When most people receive their first credit card or installment loan, they never consider the possibility of defaulting. After all, the initial payments are manageable and small enough to afford.
After a few credit increases and multiple impulse purchases, the once manageable monthly payment becomes too big to handle. Instead of saving money for emergencies, every additional dollar is being used to keep from missing payments.
Falling behind on debt payments is a source of extreme stress and anxiety for many people. Past due notices arrive in the mail as constant reminders of indebtedness. Unfamiliar telephone numbers appear on the caller identification system. It’s enough to cause a sane person to go into a mental tailspin.
The first action many debtors take is pressing the panic button. Panic often invokes fear, and fear leads to irrational decision-making such as ignoring telephone calls and not opening the mail.
Although it is tempting to ignore the issue, the debt collection problem will not go away on its own. Fortunately, there are more responsible ways to handle debt collection attempts than ignoring them. Debtors must be armed with the facts and know their rights when they are communicating with debt collectors.
Debtors are legally obligated to satisfy their debt. However, debt collectors may not use illegal tactics in order to collect money that is owed. There are procedural guidelines in the Fair Debt Collections Practices Act (FDCPA) that strictly limit the actions that a debt collector can take when attempting to collect a debt.
Debt collectors may not:
- Misrepresent the amount of debt that is owed by the debtor.
- Charge additional fees that are not outlined in the loan agreement.
- Harass debtors by calling them repeatedly.
- Use abusive or obscene language in an attempt to collect a debt.
- Threaten to cause physical harm if the debt is not paid.
- Inform a third party about the indebtedness without written consent from the debtor.
- Deposit a post-dated check prior to the date that is written on the check.
- Call a debtor’s place of employment when they have been asked to refrain from doing so.
- Make claims that they are lawyers or government authorities in an attempt to collect a debt.
- Contact a debtor after it is stated in writing that the debtor does not want to be contacted regarding the debt.
Debt collectors may:
- Make courteous attempts to collect debts.
- Contact a third party once to locate the debtor if they believe false contact information has been provided.
- Call debtors between 8:00 am and 9:00 pm (EST).
It is important to keep an open line of communication with debt collectors. Many debt collectors will work with debtors to develop a payment plan to satisfy the money that is owed. Once the debt is repaid, the debtor can now focus on saving money for an emergency fund to prevent this type of event from happening again.