How to handle a debt collector FDCPA

How to handle a debt collector FDCPA

I got a call yesterday from a client who was dealing with a debt collector. She was surprised when I told her that paying a debt collection company would hurt her credit.  Using a debt settlement company would be worse than filing bankruptcy.  The FDCPA (Fair Debt Collection Practices Act) protects you from abusive consumer debt practices. She was paying the debt collector because it was “the honest thing to do.”   But she didn’t know if a debt was sent to a collection company that she was only hurting herself by paying the bill.   Here is why:

First paying a collection often just costs you money.  

Pay a 1,000 dollar debt, and 1,000 dollars is gone. I know it sounds obvious but think about it. If you simply invest 2,000 dollars when you are 16 and another 2000 when you are 17 into a money market at 16%, you will have over 1 million dollars to retire on at age 65. What did paying the debt give to her? Nothing. Normally it only encourages abusive debt collection or encourages other debt collectors. If you paid them because of threats or abuse, you just rewarded and encouraged more abusive behavior.

Second paying a debt collector normally just hurts your FICO score it doesn’t help.  

When the collection company reports an effort to collect it damages your credit. If you respond to the collection company, they report it. If you make a payment or talk to them, they report another contact, and it starts all over. Any payment or admission increases the time they have under the statute of limitations. If there are no contacts with you and the account ages the information and damage to your credit dies over time.   Make an effort to repay it two years after it is charged off and you damaged your credit all over again. Old information has little or not relevance or impact to your credit score.

Third, there is no benefit in talking to the collector 

.A collection company rarely sues. All they ever tend to do is to file an initial claim that you didn’t pay the debt. They don’t follow up unless you pay or respond to their collection attempts. When you do answer the phone, they record your admission that you owe the debt and if they sue they will use it against you later.   They also gather information on where you bank, work and what assets you have. If you talk to them, you should state you don’t owe the debt and insist communications stop.   You may have had service with Sprint, but the debt they are collecting on maybe for a different person.

They will often claim they will sue or use the terms that they will recommend legal action. However the cost of suing is so high, suing is rarely an option for them. The threat of suing is the only method they have to force payment.   Reporting the debt, it is often the limit of their ability to harm you other than making repeated calls. Call blocking is a wonderful telephone option.

FDCPA Fair Debt Collections Practices Act

The FDCPA restricts debt collectors from using abusive tactics and making untrue statements to consumers. The FDCPA does not protest you if the person attempting to collect is collecting their debt, or the debt is not a consumer debt.   If you purchased telephone book advertising for your business, the FDCPA does not stop a debt collector from lying or using abusive tactics. The same is true if the advertising company it’s own employees to collect the debt.

Only consumers are protected by the FDCPA., And consumers are only protected when a 3rd party is attempting to collect the debt.   Normally you can record these calls. When a creditor violates a rule like trying to collect a debt that is being discharged in bankruptcy you can sue under the FDCPA. Talking to or paying a debt collector is rarely in your best interest. A cease and desist letter will stop any further communications but so will bankruptcy if the conduct is bad. If you choose bankruptcy and they contact you for payment after the case is filed it is possible to sue the creditor for damages including all of your court costs and attorney fees.

Violations of the FDCPA include:

  1. Threats of arrest lawsuit garnishments
  2. Abusive or foul language
  3. Calls at work after a request to stop or calling before 8 am or after 9 pm
  4. Repeatedly contacting friends, family coworkers or employers
  5. Making false statements or misrepresentations
  6. Contacting you after giving them notice you have an attorney
  7. Extreme repeated phone calls

This is not a complete list. There is an unlimited number of ways for a debt collector to be abusive. If you are having a problem call us. We can cure this.