If a debt collector is harassing you, we don’t have to tell you how ugly this can be. An unethical collector can harass you night and day or even at your job. He can call you at all hours and threaten to have your wages garnished, to sue you, to notify your employer or family members or even worse. While there is a law titled the Fair Debt Collection Practices Act (FDCPA) that bars debt collection agenxies from using these kinds of practices, many of them just ignore it. In fact, the Federal Trade Commission has sued numerous debt collection agencies for engaging in these practices so you know that it’s real.
What the FDCPA prohibits
Among other things, the Fair Debt Collection Practices Act prohibits debt collectors from:
- Saying you will be arrested if you don’t pay your debt;
- That they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so
- They will take legal action against you, if doing so would be illegal or if they don’t intend to take the action.
- Use threats of violence or harm;
- Publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
- Use obscene or profane language; or
- Repeatedly use the phone to annoy you
If you are being harassed
If a debt collection agency is harassing you, send it what’s called a “cease and desist” letter demanding that it stop contacting you. You can find a sample cease and desist letter by clicking here. When you send your letter to the debt collection agency make sure you send it registered and return receipt requested so that you can prove that you sent the letter and that the agency received it. Once it does so, it can contact you only one more time – to either verify it won’t be contacting you again or that it will be taking some specific action such as suing you. If this doesn’t stop the collector, you could file a complaint with your state’s attorney general’s office or hire an attorney and sue the debt collection agency. However be forewarned that many of these collection agencies are headquartered offshore so are pretty lawsuit proof.
The ghosts of debts passed
Did you know that debts are sold over and over again? Your original creditor may have sold your debt to a debt collection agency that sold it to another debt collection agency that sold it to yet another debt collection agency and so on.
Make the agency validate the debt
The FDCPA also requires debt collection agencies to validate any debt they try to collect from you. In fact, the first time a debt collection agency calls, you should ask it to verify the debt. The collector then has 30 days to provide verification in writing, which should include:
- The name of the original creditor to whom the debt is owed
- The amount of the debt
- The date you defaulted on the debt
- That the agency is legally entitled to collect the debt
You have 30 days to dispute the debt’s validity. In the event that you don’t dispute it within 30 days, the debt collection agencywill assume that the debt is valid. On the other hand, if you do dispute its validity within the 30 days, the agency must send you verification of the debt. If the agency does not respond within 30 days or if it can’t verify the debt, it must stop trying to collect from you. It must also stop trying to collect the debt once you dispute its validity – until it responds to your letter of dispute.
Four key issues
Your original creditor may have forgiven or charged off your debt. So what happens with third-party debt collectors? If they continue to try to pursue you and the debt is still within your state’s statute of limitations there are four key issues.
Statutes of limitations
Every state has a statute of limitations on debts. In the case of credit card debts it might be six years. For other debts, the statute of limitations might be eight or even 10 years. If it’s an old debt, it’s important for you to learn whether or not the statute of limitations on it has expired. If so, the debt collection agency cannot sue you. It can harass you for money but can’t take you to court.
If your creditor has charged off the debt, it means that it doesn’t expect that it’s going to get its money back. However, your debt has not been forgiven. It’s still considered collectible.
If a creditor forgives your debt (this is often part of a debt settlement process) it is totally forgiven and the debt collector should not try to collect from you.
It doesn’t matter whether your debt is forgiven, charged-off or past the statue of limitations. It will still be reported and will affect your credit score for seven years. While your creditor may have forgiven the debt, the three credit bureaus never forget.
Old debts can be confusing
Be sure to keep in mind that if a debt was charged off by your creditor this does not mean that it’s forgiven. Many creditors will pursue old debts until they have exhausted all of their legal options. Assuming that your state’s statute of limitations has not expired, a debt collector will probably contact you. In this event, you need to come up with a plan for paying what you owe or face the danger of winding up in court. Here’s a video that explains two good ways to pay off debts.
If you are sued by a creditor or a collector make sure you show up for your court date. If you don’t, the collector or creditor could get what’s called a “summary judgment” and have a lien placed on one of your assets. For most people this would mean a lien on their homes. When you sell your home, the first thing that would happen is that the lien would be paid off. So if you owed, say, $1000 and thought you had netted $10,000 on the sale of that house, you might have an unpleasant surprise when your check is for just $9000