Recently on our legal forum a user asked, “I owe thousands of dollars to different credit card companies. I also have $50,000 of medical debt. I think the debt must have been sold to a third part debt collector because the debt collection calls have become relentless. I cannot answer the phone anymore. I am really scared. I want my life back. Can you help me?”
Getting out of debt might be impossible for some debtors. Although there might some strategies that might be good for you, it’s important to understand your rights when it comes to debt collection. With that in mind, let’s take a look at some of the most important things you need to know about debt collections.
- It’s generally best to work with the original creditor.
Ideally, it’s best to resolve your debt issues before the debt is more than six months due and has potentially been sold to a third-party debt collector. So, what do you do if you cannot make a debt payment on time or cannot pay the full amount owed? Call the original creditor and see if they are willing to work out some type of alternate payment or payment schedule. The worst thing you can do is avoid the issue just hoping it will go away. It won’t.
Although the original creditor may not continue debt collection efforts they may sell your debt to a debt collector who has larger contingency collection agencies whose sole purpose is to collect all they can from you. They make billions of dollars each year harassing debtors and may earn a contingency fee of up to 15% of the balance they collect, making them highly motivated.
- You have rights under the Fair Debt Collections Practices Act (FDCPA).
You have protection against unfair debt collection practices under the FDCPA. Your rights include protection from false statements, protection from harassment and abuse, protection from calls at specific times of the day, and protection from unfair trade practices.
If you feel your rights have been violated you can file a complaint with the Federal Trade Commission, the Consumer Protection Bureau or your state’s Attorney General’s office.
- You may be able to file for bankruptcy protection and have your unsecured debts discharged.
You did not mention whether you have considered filing bankruptcy, but if you do not believe you can ever repay your debts filing bankruptcy may allow you to discharge certain unsecured debts and eliminate harassing debt collection actions.
- Debt collects may have the right to sue you.
Although third-party debt collectors cannot threaten to sue you if they have no intention of following through on the threat, they do generally have the right to sue for non-payment. If they do decide to sue you and they win their claim they may be entitled to garnish your wages (not available to all creditors in all states), levy your bank accounts, or repossess certain property.
To avoid dealing with debt collectors it’s best to pay all of your bills on time. If this is not possible, however, you need to understand your rights.
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