Regrettably debt collectors are often unethical. This has resulted in the government passing legislation to protect you from unethical debt collection tactics.
If the debt they are contacting you about is legit then you should ask for validation of the debt. This must be done in writing.
Failure to ask for validation by mail will result in your validation being completely ignored. Additionally send your validation letter certified mail so you have proof that they received it.
If your debt is validated by the creditor and is within the statute of limitations of your state, then you should negotiate payments. Statute of limitations are commonly seven years from the first date of delinquency.
When negotiating payment you should never pay the full amount. This is because your account has been purchased from the original creditor for pennies on the dollar. Thus we suggest you start your offer at 50% of the balance.
The agencies will always accept partial payment. This is because there only way to recoup the money they spent on your account is by accepting your payment or selling it for a fraction of what they paid for it to another agency.
When you agree on a settlement you must get in writing from them that in exchange for your payment they will not report any negative information to the bureaus regarding your debt. If this is not done you may no longer be getting harassing phone calls but you will have a whole new set of problems because of a low score.
Additionally if you just pay the agency they will report the collection as paid. This is still a very negative mark on your credit report. It will not improve your score by just paying.
Again, you should get in writing that negative information is not going to be reported to your credit. Occasionally derogatory information has already been reported you should get them to agree to delete it from your report.
If you do not do this there is zero benefit from paying the collection. Additionally always pay with a paper check. FYI, you can actually use the memo line to repeat the contract regarding reporting to the bureaus, then when the check is cashed you will have a binding contract.
If you are being harassed by a collection agency you are not alone. Additionally they only can legally do so much. The Fair Debt Collections Practices Act says that a debt collector can not;
- Threaten legal action
- Harass you with calls
- Call your place of employment (once asked not to)
- Claim to be anyone they are not
- Threaten a lawsuit (unless they are taking legal action)
- Threaten to garnish wages or seize property (each state is specific about what is legal, often a court order is needed)
- Call your neighbors or family members and speak with them about your debt
- Only call between 8am and 9 pm
- Call you after you have notified them that you will not accept calls regarding this debt.
Often these regulations are ignored. If you have been a victim you should report the agency to the FTC and the Attorney General. A majority of collection agencies have been fined because of violation of the FDCPA.
Also you can file a lawsuit against the collection agency and be awarded monetary damages. Make sure to keep all communications in writing in order to prove they are in violation.
If you would like to make a comment, please fill out the form below.
