As we go through life it is difficult not to incur debt. Whether it is from credit card bills, student loans, medical bills, or other financial obligations, debt can be a serious obstacle for consumers.
The general consensus among debt counselors, debt collectors, and state regulators warns that ignoring debt collection letters, phone calls, or court documents is the wrong way to address scary debt situations. When in debt, it is best to confront the fear and deal with the circumstances. Otherwise, dealing with collection agencies will only make matters worse.
The best option is to avoid debt collectors altogether. If you see financial trouble coming, try to form an agreement with the original creditor and work out a reasonable payment plan before the debt is sold to a third-party debt collector.
Sometimes that’s just not possible or it may be too late. Here are some tips to stay sane when dealing with debt collection agencies:
1. Educate yourself about your rights
Learn about your consumer rights and the Fair Debt Collections Practices Act. You can visit your state’s Attorney General’s Office website for information about debt collection laws. The Consumer Financial Protection Bureau (CFPB) is a federal agency established under the Obama administration. It offers a wealth of information about debt collection practices and what to do when dealing with harassing debt collectors.
2. Don’t ignore letters or phone calls about debts or court notices about collection lawsuits
Open lines of communication are best in these types of situations. You should actively write to the collector and get a written verification of the debt to make sure the debt belongs to you and the information is accurate. If you receive a court summons, do NOT ignore this! If you do not respond to the notice or show up in court at the hearing, the judge will enter a default judgment against you. Judgments are dangerous and can enable the creditor to attach bank accounts, place liens on property, and in some states, garnish wages.
3. Keep copies of everything
Keeping complete records for all of your open accounts is the best way to track progress and prove accuracy when necessary. File account statements and keep accurate records of when payments were made, the method of payment and when the payment was applied towards your account.
4. Safeguard your bank accounts
Debt collectors can file suit against a consumer for not making payments on a debt. If a judgment is entered, the collector may freeze savings or checking accounts, which can be very problematic for families on a budget. Some financial experts suggest keeping separate bank accounts for funds, such as Social Security or disability checks, which cannot be used as a source of a court-ordered judgment. Debt collection can also be halted if you have declared bankruptcy.
5. Be smart about payment methods
You may want to avoid giving debt collectors your personal banking information. If you use money orders or another third-party payment service, you will have proof of payment and avoid providing personal account information. You should also avoid allowing debt collectors to make direct electronic or automated withdrawals from your bank accounts.
6. Get everything in writing!
Any payment agreements with a debt collector must be confirmed in writing and signed by a representative of the debt collection agency before sending in any payments. This will help avoid misunderstandings.
7. Certify your mail
Sending documents and correspondence to a collector via certified mail provides proof that your letter or payment was received. You can also request a return receipt for proof that your letter was received.
8. Seek Legal Help
Flitter Milz is a nationally recognized consumer protection law firm that represents victims of abusive collection tactics. Contact us for a free case review. Whether you fell behind on payments or not, the debt collector must follow the law.