How To: Deal With Creditors and Pay Off Old Debt, Part One

So, this is something I think about pretty much every day. As I've mentioned before, Jason and I have some work to do on finances, which includes paying off old mistakes and some collection debts. I thought I would put together a list of what I've learned about paying off old debt. I actually talk to alot of people who are scared of dealing with their debt and who just ignore it altogether, so I thought this might be helpful to some people who are looking for some guidance.

 

(I am certainly not an expert in this field, nor do I have formal training or education, I am merely sharing my knowledge I've come to know in my personal experience. I would suggest doing more research and talking to a financial professional before figuring out a debt management plan.)

 

FIRST AND FOREMOST....WHAT YOU DON'T KNOW WILL HURT YOU 

 

Don't ignore your debt. In case you haven't noticed, it doesn't just disappear. In fact, in my experience, it could turn really ugly really fast. I used to never, ever, EVER open mail or look at my credit report out of fear of what was inside. Like, "If I don't open it, it will eventually go away." Well, in some cases, it does. But in most cases, it doesn't. Just because you don't see the debt in black and white doesn't mean it doesn't exist, either. It's like those people who don't go to the doctor when they are sick because they might be told they have a deadly illness. My response is, "So, you would just rather have a deadly illness and not know and not start treating it? Does it mean you don't have the illness because a doctor hasn't told you so, yet?" So, please. If you have a fear of your debt, you need to know how much the debt actually is. I used to make my situation MUCH worse in my head than it actually was. Some people make it better in their heads than it actually is. So you need to know where to begin.

 

On this topic of not ignoring your debt, I've been surprised to find that when I do open my mail, I might actually like what's inside. There have been times that I've found collection resolution letters that allow me to pay off an old account for much, much less than the original amount. There might be GOOD stuff in there too, but you will never know until you try.

 

UNDERSTAND YOUR RIGHTS AS A CONSUMER

 

One of the main things I hear people say is that "I tried to talk to the collections people but they were mean, and told me I was going to get arrested, and that I had to pay RIGHT NOW so I just hung up and now they won't stop calling me and they've called my friends and family and I don't know what to do."

 

I have been here, in this exact situation, several times. You are scared because collectors are scary. They are, pure and simple. They will use tricks and gimmicks to scare you badly enough to pay your debt. Not all of them are bad. I've talked to MANY very nice collectors who are people, just like you and me, who surprisingly are also in debt and don't really know how to handle it. Most people nowadays respond very well to honestly, and are very willing to work with you on your debt. So don't get scared off that "all collectors are evil." They simply are not.  

 

I have researched and researched and researched my rights as a consumer. I've had people violate multiple federal laws, when communicating with me, about what a collector can and cannot say or do to collect a debt. In fact, I had a scam collector (for a debt I didn't owe, but they were trying to collect) violate numerous federal laws when they contacted me about a debt. I found an attorney who works to prosecute these collectors. He didn't charge me a dime, because when he wins, the company pays his fees. Because I had kept voicemails, I had recordings of the said violations. I just received a notice from this attorney that he was in settlement proceedings with this company's attorneys and I was to receive $750 for their violations. I don't know if I will ever see a dime of this money, but the fact is that collectors do not just get to say and do whatever they please to get money out of you. This particular company did not ever say the required "This is an attempt to collect a debt, blah blah blah." In fact, they never even represented themself as a debt collector at all. They are required to do that on every call, even messages they leave on your voicemail.

 

So, what are some other things that collectors are not allowed to do? Collectors have to abide by the Federal Trade Commission's (FTC) Fair Debt Collection Practices Act (FTCPA). Violations of this act could result in fines of up to $1,000. Here are some basic rules they are required to follow.

 

1. They are not allowed to threaten you with legal action if they have no intention of following through. For example, they cannot say they will arrest you and they cannot say they will sue you unless they actually have an intention to do so. Saying that they will do that just to get you to pay is in violation. A collector also cannot just start garnishing your wages (although, they can with student loans, so heed that warning!). They have to have a court order to do that, which means you have already been to court for this and you will have already seen that coming (hopefully). For them to say "Your wages will be garnished if you don't pay today" is in violation of the FTCPA.

 

2. They are not allowed to call your friends and family more than once, and the only reason they are to call is to get your contact information, not speak with your family about your debt. Calling your friends and family more than once is harassing and they are violating law. Talking about your debt is also a violation.

 

3. They are not allowed to call you repeatedly, constantly, until you pick up. Nor are they allowed to call you late in the evenings or early in the mornings.

 

4. If you request a copy of the debt in writing, which you should do EVERY single time, they are required by law to provide it to you. Do not ever pay a debt that has not been validated in writing.

 

For a complete list and explanations on your rights and also what a collector can and cannot do, please visit the FTS's website at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm. The main thing to remember is that collectors have the upper hand most times because most people simply do not know their rights as a consumer, nor do they know when a collection company is in violation of the FTCPA. Don't let yourself get taken advantage of! Educate yourself as much as possible.

 

TOMORROW: HOW TO BEGIN THE DISPUTING PROCESS

Update: Here are the links to the other two posts for the series on debt collectors...

How to Deal with Creditors and Pay Off Old Debt, Part Two

How to Deal with Creditors and Pay Off Old Debt, Part Three