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How to Deal With Debt Collectors in 3 Steps
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How to Deal with Debt Collectors in 3 Steps
Don't rush into paying. Be sure to verify your debt and understand your rights.
by Sean Pyles Senior Writer | Personal financial, credit, and personal finance Sean Pyles leads podcasting at NerdWallet as the host and producer of the NerdWallet's "Smart Money" podcast. The show "Smart Money," Sean talks with Nerds across NerdWallet's NerdWallet Content team to answer the questions of listeners about their personal finances. With a focus on shrewd and actionable money advice, Sean provides real-world guidance that can help consumers better in their finances. Beyond answering listeners' money concerns on "Smart Money" Sean also interviews guests outside of NerdWallet and creates special segments on topics like the racial wealth gap and how to begin investing and the history of student loans.
Before Sean took over podcasting at NerdWallet the company, he also wrote about topics related to consumer debt. His work has appeared on USA Today, The New York Times and other publications. When Sean isn't writing about personal finance, Sean can be found digging around his garden, taking runs and taking his dog for long walks. He is based at Ocean Shores, Washington.
Last updated Mar 17th, 2023 at 5:00 PM PDT
Editor: Kathy Hinson Lead Assigning Editor Personal finances, credit scoring managing money and debt Kathy Hinson leads the Core Personal Finance team at NerdWallet. In the past, she worked for 18 years at The Oregonian in Portland in positions such as copy desk chief and team editor and designer. Previous experience included news and copy editing for various Southern California newspapers, including the Los Angeles Times. She received a bachelor's degree in journalism and mass communications in the University of Iowa.
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A debt collector is harassing you, seeking payment on an outstanding consumer debt. The tactics are annoying at best. They can also be predatory, or even illegal at worst.
It's essential to learn how to handle debt collectors, including understandingto assert your rights and decide on the most appropriate method of handling them . Before you make any statements or make any payments be sure to take these steps:
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3 steps to deal with a debt collector
1. Do not give into pressure to pay on first contact
As you wouldn't dive in to a deal without understanding its terms, don't rush to make a payment if a debt collector contacts you. Take time to think through your .
"A lot people are embarrassed about being in debt and that's the reason debt collectors swoop on," says Ramon Khan who was a debt collector in Texas who now works in online marketing.
"They create this pressure and exploit these pain points to force you to make a payment. If, at the end of the day are owed $50,000 or $100,000, they don't really want to pay all of it. If they can force you to pay some of the amount, it is a part of their amount of."
Don't make a payment, don't pledge to pay and don't divulge any payment information the collector could utilize in the future. Ask for information on the debt, and then say that you'll call back to discuss it at a later time.
Making one paymentas little as $5 or $10 -- is an acknowledgment of the debt, and could have severe consequences. In the event that the balance is beyond the , for example the payment could reset that clock and could lead to a lawsuit or .
Readers can also ask questions.
Do you have the right to go to jail for not repaying the payday loan?
Refusal to repay a loan is not considered a criminal offense. In fact, it's not illegal for the lender to threaten the borrower with arrest or imprisonment. However, some payday lenders have had success using bad-check laws to file criminal complaints against loanees, with judges wrongly rubber stamping the complaints.
How do I dispute a debt?
There are two options you can utilize to contest a debt first, the debt collector must send youa letter outlining the debt and your rights in disputing it. Then, you can request you can request a letter of verification. You can write a request to get more information and to temporarily stop collection efforts.
What happens if we don't cooperate with the debt collector?
The failure to pay a debt could put your salary, bank account or property at risk. Additionally, you may lose the right to contest the debt.
2. Collect the facts
If the original creditor sells a debt to a third partywho may then be able to sell the debt in the future or even resell it again -- recordkeeping often falls off the radar. Many sold debts are erroneous regarding the amount due or who is owed the debt.
Debt collection practices are one of the main causes of complaints by consumers with the Consumer Financial Protection Bureau as the result. Around 70,000 complaints were filed in 2021 on the matter The main reason for this was that consumers were being asked to pay off debts they didn't due [0] Consumer Financial Protection Bureau . . Accessed Apr 7, 2022.
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Request a from the collector of the debt if you do not receive one within five business days from the first time you contact. The letter should contain information about the debt, the collection company and the best way to contest the debt.
Keep your own records of the debt, if it's yours, including the information about the original creditor and your record of your payments.
Keep accurate records of communications with the debt collector and any previous payments. You may want to use certified mail for the best evidence.
Track your debt the easy way
Sign up with NerdWallet to view your payment schedule and breakdown of your debt all in one spot.
3. Know your rights and know how you can use them
This is your friend. This law outlines your rights as a consumer , and shields you from unfair collection methods. For example:
Communication: You can tell them what and when you can contact you and request you can request that they stop communication completely. Debt collectors are not allowed to making use of profane language or threats to commit violence.
Honesty: Debt collectors cannot lie to you about whom they're from, the much money you owe or the legal consequences for not paying off your debtfor example threats of arrest.
Challenging the debt You are entitled to contest the debt. If you challenge your debt in the first 30 days of first contact, the collector cannot ask for money until you have made sure the issue is settled. After 30 days you can still challenge the debt, but the collector is able to request payment as the dispute is looked into.
You could be protected if the protections under the FDCPA have been violated. Your state might offer extra consumer rights. Consult with the legal aid office in your region or with your State Attorney General's Office.
Know your state and federal security measures in the collection process. Your state's and the are good resources.
It's a matter of sending a letter to debt collectors to request more information on the debt or asking that a debt collector end contact, you should know how to assert your consumer rights -- and don't be afraid to assert them.
Author bios: Sean Pyles is the executive producer and host on the NerdWallet's Smart Money podcast. His writing has appeared on The New York Times, USA Today and elsewhere.
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