Dealing with Debt Collectors
Getting a call from a debt collection agency can be a nerve-wracking experience. When you're nervous or scared of what they might say, it can make it even more difficult to think clearly or respond appropriately. Understanding how debt collectors operate, as well as your rights in the debt collection process, can help you prepare for interactions with them.
Here are six steps to deal with collection agencies.
1. Be Willing to Communicate
Communicating with debt collectors can make it easier to resolve your debt.Thismeans picking up the phone when they call, calling them first, or responding to their letters. If you move, send them an updated mailing address.Being proactive, rather than ingnoring your debt, will make debt collectors more inclined to work with you.The Consumer Financial Protection Bureau has created a series of sample letters borrowers may use to communicate with debt collectors.
2. Organize Your Information
Before you decide on a course of action, you should organize every piece of information you have regarding the debt. If debt collectors try to collect a debt that isn't yours, you'll want to have the correct information and correspondence to dispute it.
3. Know Your Rights
The Fair Debt Collection Practices Act established a set of guidelines that dictates what debt collectors are and aren't allowed to do. Debt collection agencies aren't allowed to harass you, your family, or your employer. They may threaten to call your boss, but they can only verify employment. They can't publish your debt publicly or repossess belongings unrelated to the debt. Knowing your rights should instill you with the confidence you need to effectively navigate your interactions with these companies.
4. Know the Statute of Limitations
One of the most common mistakes you can make is paying a debt that is already past its statute of limitations, which is often 3–10 years after the last payment, depending on your state. Once the statute has exceeded its limit, you're under no legal obligation to pay your debt.
5. Go to Court
If a debt collector sues you, it's vital that you respond immediately to the court summons. Many people lose lawsuits to debt collectors because they don't take the time to respond or show up at court. Once the matter has been taken to court, consumers can face wage garnishments, property liens, and more. There are consumer agencies and groups designed to help borrowers during this time so they don't have to go to court alone.
6. Settle the Debt
If you wish to settle the debt, you can try offering the debt collector a sum that is lowerthan the original debt. Debt collectors are usually willing to negotiate since they bought the debt for much lower than its original value. They might also be willing to set up a payment plan so you don't have to pay the full amount right away. Just make sure you know whether there is interest on the debt before you agree to any payment plan.
Once you've come to an agreement with a debt collector, ask for the settlement amount or payment plan in writing and make copies of any paperwork they send you. Debts sent to collections will fall off a credit report after seven years, but consumers may have to call credit bureaus directly and ask them to remove the accounts manually.
FAQs
Navigating local laws and restrictions
Some countries have laws to prevent foreign debt collection agencies from collecting debts or issuing proceedings directly. However, that's not a problem if you instruct an agency that has a network of trusted partners across the globe.
Can debt collectors work internationally? ›
Navigating local laws and restrictions
Some countries have laws to prevent foreign debt collection agencies from collecting debts or issuing proceedings directly. However, that's not a problem if you instruct an agency that has a network of trusted partners across the globe.
What should you not say to a collection agency? ›
If a debt collector tries to collect a time-barred debt from you, the most important thing is not to say or do anything that in any way admits that you owe the debt. By acknowledging the debt or even making even a token payment, you might inadvertently restart the limitations period.
What happens if you don't pay international debt? ›
In such instances, the outcome is often a sovereign default. And while people who can't pay their debts may be sued and forced to give up assets to satisfy the resulting judgment, there is no international debt court to enforce such claims against insolvent sovereign debtors.
What happens if you don't pay a debt in another country? ›
Leaving the country doesn't absolve you of your responsibility to pay your debts. If you stop making payments, your creditor could sue you and garnish your U.S.-based assets. Your credit history will also take a significant hit.
What's the worst a debt collector can do? ›
Debt collectors are not permitted to try to publicly shame you into paying money that you may or may not owe. In fact, they're not even allowed to contact you by postcard. They cannot publish the names of people who owe money. They can't even discuss the matter with anyone other than you, your spouse, or your attorney.
What happens if you never pay collections? ›
In some cases, the creditor or collection agency might decide to take legal action against you. If the court rules in their favor, you could face wage garnishment, a lien on your assets, or seizure of property, depending on state laws.
What is the 11 word phrase to stop debt collectors? ›
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
How to get out of collections without paying? ›
You cannot remove collections from your credit report without paying if the information is accurate, but a collection account will fall off your credit report after 7 years whether you pay the balance or not.
Will debt collectors give up? ›
If the debt is not collected, then the debt collector does not make money. In many cases, although you would think that debt collectors would eventually give up, they are known to be relentless. Debt collectors will push you until they get paid, and use sneaky tactics as well.
If you do not believe you owe the debt, you may write to the collection agency within 30 days after you are first contacted, saying you don't owe the money. The agency may not contact you after that unless you are sent proof of the debt, such as a copy of the bill. A debt collector may not harass or abuse anyone.
Why should you never pay a collection agency? ›
By paying the collection agency directly, the notification of the debt could stay on your credit report longer than if you attempt to use another option, like filing for bankruptcy. When institutions check your credit report and see this information on it, it may harm your ability to obtain loans.
What is a drop dead letter? ›
Send a 'drop dead' letter
You have the right to ask them to stop contacting you. To do so, you can send what's sometimes referred to as a “drop dead letter” — a written notice to the debt collector informing them you want no further contact. By law, debt collectors are required to follow this request.
What are 2 things that debt collectors are not allowed to do? ›
Debt collectors cannot harass or abuse you. They cannot swear, threaten to illegally harm you or your property, threaten you with illegal actions, or falsely threaten you with actions they do not intend to take. They also cannot make repeated calls over a short period to annoy or harass you.
Can US debt collectors collect in the UK? ›
Due to various agreements and international bodies, debts can be chased across almost any border. The EU has facilitated several laws that make it easy to pursue debts across Europe. Ultimately, this means that you can be pursued in the UK.
Can a US debt be collected in the UK? ›
Enforcement in England
Due to the absence of a reciprocal enforcement agreement, a US judgment can only be enforced in England at common law by bringing a new action under which the judgment is seen as a simple contractual debt. New proceedings are therefore issued in the English court for payment of the 'debt'.
Is debt an international issue? ›
The world's poorest countries are facing a growing debt crisis. The International Monetary Fund (IMF) reported last fall that more than half of low-income developing countries are in or at high risk of debt distress, and about one-fifth of emerging markets have sovereign bonds trading at distressed levels.
