay honest about your inability to pay. Be clear about when you will be able to start paying again. If you do not have the answers they seek, then tell them you don’t know. Better to say you don’t know than to continually break payment agreements.
Creditors will try and work with you. They will offer special payment plans. If you can work with them, the calls will stop and you will get back on your feet again with your creditors. If you cannot make any payment plans, due to prolonged unemployment, illness or for whatever reason, tell them so. They may or may not be able to help you but either way, you must stay honest about your ability or inability to pay. If your bill is $100.00 a month and you can only pay $40.00, let them know that and see what they can do. They would rather have some money than none at all.
Think twice about paying the lesser amount until they have approved this payment arrangement. Get the names of the people you talk to, when you talked to them, their phone number & extension number and what you agreed to. Always have them send you the new agreement in writing. When you receive the new agreement – read it and verify that it is what you agreed to.
Creditors may attempt to reach a settlement with you. This may or may not help you. Settlements are usually a one-time payment of up to 50% of the debt that you have.
However, if you can’t afford the $50.00 a month payment, paying a lump sum, no matter how reduced the amount is, may be difficult to pay. If you can swing this reduced settlement payment, your debt is paid off.
Your credit score will take a hit from this, but nothing that you can’t recover from if you are diligent. Keep in mind that when you pay a settlement amount, the amount that you didn’t have to pay, the amount that the lender forgave without payment will appear on a 1099 and will need to be added on your taxes.
When all attempts to try and collect on the debt have failed, your creditor will charge off the account and take the case to court or perhaps sell the debt to a collection agency. For some creditors, this may be a matter of 2-3 months. For others, they may hold onto the debt without receiving any payment from you for up to a year. Every creditor is different as is each individual collector. Know your rights and do the best that you can.
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