A past due or delinquent account can quickly be turned over to a collections department or agency that will then become responsible for collecting the debt. Debt collectors can be intimidating to consumers, especially when their attempts to collect a debt lead to daily calls, emails, letters, and text messages.
The idea of facing off with debt collectors can be overwhelming, but knowing what mistakes to avoid when dealing with debt collectors can be beneficial to consumers.
Ignoring Phone Calls & Letters
Debt collectors will make constant attempts to contact people when a debt is owed. Unfortunately, ignoring these communication attempts will not make the debt disappear. And it is likely that the debt collectors will continue to reach out until contact is made. However, if the debtor provides a written request to no longer be contacted, the debt collector will have no choice but to cease contact, unless it is to notify the debtor of legal action that has or will be taken against them.
Not Knowing Your Rights
Many consumers don’t know their rights when it comes to debt collectors. As a result, their debt collector can get away with certain things that are technically considered illegal.
The Fair Debt Collection Practices Act actually protects consumers against debt collectors by deeming certain actions illegal, including:
- Contacting the debtor before 8 a.m. or after 9 p.m.
- Contacting the debtor at work when they have been advised not to do so.
- Contacting the debtors after a request to cease contact has been submitted.
- Threatening to harm the debtor.
- Providing false information about the debt, their identity or consequences of not paying the debt.
Not Confirming Ownership of the Debt
When people are first contacted about a debt, they may not think twice about whether or not they are the owner of the account. As far as they are concerned, someone wants money from them, so they will pay the debt or ignore it.
If someone is unsure about the validity of the debt, they should avoid making any payments without looking into the account. Consumers can confirm if a debt is theirs by requesting details about the debt from the creditor, such as the amount owed and the name listed on the account. Of course, if the debtor does confirm that they are the actual owner of the account, they will be able to obtain additional information and make arrangements for the payment of the balance due.
Not Negotiating a Settlement Agreement
Not everyone is able to pay their debts in full, but that doesn’t mean arrangements can’t be made. Debtors should always consider resolving their accounts for less than the balance due by negotiating with debt collectors. In some cases, debt collectors will accept a certain portion or percentage of the balance due and consider the account paid in full.
For example, say a person’s account has a balance due of $1,455. The creditor can decide that the account will be considered paid in full if they pay the agreed-upon amount of $1,200 by a certain date. The debtor will have saved $255 and finally settled the debt.
Not Understanding the Impact on Your Credit Score
Collections accounts are listed on credit reports, and they negatively impact the consumer’s credit score. This type of account is showing that there is a debt owed, so it is considered derogatory information that is harmful. When someone continues to ignore their debt, it will continue to be reported as unpaid, causing a drop in score. And a low score can make lenders see a consumer as a risk and question their ability to manage their finances.
People have different ways of dealing with debt collectors. Valid debt or not, certain mistakes that are made when dealing with debt collectors can be costly to consumers and can have a significant negative impact on their lives.