7 Things All Debtors Should Do
June 5th, 2015 by Bunch & Brock
No one likes to owe money. Not being able to pay the bills can leave people feeling frustrated, embarrassed, depressed and hopeless even though many money troubles are due to forces beyond their control, such as losing a job or getting very ill. You may be contacted by a debt collector once your debts are seriously past-due. A debt collector may be a collection agency, a lawyer who collects debts as part of their business or a company that buys delinquent debts and then tries to collect them.
1. Keep track of your credit report
You probably have seen a lot of advertisements for free credit reports, but most of these require you to buy credit monitoring or some other type of service. To see how your debt could be impacting your credit, to ensure no one is fraudulently using your credit identity and to see who actually owns your debt, you can check your three credit reports for free once a year. Equifax, Trans Union and Experian have teamed up to give the public one place to go to request their report. The website is www.annualcreditreport.com. The free credit reports can also be requested by calling 1-877-322-8228 or by writing to:
Annual Credit Request Service
P. O. Box 105281
Atlanta, GA 30348-5281
2. Take the collection calls
Ignoring the collector won’t make the debt go away. In fact, disregarding the phone calls can actually make the situation worse, because the following step is sending collection letters that may include notice of legal action. If you have received collection letters, read them and consult an attorney. Answering the phone and dealing with the collector calmly can help you get control over the situation.
3. Request the demand in writing
What if you simply have the same name as someone else who owes money? Once you have been contacted by a collector, tell them you want to verify the debt in writing. Under the Fair Debt Collection Practices Act, they have five days to send you this written “validation notice,” which must tell you the amount of money you owe, the name of the creditor to whom you owe (or owed) the money and what action to take if you believe you do not owe the money.
4. Know the legal status of your debt
Some debts are subject to a limitations period, and once that time is over, the debt can no longer be collected. This time period varies from state to state as well as from debt to debt. In Kentucky, the statute of limitations runs five years from the date you last made a payment on open account (credit card) debt and oral contract debt; it is 15 years on written contract, domestic judgment and foreign judgment debt. If a debt collector contacts you regarding an old debt, do not admit that you owe the debt, do not pay the debt and do not agree to send them money or you risk restarting the limitations period and giving them the legal right to sue you. Instead, consult an attorney who can properly instruct the collector that the debt has expired. See Also: Debt Relief & Foreclosure
5. Don’t immediately agree to a payment plan
It’s critical to request and review evidence of the debt to ensure that the details are correct. After receiving written verification of the debt, seek independent financial advice before agreeing to a plan. A financial professional can help get you the best repayment options and make sure that you aren’t accidentally reactivating old debt that should be dismissed. See Also: Handling Debt After a Job Loss
6. Use consumer friendly resources
Seek out legal or financial professionals with experience in the field of debt collection who are likely to know the most currently available options. Look for guidance from the National Foundation for Credit Counseling. The Federal Trade Commission explains some of your rights here. Download and review a free copy of the Fair Debt Collection Practices Act (FDCPA). Be wary of any free online sites that purport to give financial advice, but that are, in fact, linked to collection agencies.
7. Document and report harassment
By law, debt collectors are prohibited from lying, from threatening you with arrest, and from harassing, oppressing or abusing you or any third parties they contact. For example, they cannot falsely claim that they are attorneys or government representatives, use obscene or profane language, use threats of violence or harm, or misrepresent the amount you owe. They also cannot contact you at work if they’re told not to or call you before 8 a.m. or after 9 p.m. (in your time zone) unless you agree to it. If a caller appears to be in violation of the law, report them to your state Attorney General’s office, the Federal Trade Commission, and the Consumer Financial Protection Bureau.
As a bankruptcy law firm with more than 35 years of experience in the Commonwealth of Kentucky, we have helped many debtors protect their rights. To get started, or if you have any questions about this topic, call Bunch & Brock at 859-254-5522. You can also fill out this online form.