Know your rights with debt collectors

Woman on phone looking at papers

Owing debt is hard enough on its own. Add in someone harassing you about the debt night and day and you may feel even worse. However, you do have legal rights to keep debt collectors from making your life a nightmare. Here’s how to stand up for yourself.

Know the specifics about your debt

It’s probably wise to talk to the debt collector at least once, even if you can’t make a payment at that time. You may be able to resolve the dispute and end the matter with one call. Plus, if it’s a mistake, you’ll save a lot of time and hassle by just clearing up the issue. This is an important step toward managing an account in collections.

Know what they can — and can’t — do

The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from using abusive, unfair or deceptive practices in their collection efforts for personal debt such as unpaid credit card or medical bills; auto or student loans; or mortgage. These rights are enforced by the Federal Trade Commission as well as the state of North Carolina.

The actions a collector can take to recover a debt are minimal compared to what they can’t do. A creditor may legally contact you via phone, mail, email or text in an attempt to collect a debt. Postcards are not an acceptable form of communication.

In addition to trying to reach you, a debt collector may contact other people including your family members, neighbors and even your employer. This can be done only in an effort to find your current address, phone number and/or where you work. The debt collector can’t discuss your debt with anyone you have not authorized, including your employer.

North Carolina law, like the FDCPA, doesn’t allow illegal debt collection practices. Collectors can’t contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree to it. Collectors also may not contact you at work if they’re told you’re not allowed to receive calls there. They’re also prohibited from making harassing or false statements such as threatening to garnish your wages or seize and sell your property — unless permitted by law and there is intent to do so.

Collectors also can’t use profanity or threaten you with arrest or violence for non-payment. They are prohibited from engaging in unfair business practices such as depositing a post-dated check early or giving false information about you to a credit reporting company. In addition, the collectors can’t pretend to contact you for reasons other than debt collection. Lastly, they can’t pretend to be attorneys or government representatives.

Need to file a complaint?

If necessary, you can file a complaint against a debt collector that uses deceptive or illegal practices:

Know how to dispute a debt

If you believe you don’t owe the debt, send the collector a debt dispute letter stating you don’t want to be contacted anymore. Debt collectors are required to give you their mailing address upon request. The dispute letter must include the name of the creditor, a request for verification of the amount believed to be owed and a request to not alert credit reporting agencies until the issue is resolved.

If they’ve already reported it, ask to have the statement removed from your credit report. Otherwise incorrect information could end up on your credit report, possibly ruining your credit. Make a copy of the letter for your own records and send the original by certified mail. Pay for a return receipt to document your letter was delivered.

After the initial contact, debt collectors must send you a written “validation notice” within five days. The letter must include the information requested from your dispute letter. From there, the only time a collector can legally reach out to you is to confirm there will be no further contact, or to inform you the creditor intends to take a specific action, such as filing a lawsuit.

Keep in mind that sending a letter or hiring an attorney, if you can afford to do so, is not a “get out of jail free” card. The goal of your letter is to stop the contact. While the calls may stop, you’re still responsible for paying back any debts you owe. If you don’t pay, a creditor can sue to collect what you owe.

The process to break up with bill collectors isn’t quick; be patient. Credit Union members can get no-cost Financial Counseling. Call or visit your local branch to get help making a plan to pay down debt.

The advice provided is for informational purposes only. Contact your financial advisor for additional guidance.

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