Here’s How To Defend Against Debt Collectors

August 26, 2013
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The Consumer Financial Protection Bureau recently sounded the alarm on unlawful debt collection practices and now allows consumers to file complaints against collectors that don’t follow the rules.

Here’s what you need to know when it comes to debt collectors who just won’t leave you alone:

1. Debt in collection is an epidemic

While banks and credit card companies collect debt, sometimes they hire third-party debt collectors to help. With thousands of debt collection firms nationwide, most follow the rules, but there are always bad apples. As of 2012, some 30 million Americans had an average of $1,400 of debt in collection, according to the CFPB.

2. Here’s when you should report a debt collector

The Consumer Financial Protection Bureau says these debt collection practices may be illegal:

– false threats of lawsuits, arrests, prosecution or jail time if consumers fail to pay debt.

– misrepresenting the amount of debt owed

– disclosing debt to a consumer’s employer, family or friends

– claiming debt will be waived if consumers accept their “settlement offer” (even though the collector doesn’t waive debt)

3. Don’t trust a debt collector’s advice

Debt collectors typically advise consumers that upon paying off debt, their credit score will dramatically improve. This can be misleading because if the debt collectors fail to notify the credit reporting bureaus that a payment was made, your credit score isn’t going anywhere. Plus, the debt they’re trying to collect may be so old, that it wouldn’t even be included in the credit score formula.

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4. How to fight back

The CFPB has posted five sample template letters on its website that include detailed scripts that consumers can customize and send to debt collectors to stop the harassment. These letters are for when: the consumer wants more information about the debt they owe; if they’ve hired an attorney and no longer want to be personally contacted; if the consumer wants to limit how a collector contacts them; if the consumer wants to dispute the debt; a sample letter that asks the collector to stop all forms of communication with the consumer.

5. Filing a complaint with the CFPB

While the CFPB has accepted complaints on mortgages, credit cards and private student loans, the Bureau now allows consumers to file debt collection complaints. Consumers can fill out the form online or call its toll-free number. Companies are expected to respond to consumers within 15 days. Filing a complaint won’t get lost in the bureaucracy of the government and will be taken seriously. In fact, these complaints are even reported to Congress to help shape future legislation and regulations.

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Tags: Collection agency, consumer, credit card, Debt

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