How to Avoid the Stress of Debt Collection

At some point in your life, you may experience dealing with a debt collector. That experience may not be a positive one, which gives most collectors a bad reputation. As a consumer, it’s important that you understand how to deal with debt collectors to avoid conflicts.

Here are important things to keep in mind.

How Does Debt Collection Work?

In general, debt collectors are agencies that specialize in recovering owed money that has become delinquent. Companies hire them to collect debts on their behalf.

If you’re unable to settle your debt or fail to make the payment in a certain period, you’re likely to encounter a debt collector. Delinquent bills usually occur when you have overdue payment on credit card balances, auto loan payments, phone bills, and back taxes. The company you owe the money to will report your case to the credit bureau before turning it over to a debt agency.

The reason companies opt for debt collectors is that it’s cheaper to have an agency retrieve debts rather doing it themselves. Debt agencies also have the tools and expertise to easily track down debtors even if you have changed your contact details.

A debt collector doesn’t just rely on your personal and work phone. They can call your family, friends, and neighbor to confirm your contact information without disclosing the reason.

What are Your Rights as a Consumer with Debt?

Man under numerous debtsDebt collection laws may vary depending on where you live. Working with a debt collection attorney in Salt Lake City would help you learn about your rights and obligations. The Law Office of Davis & Jones, P.C., for example, can assist you in making the debt collection process smooth based on the state’s regulations.

At the federal level, the Fair Debt Collection Practices Act (FDCPA) can give you protection during the process. This act allows you to request for a written notice that explains the debt, which helps you identify if it is legitimate. The notice should contain the following information:

  • The amount of debt
  • The name of the creditor
  • A statement that unless you dispute the legitimacy of the debt within 30 days after receipt of the notice, the debt collector can assume it to be valid.
  • A statement that if you inform the debt collector in writing that the debt is disputed within the 30-day period, the debt collector will acquire verification of the debt or a copy of a judgment against you. The debt collector shall deliver a copy of such verification or judgment to you.
  • A statement that, upon your written request within the 30-day period, the debt collector will give you the name and address of the original creditor, in case it’s different from the current creditor.

Additionally, a debt collector should not harass you to obtain the money you owe. The collector must only call you between eight o’clock in the morning and nine in the evening. They are also not allowed to threaten you with arrest, body harm, and public shaming, among others.

The collector can only discuss your debt to you, your attorney, and your family.

How Does Debt Collection Affect Your Credit Score?

Having delinquent debts can negatively impact your credit report, regardless of its status. When you have a collection on your report, your credit score will drop. This may affect your ability to get a loan or use credit cards in the future. A collection account may stay on your report for up to seven years.

As a debtor, it’s important to settle your payments. It may be difficult to pay off your debts in full, but you can negotiate with your creditor for an alternative solution. Once you have paid all your debts, focus on building a positive credit report to prevent this situation from happening again.