Know your rights: 3 strategies for dealing with debt collectors

At TPG, we advocate Smart credit card spendingIncludes full payment to avoid interest on your balance.

But it’s not always easy, and we understand why people may continually miss credit card payments.

If you find yourself in financial difficulty, know that you are not alone and that predatory practices used to collect payments are illegal.

According to a recent survey by Bankrate50% of American adults say they carry credit card balances from month to month.

Late or missed bill payments can start the process credit card overdue – and over time, can eventually lead to having to deal with debt collectors.

If you find yourself in this precarious position, here are three things you need to know.

What is a debt collector?

Debt collectors are agencies, buyers and attorneys who regularly collect debt from individuals. Specialized companies also buy overdue debts from creditors and try to collect them.

According to the Consumer Financial Protection Bureau, the agency responsible for handling complaints from financial consumers, debt collectors often use questionable — and sometimes even illegal — tactics. According to the 2023 reportThe CFPB handled more than 110,000 debt collection complaints in 2023.

So debt collection is one of the most common and notorious topics of consumer pushback about financial products or services that the CFPB sees.

Why might you have to deal with debt collectors?

There are a number of reasons why you may have to deal with a debt collector. The first cause is one credit card issuer (or another creditor) may use its own in-house debt collectors or hire an outside agency to collect the delinquent debt you owe.

Debts sent to collections may include things like:

• Credit card balance
• Car loan
• Medical and hospital bills
• Student loans
• Mortgage payments

The second scenario is when a collection agency purchases the delinquent debt from the creditor at a discount. If that company can receive full payment from you, they can make a profit.

Clearly, especially in the latter case, these debt collectors have a financial incentive to pursue payment – and so they sometimes act in discriminatory or problematic ways.

Tips on how to deal with debt collectors

Know your rights as an individual

If you owe money, you must pay it. However, you don’t have to put up with threatening behavior. In 1977, Congress passed it Fair Debt Collection Practices Act to help you know when a debt collector has crossed the line.

These debt collectors may not harass, lie, or manipulate you in any way to settle the debt. the Federal Trade Commission has a complete list of what debt collectors can and cannot do when collecting debt. The bottom line is that abusive, unfair or deceptive tactics are prohibited.

Also, know that you can report any problems you have with debt collectors to your state attorney general’s office, which FTC and CFPB.

Stay organized and get everything in writing

You should know exactly what you owe and have that information clear from the start from the creditor, not the debt collector.

Don’t do anything when you get the first call from a debt collector. The collector must also send you a written “confirmation notice” within five days of first contacting you. The notice must say how much money you owe, the name of the creditor you owe, and what to do if you don’t think it’s yours.

If you believe you do not owe any money, you should send the debt collector a letter requesting verification of the debt. If you send that letter within 30 days of receiving the confirmation notice, the debt collector must send you written verification of the debt – for example, a copy of the bill you allegedly owe – before when they can start trying to collect the debt again.

Consider other options for debt repayment

If possible, try to make one agreement with creditors before the invoice is sent to the collection department.

Another option if you’re having trouble collecting debt is to seek out a nonprofit credit counseling agency. The United States Department of Justice has compiled a list of approved credit consulting organizations. An agency may be able to help work something out with your creditors regarding a repayment plan. If you’re having trouble repaying your debt or if debt collectors are hounding you, you can try requesting a free consultation with a bankruptcy attorney.

Even if you decide not to file for bankruptcy, an attorney can tell you what creditors are allowed to do in your situation and what they can and cannot collect.

Bottom line

In an ideal world, by making all your monthly payments, you will never have to come into contact with debt collectors. However, if it’s too late to do that, it’s important to know your rights and how to spot predatory behavior.

Hopefully, with these tips, you can pay off all the money you owe – or at least, have a better understanding of how to deal with debt collectors.

If you’re finally ready to sign up for financial products again, take a look The card has the best security And Best beginner cards. In short, effective credit card management can help you Establish better credit score, protect you from fraud and provide it to you chance to earn valuable rewards.

Related reading: