Four Important Things Debt Collectors DON’T Want You To Know
The U.S. Consumer Financial Protection Bureau (CFPB) is responsible for handling consumer complaints about debt collectors. In April and May 2020, the early months of the COVID-19 pandemic, the CFPB reported that they received the highest amount of complaints in history, at 36,700 and 42,500 respectively. Despite temporary protections that the U.S. government established to alleviate financial stress on consumers during the coronavirus pandemic, debt collectors continued their crusade to collect payments.
Despite laws that have been passed to protect consumers over the years, debt collectors continue to act in ways that violate consumer’s rights. They will do just about anything to intimidate consumers to pay bills, whether or not they owe them. Here are four important things debt collectors do not want you to know.
There Are Laws That Protect You From Certain Collection Behaviors.
The CFPB receives complaints all of the time about debt collectors who violate the laws. Of course, debt collectors would prefer to deal with consumers who are unaware of the laws that have been enacted to protect them. That way, they can use all of their intimidation tactics to force the consumer to the pay bill, even if they are not responsible for the debt.
The Fair Debt Collection Practices Act (FDCPA) was enacted in March 1978 to eliminate unfair, deceptive, and abusive debt collection practices. In 1991, Congress passed the Telephone Consumer Protection Act (TCPA) in response to consumer complaints. The TCPA stipulates how debt collectors are allowed to conduct their telephone, fax, and text message solicitations with consumers. Know your rights and be ready to file a complaint against the debt collector if they violate any laws.
There Are Statutes of Limitations.
Debt collectors are known to threaten legal action or sue consumers, even when the statute of limitations on the debt has run out. You should know that, in most cases, a debt collector must file a collection lawsuit within four years from a) the last payment on the account or b) the date of default. However, this does not stop creditors or agencies that buy unpaid debts from filing suit after the statute has run out.
Unfortunately, most people will lose the case in court because they do not show up to fight the lawsuit. You have the right to raise a defense pertaining to the statute of limitations. It would be helpful to hire a lawyer to help you file the appropriate paperwork on time and defend your case against the debt collector, although you can fight the creditor on your own if you so choose.
Settling a Debt Will Bruise Your Credit Score (Temporarily).
You have a very old debt and it is fairly large. The collection agency sends you a proposal to pay off the debt at only 40% of the original amount. (Some collection agencies will offer payment plans that lower the amount of the debt, as well.) Since this sounds like a great way to get rid of the debt, you are tempted to pay it. Before you settle the debt, however, you need to understand that settling debts bruises your credit score - at first.
Sure, your credit will eventually heal after some time and continuous on-time payments of your other financial obligations. But, at first, your credit will be negatively affected. The credit agencies reflect this on your credit report as a partial settlement. It is better to settle an account for less than to not pay it all.
Note: If you do decide to settle an old debt, you should have an attorney negotiate for you. No
t only can an attorney attempt to get the best settlement offer possible, but they can also negotiate the account to be marked as “paid in full” on your credit report.
You Have Rights.
If a creditor or debt collector violates your rights, did you know that you can file a counterclaim for damages? Any violations can also be used to negotiate the amount of the debt or ultimately have the case against you dismissed. Your ace in the hole will be documentation of incidents when the debt collector violates the law with unethical practices or harassment. So, document, document, document!
If debt collectors are harassing you or you are facing a debt lawsuit, you should contact an experienced attorney immediately. If you feel like you have hit a brick wall of debt and creditors are contacting you from every direction, you might want to consider filing bankruptcy. A reputable and experienced attorney can take a look at your financial circumstances and give you advice on your first step to freeing yourself from the never-ending collection phone calls and threats.
Are You Considering Filing For Bankruptcy?
If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy attorney as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.