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It is totally understandable to become frustrated and even incensed when you are bombarded by debt collectors. It is common to receive a flurry of phone calls, letters in the mail, and even in-person visits at your home when creditors seek to collect. If you have multiple debts simultaneously, the problem can become exacerbated as multiple collection agencies seek to make your life difficult.
Many times, it is possible for creditor inquiries to cross over into harassment. Debt collectors might call at inappropriate times or places, attempt to intimidate you, use abusive or inappropriate language, or even misrepresent who they are and what you owe. As the harassment increases, you might be tempted to try and put a stop to it as quickly as possible through the path of least resistance.
It is critical to remember that you have rights as a debtor. Exercising those rights can put an end to bad creditor behavior. Acting impulsively or making the wrong moves can deepen your financial problems and even place you on the hook for money you do not owe. Below, we cover 6 mistakes people make when dealing with creditor harassment.
When a debt collector randomly calls you, shows up at your door, or sends a letter, they are declaring that you owe something to someone, somewhere. There is literally no good reason to readily admit that a debt is necessarily yours.
Even if you are aware that you are behind on one or more payments, you can never be certain at first that a debt collector is a valid party representing your creditor. You also may not be obligated to pay the amount the creditor is claiming you owe. Unscrupulous creditor agencies, especially ones that are not the original owners of your debt, will sometimes tack on unlawful or fraudulent interest, fees, and penalties and then attempt to intimidate you into paying the full amount.
Be careful, as debt collectors can be sneaky in weaseling you into admitting that a debt is yours. Never answer in the affirmative that you owe a debt to anyone without knowing more information – even if you know that you do owe some amount.
For example, you might be behind on your car payments. A creditor calls and ask for you by name. You might answer something like “Yes, who is calling?” – and they might respond with “Are you aware that you are behind on your payments with this bank on your vehicle?” In this situation, you might instinctively answer yes – you know you’re a few payments behind and are trying to catch up. However, you do not know who is actually speaking on the other end of the line! Instead of answering yes, ask who is calling, and go from there.
If you do admit that a debt is yours without affirming the details, you can place yourself between a rock and a hard place down the road. Should you later discover that the debt is not yours, it can be challenging to dispute the obligation with credit reporting agencies. Instead, always ask to be sent information on the alleged debt in writing so that you have hard evidence and can carefully review the details.
As a debtor, you have a right to request that a collection agent verify your debt. To do this, you will need to send a debt validation letter, a formal inquiry that requests that the collector prove that you owe the debt.
The verification from a collector must be provided in writing and delivered within 5 days of your request. The response will need to include the total amount owed, the original entity to whom it was owed, and the new entity to whom it is owed. Keep in mind that creditors will sometimes sell off debts to other creditors and agencies, even changing hands multiple times before anyone calls you about it. In these situations, the current owner of the debt will have to produce information they do not necessarily have. If they cannot verify the origin of the debt or how much you actually owe, they cannot collect or pursue legal action against you.
Even if a collection agent does produce a verification document, you have up to 30 days to formally dispute that the debt is yours. They will then have to turn over their evidence for you to independently verify. The worst-case scenario is you will have a chance to audit a debt to make sure you are actually obligated to pay. This will also buy you some time. In the best-case scenario, you can dismiss a debt outright.
When a collector calls or visits you in-person, they will likely ask you a series of identifying questions before seeking personal information. This is done to allegedly “confirm your identity” and therefore verify that you owe the debt that they are seeking. The reality is that you do not have to offer any personal information in these encounters.
Remember, you almost certainly do not personally know the debt collector that has reached out to you. This individual is essentially a stranger who is asking for money. No matter how they identify themselves or attempt to persuade you, do not give them any additional information!
Pieces of personal information that you should never volunteer to a debt collector include:
Keep in mind that questions about personal information will often be presented as “identifying” questions, which implies that they already have the answers. If they already had the information, they would not waste time asking. Call the bluff!
The best way to handle a collection agent that is probing for personal information is to calmly and politely ask that they continue any communication in writing. If they are reaching you by phone and claim that they do not have your mailing address with which to do so, that is their problem, not yours.
An especially zealous and persuasive debt collector might try and convince you to make a payment of any kind toward settling the debt over the phone. They can try numerous tactics to make this option appealing: They might say they will decline to pursue a collections lawsuit if you show you are willing to at least partially repay, for example. They could even request a seemingly paltry amount as a show of good faith.
