When you owe money for an account or loan and fail to make the payments you put your credit rating at risk. When you fail to make payments for a prolonged period a debt collection agency is likely to start calling your phone. Consumers have rights in this country even when in financial default. Most people in the U.S. are unaware of those rights, however, and allow a collection company to intimidate them into making rash decisions.
Paying off collections needs to be handled intelligently to avoid making your situation inadvertently worse. A debt collection attorney can help you know your rights and make smart financial decisions going forward. Read everything you need to know about debt collection now.
Debt Collection 101
The fundamental concept of debt collection is familiar to most U.S. consumers but details about how the process truly works are not commonly understood. What is debt collection? Simply put, debt collection is the process of obtaining payments owed on a debt. A debt collector is employed only when a financial obligation is defaulted on by a consumer.
Defaulting on a bill, loan, revolving credit account or other financial obligation is not an instant process. It is often also not intentional or premeditated in nature.
When you pay your electric or phone bill you try to pay it on time each month. Sometimes you pay it early and other times slightly late. Paying late on a bill might result in a late fee on your account but it does not constitute a default. Defaulting on a bill essentially means one of two things. The first involves discontinuing payment on the debt altogether.
The second involves paying late so many consecutive times the fees and extra interest accrued on the account become unaffordable. When either of these scenarios happen the issuer of the loan or account uses whatever legal methods possible to retrieve their money.
This retrieval process usually starts with hiring a debt collection agency for personal debt recovery.
People default on debts for a wide and unfortunate variety of reasons. Financial hardship is of course the umbrella under which most other reasons fall, but how do people get to a place of financial hardship? Numerous situations of an escalating nature must occur to reach a place in life where one begins to default on debts.
It is also possible for one major specific situation to create hardship. For example, a car accident results in an injury, which leads to a physical disability and loss of work. For another example, a person takes on several debts but miscalculates their affordability. The snowballing late payments and interest rates makes paying the bill impossible, and eventually the account is sent to a collection agency.
What Rights Do Indebted Individuals Have?
Just because you are indebted does not mean you sacrifice all your rights as a consumer. A personal debt collection agency has legal limitations to the methods they are permitted to employ when attempting to collect on a debt.
Knowing these limitations (but also what credit collection services can do) helps you protect yourself and family from unethical and illegal harassment tactics.
A debt collection company and its representatives are prevented by law from contacting you at unusual and inappropriate times and places. A debt collector may not contact you before 8 a.m. or after 9 p.m. in whatever time zone you live.
Debt collectors are forbidden from using harassment tactics as well. This includes any member of your household or immediate family and circle of friends. If you choose to hire a debt collection attorney and a debt collector is aware of this, the agent must cease all direct contact with you immediately. For this to apply the debt collection service or its agent must be officially informed about your attorney and have access to his or her contact information.
You have the legal right to tell the debt collector to stop contacting you. You have the right to negotiate payment or settlement plans to get the debt completely dismissed.
You also have the right to communicate with a debt collector in writing to state:
• You do not owe the debt.
• You request more information about the debt.
• You request a cease-and-desist for all further contact.
• Contacting you is only permissible if done through your debt collection attorney.
• A list of alternate ways you agree to be contacted.
Sample letters are available for download from the Consumer Financial Protection Bureau website. You have the right to request proof of identification if a personal debt collection agency sends an agent to see you personally. You have the right to not open your door and order them to leave your property. You also have the right to report the debt collector to the government. You even have the right to ignore the debt and never pay it, but that is likely not in your best long-term interest. Finally, when you are confused or stressed but desire to pay your debt, you have the right to hire a debt collection attorney to represent your case.
Debt Collection Lawyer – What You Need to Know
Paying off collections is tricky business. The primary purpose of most credit collection services is to recuperate all money owed on outstanding or defaulted debt. Debt collection agents make offers to trick you into committing to certain payment plans and accepting higher balances than you can afford.
A debt collection attorney helps navigate these nuances and avoid becoming manipulated into paying more than you owe. Debt collection help from a qualified lawyer also gives you more negotiating power. A debt collection service agent is trained to use and take advantage of consumers’ general lack of knowledge pursuant to finance law.
This is not possible to do when you are represented by an attorney.
Many outstanding debts accrue massive late fees, excessive interest, and other penalties. Companies keep your account active if possible before charging it off.
The longer it accrues interest and fees the more they have negotiating power and a chance to get the actual balance they are entitled to recuperated.
Other reliable debt collection attorneys and additional debt relief resources can oftentimes be found in places like:
• Government-approved credit counseling services.
• DebtReduction Services.
• National Foundation for Credit Counseling (NFCC).
You need a debt collection attorney to eliminate the excess interest and fees and negotiate settlements or payment plans based on what you really owe – not inflated figures beneficial only to your debtor.