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How to Handle Debt Collectors in just 3 Steps
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(image: https://i.pinimg.com/originals/22/59/b4/2259b48f2e16305d458dce37ca45f0e0.png)How to Handle Debt Collectors in 3 Steps
Don't rush into paying. Make sure you are aware of your debt and your rights.
Written by Sean Pyles Senior Writer | Personal finance and financial debt Sean Pyles leads podcasting at NerdWallet as the producer and host of the NerdWallet's "Smart Money" podcast. The show "Smart Money" Sean talks with Nerds across the NerdWallet Content team to answer the questions of listeners about their personal finances. With a particular focus on sensible and practical money tips, Sean provides real-world guidance to help people improve the financial situation of their lives. Beyond answering listeners' money concerns on "Smart Money," Sean also interviews guests who are not part of NerdWallet and produces special segments on topics like the racial wealth gap as well as how to get started investing and the background of college loans.
Before Sean took over podcasting at NerdWallet, he covered topics related to consumer debt. His work has appeared on USA Today, The New York Times and other publications. When when he's not writing about personal finance, Sean can be found working in his garden, going for runs , and taking his dog for long walks. He lives in Ocean Shores, Washington.
Last updated Mar 17th, 2023, 5:00 PM PDT
Edited by Kathy Hinson Lead Assigning Editor Personal finance, credit scoring, debt and money management Kathy Hinson leads the Core Personal Finance team at NerdWallet. Previously, she spent 18 years with The Oregonian in Portland in capacities such as chief of the copy desk and team director of design and editing. Her previous experience includes editing copy and news for various Southern California newspapers, including the Los Angeles Times. She received a bachelor's degree in mass communication and journalism at The University of Iowa.
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The debt collection agency is trying to hound you to pay a consumer debt you owe. tactics can be annoying at best. They can also be criminal, or even illegal at worst.
It's crucial to know how to handle debt collectors --including understanding -to assert your rights and select the most appropriate method of handling them . Before you say anything or make any payments be sure to be sure to follow these steps:
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Three steps to handle a debt collector
1. Don't give in to pressure to pay at first contact
Just as you wouldn't jump into an agreement without fully understanding the terms, you shouldn't rush to pay a debt when a debt collector contacts you. It is important to take the time to analyze your .
"A large number of people are embarrassed of having their debt, and that's what debt collectors prey on," says Ramon Khan, a former debt collector from Texas who now works in the field of online marketing.
"They create this tension and play on the pain points in order to convince you to make a payment. At the end of the day, if you owe $10,000 or more, they don't really care that you're going to pay it all. If they can force you to pay a portion of it, that still is a part of their amount of."
Don't pay, don't say to pay and don't divulge any information about your payment that the collector may use later. Ask for information on the debt and say you'll call back to discuss it at a later time.
Making a single payment -- even just $5 or $10 -- is an acknowledgement of debt, and could have severe repercussions. If the debt is over the date, for instance paying a bill will reset that clock and could lead to a lawsuit or .
Readers may also have questions.
Do you have the right to go to jail for not repaying the payday loan?
Failure to repay a loan is not considered a criminal violation. In fact, it is to be the duty of a lender to threaten the borrower with arrest or jail. However there are instances where payday lenders have had success making use of bad-check laws to file criminal complaints against borrowers, with judges mistakenly stamping the claims.
How can I contest the loan?
There are two options you can utilize to contest the debt first, the debt collector must send youa letter with a description of the debt as well as your rights in disputing the debt; and secondly, you can request a letter of verification. You can submit a written request for more information and to temporarily stop collection efforts.
What happens if you don't pay a debt collector?
The failure to pay a debt could put your salary, bank account or property at risk. Worse, you can also lose the ability to challenge the debt.
2. Find the information you need
If the original creditor sells the debt to a third partythat could later resell the debt again, and so on -- recordkeeping often falls to the side. A lot of sold debts contain errors regarding the amount due or even who owes the debt.
Debt collection practices are one of the largest sources of consumer complaints with the Consumer Financial Protection Bureau as the result. More than 70,000 complaints were submitted in 2021 on the matter The main reason for this was the demand from consumers to pay off debts they didn't have to pay (zero) Consumer Financial Protection Bureau . . Accessed April 7, 2022.
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Ask for a letter from the collector of your debt if you don't receive one within 5 business days of first contact. The letter should contain information about the amount owed, the collection company and how to challenge the debt.
Make your own notes on the debt in the event that it's yours including the information about the original creditor and your record of your payments.
Keep records of your communications to the collector, as well as any prior payments. You may want to use certified mail for the most reliable documentation.
Make sure you track your debt in an easy way
Join NerdWallet to view your current payment schedule and breakdown of your debt all in one place.
3. Know your rights and how to make use of them
The is your ally. This law provides you with rights as a buyer and protects you from the shady collection practices. For instance:
Communication: You are able to specify what and when you can contact you, and also that they cease communication altogether. Debt collectors are not allowed to making use of profane language or threats to commit violence.
Honesty: Debt collectors are not able to lie to you regarding the identity of their representatives, the you owe them, or the legal consequences of not paying off your debt- for instance threats of arrest.
Challenging the debt You are entitled to dispute the debt. If you challenge the debt within 30 days of first contact, the collector will not be able to request money until you have made sure the issue is resolved. After 30 days you can continue to challenge the debt however, the collector may request payment as the dispute is looked into.
You may be able to claim if your rights under the FDCPA were violated. Your state might offer additional consumer protections. Check with legal aid in your region or with your State Attorney General's Office.
Be aware of your federal and state security measures in the collection process. Your state's and the can be a good resource.
It's a matter of sending an email to debt collectors to request more information on the debt, or requesting that the debt collector stop contact, be aware of how to assert your rights as a consumer as well as not be afraid to do so.
About the author: Sean Pyles is the host and executive producer on the NerdWallet's Smart Money podcast. His work has appeared on The New York Times, USA Today and elsewhere.
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