To make this transaction, they will need either your credit card or bank account information. Be extremely cautious about giving your credit card or bank account information to debt collectors and never do so over the phone. Any transaction should be laid out in writing, with terms defined for how the agent will use and store your information.
Keep in mind that making a payment prematurely can place you in an extremely disadvantageous position. If you pay any amount, you are in effect admitting that you owe the debt. As we covered above, you should always take exhaustive steps to verify that the debt is yours and what you actually owe.
You also can negotiate with creditors. By agreeing to pay any amount, you break the threshold of being willing to pay at all, thus damaging your ability to negotiate in the future. For example, you might agree to at least partially repay a debt if the creditor agrees – in writing – to remove negative credit items associated with that debt for each of the three credit reporting agencies. If you pay upfront, before negotiating, you likely will not be able to request these terms later.
It should also go without saying that sharing credit card information and bank account and routing numbers can easily lead to theft. The debt collector might attempt to retrieve more funds than you agreed to release or otherwise improperly use the sensitive information. Always get credit card or bank account authorizations in writings, with defined terms about how much you agree to pay.
Finally, note that making a partial repayment resets the statute of limitations for the remainder of the debt. When a creditor is unable to collect payments on a delinquent obligation, they in many cases have the option to pursue a lawsuit that will force the debtor to pay. There is a statute of limitations on the ability to bring these lawsuits, but when a debt is partially repaid, that statute resets.
Be aware that none of this is to say you should never negotiate with creditors. Sometimes you can settle an outstanding debt for a fraction of what you owe. You should just exercise caution and seek professional advice before agreeing to any terms and never impulsively accept a deal over the phone. Get all terms in writing.
A debt collector’s job is to convince you to pay, by any means necessary. This can include resorting to outright creditor harassment. They might call at all hours of the day, dial you repeatedly, or even try to reach you at work. Some creditors will even resort to in-person visits. They could threaten you with lawsuits, yell at you, or use expletives.
Creditor harassment is unlawful under the federal Fair Debt Collections and Practices Act (FDCPA). Collection agents are no doubt aware of the laws but are hoping you are not, and they will almost never inform you of your rights. It is up to you to see you through their tactics and exercise the protections afforded to you.
Keep in mind that some creditors will follow the letter of the law and not technically engage in creditor harassment but will still find ways to compel you to pay. They may attempt to induce guilt or shame for owing money and convince you that settling a debt is the only responsible thing you can do. Do not give in! Having debt does not make you a bad person.
The most immediate way to put a stop to creditor harassment is to ask creditors to stop calling you. Under FDCPA, they are required to oblige and only continue communications in writing. This allows you to keep thorough records of any interactions with collectors and avoids the worst practices collection agents tend to employ.
You can put a stop to many unsavory creditor practices by requesting that all communications be made in writing. However, that will not make creditors go away forever. When met with legal resistance, collection agents can often respond in kind. That means you might be hit one or more lawsuits. Should you lose – and if you genuinely owe a debt, you very well could – you will be forced to repay. This can result in wage garnishment, where a portion of your paycheck is siloed and sent to creditors.
To avoid lawsuits, you will need to at some point address the underlying cause of creditor action: the debt itself. If you do not have the means of paying to the satisfaction of your creditors, it may be time to consider bankruptcy. As a consumer, filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy can permit you to discharge unsecured debts – like medical debt, credit card bills and personal loans – in exchange for going through a liquidation or reorganization process, respectively.
Filing for either type of consumer bankruptcy also entitles you to the automatic stay, a court order that prevents creditors from contacting you. The automatic stay is issued promptly filing your formal filing and freezes any ongoing creditor actions, including lawsuits, foreclosures, wage garnishments, or repossessions. Creditors will not be able to communicate with you or initiate any negative action until your bankruptcy has concluded. By that point, you will ideally have discharged the relevant debt or reorganized your finances in such a way that you can settle any outstanding amounts.
Our bankruptcy lawyers at Bach Law Offices, Inc. are passionate about protecting clients’ rights. We are experienced with fighting creditor harassment and can help you address its underlying causes through bankruptcy. We can also help you address credit reporting error and work to develop a plan to begin the credit recovery process. Our team can then assess your situation to help determine if Chapter 7 bankruptcy or Chapter 13 bankruptcy can help you overcome debt and stop creditor harassment for good.