You are responsible for your debts. If you fall behind in paying your creditors, or if an error is made on your account, you may be contacted by a debt collector.
A debt collector is any person, other than the creditor, who regularly collects debts owed to others, including lawyers who collect debts on a regular basis. You have the right to be treated fairly by debt collectors.
The Fair Debt Collection Practices Act (FDCPA) applies to personal, family, and household debts. This includes money you owe for the purchase of a car, for medical care, or for charge accounts. The FDCPA prohibits debt collectors from engaging in unfair, deceptive, or abusive practices while collecting these debts. Under the Fair Debt Collection Practices Act:
- Debt collectors may contact you only between 8 a.m. and 9 p.m.
- Debt collectors may not contact you at work if they know your employer disapproves.
- Debt collectors may not harass, oppress, or abuse you.
- Debt collectors may not lie when collecting debts, such as falsely implying that you have committed a crime.
- Debt collectors must identify themselves to you on the phone.
- Debt collectors must stop contacting you if you ask them to do so in writing.
For complete details, see Fair Debt Collection
Solving Your Credit Problems
If you are having problems paying your bills, contact your creditors immediately. Try to work out a modified payment plan with them that reduces your payments to a more manageable level. Don't wait until your account has been turned over to a debt collector.
Be skeptical of businesses that offer instant solutions to credit problems: There aren't any.
Resolving credit problems can take time and patience.
If you're not disciplined enough to create a workable budget and stick to it, work out a repayment plan with your creditors, or keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But not all are reputable. For example, just because an organization says it's "nonprofit," there's no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, or hide their fees by pressuring consumers to make "voluntary" contributions that only cause more debt.
Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.
Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.
When your financial situation prohibits you from meeting the payment demands of debt collectors, consider offering them a payment agreement that meets your needs not theirs. Use the letter below to write your own debt payment agreement letter. With all letters of communications to collection agencies, send them certified mail WITH return signature receipt so you will have a record mailed back to you with their signature as proof they did receive it.
Your Name
Your Address
Your City, State Zip Code
Today's Date
The F'd Up Collection Agency
666 Demon Street
Hells Bells NY 66666
RE: Account #
To Whom It May Concern:
According to my records and your {phone call or letter} the balance of this debt is $_____. I am not disputing this debt however; my current financial situation prohibits me from paying the amount you're demanding. I am able to make payments on this account every {insert date of month} to your company in the amount of $ _________.
I would appreciate a call from you confirming your acceptance of my payment terms. However, if I do not hear from you, I will consider your cashing or depositing my check as confirmation that you accept my payment terms. If you do not accept my terms then I expect the enclosed payment to be returned to me immediately in the enclosed self-addressed stamped envelop.
As a show of good faith I've enclosed my first payment in the amount of $________. If my financial situation improves enough for me to increase my payment amount I will contact you immediately. Thank you for understanding.
YOUR NAME HERE
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If you owe the debt and want to make payments but just can't afford the amount the collector is demanding. You may want to consider settling a debt with a creditor or collector and maintain a record of your actions. By "settle" you wish to pay less than the balance owed on a debt. Settling a debt is often used to reach a compromise with creditors or collectors over a particular debt in order to avoid or end in court.
The actual settlement is what both parties have agreed to accept as payment. Use the free sample letter below to draft your own debt settlement offer.
Your Name
Your Address
Your City, State Zip Code
Today's Date
The F'd Up Collection Agency
666 Demon Street
Hells Bells NY 66666
RE: Account #
To Whom It May Concern:
I do not agree that I owe as much as you claim I owe on the above referenced account. In an effort to save both of us a great deal of time and expense I am offering to settle this account for $ _______.
If you accept my offer, please send written confirmation to my address listed above. Once I receive your written confirmation, I will mail payment to your organization within five business days. If you wish to discuss this settlement offer, I can be reached at (insert daytime phone number with area code). However, please understand that I will not make any payment until receiving written confirmation that you accept my offer.
YOUR NAME HERE
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