What You Should Know About Debt Collectors
This is an article “What You Should Know About Debt Collectors” by Marc Primo
As if current challenges weren't enough to increase our stress levels, debt collectors creep up around every corner whenever payments on your credit cards or loans are missed. For many, money stress is real and can pose a serious burden. No matter how inevitable it is for a lot of people to experience financial difficulties, predatory practices from dubious debt collectors are never good. In fact, certain methods used by some collectors are downright illegal.
According to recent statistics from the National Foundation for Credit Counseling's 2021 Consumer Financial Literacy and Preparedness Survey, almost half of the general population in the US have credit card debt. More than 50 percent of this number is prone to loan delinquency, with many spiraling deeper into debt.
This year, the Fair Debt Collection Practices Act (FDCPA) has included a stipulation stating that collectors now have the option to message you via mobile phones. This creates yet another channel for debt collection purposes, aside from existing ones like e-mail and social media.
Dealing with debt collectors is never easy, especially when you don't have the money to settle arrears. The next best thing is knowing your rights as a borrower and your options to better manage debt.
Here are a few facts worth knowing about debt collection and those who implement the process.
The debt collector's role
Most debt collection agencies run businesses that buy past-due debts from lenders and pursue payment from the people that borrowed them. For some individuals who have incurred debt through loans or credit cards and have missed a few payments, experiencing questionable practices during the collection process is not uncommon.
The Consumer Financial Protection Bureau (CFPB) implements updates in the FDCPA and handles consumer complaints against unfair collection practices. During the start of the pandemic, the bureau reported over 300,000 complaints concerning debt collection. Dealing with unfair collection practices is one of the most stressful matters consumers have to deal with when it comes to managing their money or signing up for financial services.
At present, only 23% of American households say that they are debt-free. This figure means that debt collection agencies will continue to thrive, with a good half of the population owing creditors for credit card balances, car loans, medical and hospital bills, student loans, and mortgage payments.
These agencies often get discounted rates when they buy out past-due debts from lenders, which they profit from upon collecting the total due amount. Because of this leverage, it's not surprising how some agencies sometimes apply illegal tactics to get borrowers to pay their debts.
How to deal with unfair collection practices
When you apply for a loan or credit card, the first thing you ought to know is the list of your rights as a borrower. Well, that and the fact that you always have to pay back the money you borrowed. Nonetheless, knowing your rights come in handy should you become a victim of unfair collection practices, all of which are covered by the Federal Trade Commission (FTC).
For example, with the new option for debt collection agencies to send text messages to debtors demanding payment, borrowers should know that the allowable hours for sending text messages are only between 8:00 a.m. and 9:00 p.m. Other things to look out for once you receive these SMS notifications are directions within the message itself on how to opt-out of receiving more reminders in the future.
To determine whether the text messages you receive from debt collectors are legitimate or scams, check if the sender asks you for personal information or asks sensitive questions that could grant them access to your accounts. For good measure, you could also request validation from the sender from the get go, from the day you receive the text message up to the next five days.
To establish professional communication, make sure you check for the debt collection agency's name, details on how they obtained your loan and debt information from your original creditor, the amount you owe, and their contact information. All of these details are warranted by the CFPB so borrowers can thoroughly verify the legitimacy of the debt collection process.
Borrowers also have the right to request a copy of their credit report via www.annualcreditreport.com so they can cross-check details of the amount cited by debt collectors and the name of the debt collection agency.
What to do if you are unsure of the debt collection agency
If your credit report does not show the agency's name in its list, the next step you should take is to contact your original creditor and inquire which collection agency bought your past-due debt. In some cases, though, multiple selling of past-due debts may occur, making it harder for borrowers to trace the current debt collection agency holding their obligations.
Keep track of the total amount you owe creditors, and also check if it is consistent with your original creditor's records. Debt collection agencies must first send a written validation notice within the first five days of contacting you, so don't feel pressured to respond the moment you hear from debt collectors for the very first time.
Check if the notice indicates the total amount you owe, your original creditor's name, and instructions on what to do if the details shown on the notice are wrong. To further verify the accuracy of your debt details, send a letter to the collection agency within 30 days upon receipt of the notice and ask for verification, such as copies of your bills from your original creditor. No debt collection agency is allowed to demand payment from borrowers until they are able to furnish them with the requested copies and documents. By doing your share of due diligence, you can have peace of mind knowing that you are communicating with legitimate agencies, and not professional swindlers.
Being organized is being prepared
If the agency continues to contact you without fulfilling their obligation to furnish you with your requested documents, make sure you take note of the time and date they contacted you. Take screenshots of the messages they send, including your replies stating whether or not you want to be contacted via that channel. You can use these details to file a complaint to either the FTC or the CFPB, regardless of whether you think the agency contacting you is fraudulent or practices unethical collection methods.
The main thing to remember is that you always have rights as a borrower to protect you from being victimized by unscrupulous debt collectors. Remember, some agencies employ guilt tactics to keep the pressure on you which is not acceptable by law. If you are ever subjected to unfair practices, knowing how to file a complaint with the proper authorities will make things easier for you in the long run.