Dealing with debt collectors: Mistake Number One

Getting a call from a debt collection agency is bad enough when you really have fallen into debt. It’s worse when you’ve paid all your bills on time and the whole mess is a big misunderstanding.

If the latter is your situation, you’ve got two delicate tasks ahead of you: (1) communicate with someone who’s not a particularly enjoyable individual and (2) dispute the debt in a way that prompts a review and, ideally, a removal of the alleged debt from your record. This calls for superb diplomacy and a calm demeanor. Mistake Number One: losing your cool. Treat the debt collector as you would like to be treated.

Video:

Your rights regarding debt collection

Under the federal Fair Debt Collection Practices Act (FDCPA), you are granted certain rights when dealing with collection agencies. The act was written because consumers complained about abusive treatment they had received. As mandated by the FDCPA, within five days of its first contact with you, the debt collection agency must send you a written notice that tells you

• How much money you reportedly owe.
• That if you dispute the debt within 30 days, the debt collector will obtain verification of the debt and mail it to you.
• That upon receipt of your written dispute the debt collector will provide you with the name and address of the original creditor.

Also, the agency must stop contacting you if you send this letter disputing the debt.

What debt collectors cannot do

Among other restrictions, the FDCPA prohibits debt collectors from:

• Using a false threat to try to intimidate you into paying.
• Calling you at unreasonable times.
• Placing telephone calls to you at an inconvenient place, such as work.
• Using obscenity, racial slurs or insults.
• Falsely claiming to have started a lawsuit against you
• Threatening to have you arrested if you do not pay the debt.

Video:

Mistake Number Two: Talking on the phone

From the sound of that, you probably have a good idea of the type of person you’ll be dealing with. Mistake Number Two: Talking to him or her on the phone. The best of all possible ways to communicate with a debt collector is by mail. Write a letter. Ask the debt collection agency:

• Why it believes you owe the money.
• How it calculated the amount of the alleged debt.
• To send you copies of contracts or documents to support its allegations.

Request that the debt collector

• Contact all credit agencies it has informed of this alleged debt and tell them that you are disputing it.
• Forward a copy of your letter to the creditor who alleges that you owe the debt and inform them that you are disputing it.
• Cease all contact with you about the alleged debt. Any future communication should be in writing and be sent to your home address.

Mistake Number Three: Posing a threat

Don’t make any future negotiations more difficult than they need be. Mistake Number Three: Threatening bankruptcy. Don't even hint that you will file for bankruptcy if the disputed debt is not erased from your record. That could be enough to send the debt collector over the edge and into action that both of you will later regret.

Following through with the credit reporting agencies

If you send a credit report dispute to the debt collector, the debt collector must report that the debt is "disputed" when reporting your status to the three nationwide consumer reporting companies. That won’t have an immediate effect one way or the other on your credit report or score, but it will put you on record as having protested the alleged debt. If you are successful in having the erroneous debt erased, be sure to contact the consumer reporting companies – Equifax, Experian, TransUnion -- and tell them so.

How did this all begin?

Where did this alleged debt come from? Human error could be the cause. Far more harmful is identity theft. That’s when someone commits fraud by illegally using your name, Social Security number or credit card number. Identity thieves can open a credit card account in your name. Their unpaid bills are noted on your credit report. How would you know, and later prove, that you were a victim of an identity thief?

• Was your wallet stolen or lost?
• Did you respond to a phishing email?
• Did a company experience a data breach and lose some of your information?

You can repair damage done to your credit report if identity theft is the cause. For more information, read the Federal Trade Commission’s consumer alert, “What To Do If Your Personal Information Has Been Compromised.”

Getting professional help

Maybe you’re not the greatest letter writer. Maybe you have trouble keeping your temper when talking to people you don’t like. Maybe all of this is out of your comfort range. Attorneys and financial advisors specializing in consumer debt resolution can offer suggestions for further action. Here are a few:

American Consumer Credit Counseling
Auburndale, Mass.

Apex Debt Solutions
Lake Forest, Calif.

Bills.com, LLC
San Mateo, Calif.

Consumer Debt Intervention
Payson, Ariz.

Consumer Debt Resolution Consult
Aventura, Fla.

Consumer Debt Resolution Consultants
Miami, Fla.

Freedom Debt Relief, LLC
San Mateo, Calif.

Johnson Law Group
Las Vegas, Nev.

Legal Debt Dispute
Miami, Fla.

Leslie H. Tayne
Melville, N.Y.

Money Management International
Houston, Texas

Persels & Associates, LLC
Towson, Md.

Proficient Consumer Debt Resolution
Houston, Texas

Responsible Debt Relief
Honeoye Falls, N.Y.

Shewry & Van Dyke, LLP
San Diego, Calif.