By Andrew Housser
Credit cards and other debt have become a fact of life for most people. It is true that credit cards or loans can be a useful way for people to pay for things they need, when they need them. Unfortunately, it's also true that the freedom of credit can cause problems for many people. Sometimes, unforeseen circumstances arise that make it difficult or impossible for people to keep up with their bills.
Getting too deep into credit card bills creates problems on several levels. Dealing with collection agencies -- to which most credit card lenders send unpaid debts -- can be one of the most difficult. Collection agencies can be very aggressive in their collection efforts. Their calls can be stressful, embarrassing and even frightening.
The good news is that the government has established rules that govern how collection agencies can contact you. For example, at the federal level, there is the Fair Debt Collection Practices Act (FDCPA). If debt collectors are calling you, take the time to familiarize yourself with these regulations.
1) You have rights when it comes to debt collection.
It is true that companies can pursue consumers to collect on unpaid debts. But laws protect consumers from being unreasonably harassed. Some of the most important points to know: Debt collectors cannot harass or threaten you, make false statements, invade your privacy or lie.
2) The FDCPA applies to most personal debts.
The Act covers debts you incur for personal reasons. These include credit card bills, mortgages, medical bills and loans. It does not cover business debts.
3) You can request not to be called at work, or at certain hours.
Collectors cannot contact you at work if you ask them (in writing or on the phone) not to call you there. They also cannot call you before 8 a.m. or after 9 p.m. unless you give them permission.
4) Collectors must prove you owe the debt.
Within five days of first contacting you, the FDCPA requires debt collectors to send you a written validation notice of the debt. This notice will tell you how much you owe, and must include the name of the creditor. Read all of these letters. Sometimes the debt may be something you have already paid, or it may even belong to a person with a name similar to yours.
5) Ask for verification of a debt you are unsure of.
If a collector asks you to pay a debt you do not owe, you can dispute the debt in writing. You must write to the collector to request verification within 30 days of when you are first informed of the debt. Sending your request by certified mail is wise.
6) Keep good records.
Keep copies of all correspondence related to collections. Never pay a debt until you receive written notice of the amount due, as required by the FDCPA. Keep records of everything you pay.
7) You may take time to collect your thoughts.
Debt collectors may not force you to respond immediately. If a collector catches you off guard, ask him or her to call back in an hour so you can plan. You also can write to formally request they cease and desist from contacting you. Do be aware, though, that this does NOT eliminate your debt. The collector still can escalate collections by sending the debt to a law firm.
8) You should understand your options for help.
If you are receiving calls from a debt collector, chances are you have serious debt you cannot afford to pay. Make sure to take action and understand your options, which may include debt consolidation, credit counseling or credit advocacy, also known as debt resolution.
No one wants to deal with debt collectors, but if you find yourself in this situation, know that you have the right to fair treatment as you work to clear your debts. By being aware of your rights, you can take steps to confirm the amount of your debts, make sure you are paying only your own debts, and protect yourself from harassing or threatening behavior. Then, with diligence and hard work, you can work your way out of debt and back to a healthy financial status.
Collectors cannot contact you at work if you ask them (in writing or on the phone) not to call you there. (©Christopher Robbins/Digital Vision/Thinkstock)
Andrew Housser is a co-founder and CEO of Bills.com, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC and its wholly owned subsidiary, Freedom Debt Relief, a national consumer debt resolution firm that has served nearly 100,000 clients and manages more than $1 billion in consumer debt. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.
