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Know
The Limits Of Debt Collectors
With consumer credit leaping by $19.8
billion in November 2001 to a record
$1.65 trillion, one shouldn’t
be surprised by the trend toward aggressive
debt collections. The nation’s
surprising debt load comes at a time
of high unemployment rates and an
economic recession, making it harder
for consumers to pay their debts.
The result: more bankruptcy filings
and loan delinquencies.
Collection Rules
If collectors begin calling you, it
pays to know the limits of what third-party
collection agencies can and cannot
do. The Fair Debt Collection Practices
Act (FDCPA) provides consumer protection,
and lets you know how to set limits
the debt collector must respect and
abide by. The FDCPA prohibits harassment
and misrepresentation in cases of
collections on the following types
of debt:
- Personal - automobile financing,
basic loan, charge cards
- Family - medical care
- Household - mortgage
Some of the features of the FDCPA
cover limitations on phone contact
and rules about written correspondence.
Collectors:
- Are not permitted to use obscene
language.
- Cannot call before 8 a.m. or
after 9 p.m.
- May not call you at work if
you state that your employer disapproves
of this communication.
- Must provide a written notice
within five days of contacting
you stating the amount you owe,
whom you owe, and what action
to take if you believe you do
not owe the money.
- Cannot contact you if, within
30 days of receiving the written
notice, you dispute the debt in
writing. The collector cannot
try to collect the debt during
that time until they provide documentation
of what is owed.
What's a Charge-off?
As a last resort, some people who
simply can’t meet their payments
may be relegated to the charge-off
category, which means the creditor
or lender feels there is no alternative
except to write off the debt and will
no longer pursue payment. Charge-offs
stay on your credit report for seven
years and are considered a serious
notation. In addition, some charged-off
accounts may be sold to collection
agencies at a later date, allowing
the collection of the debt to be reactivated,
which means more collections calls.
Before debt collectors get involved,
you might find it worthwhile to contact
the creditors on your delinquent accounts
to set up new payment plans. Even
though charge-off notations can remain
on your report for seven years, new
notations that you have paid off these
debts will also appear. In this case,
current and future credit grantors
would likely take a positive view
of making such an effort to pay off
old debts. |
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