Know how to put a debt collections company in its place.
Money Girl
314 MG The Law About Debt Collections Harassment
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I received a question from Janice who asks, "I've had a credit card for years that I always pay on time, but I keep receiving collections letters and phone calls saying that I owe a large debt on the account. How can I stop this harassment when I don't owe a dime?" It's never fun being hounded by a debt collector. In this episode, I'll tell you the best ways to deal with a collector no matter if it's a mistake or you have a financial hardship. Knowing your rights is the best way to prevent debt collections harassment. Many people don't realize that there are federal and state laws that debt collectors, such as collections agencies and attorneys, have to follow. The main federal law for personal debt is called the Fair Debt Collections Practices Act, or FDCPA. It prohibits debt collectors from harassing you even when you owe money. A legal harassment includes the following, threatening harm or violence, calling you repeatedly, using obscene or profane language, misrepresenting personal or company identity, saying or doing anything deceptive or misleading, and threatening to contact your employer about a debt. Debt collectors also can't contact you at unusual times or places. For instance, they can't call you before eight o'clock in the morning or after nine o'clock at night, nor can they call you at work if they've been informed that you're not allowed to take calls there. Here are five additional debt collections rights that everyone should know about. Write number one. You can tell a collector not to contact you. If you request in writing that a debt collector stop contacting you well, then they must heed your request. However, simply telling a collector to back off doesn't prevent them from reporting a delinquency to the credit bureaus or filing a lawsuit against you. No matter what, a collector is allowed to contact you to send verification of your debt or to inform you about any specific legal action that they intend to take against you. Write number two. You can dispute a debt. If you don't believe that you owe all or part of a debt, you can dispute it. However, you've got to put a dispute in writing within 30 days of receiving a collections notice. Send a certified letter to the collector requesting more information and a formal verification of the debt. When you do this, the collector can't contact you until they provide this information at writing. Write number three. Collectors can't tell others about your debt. A debt collector generally isn't allowed to discuss your debt with anyone else, except your spouse or attorney. And if you have an attorney, a collector must contact him or her about your debt, not you. A collector can only contact other people to find out general information about you, like your phone number or address. 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Go to policygenius.com or click the link in the description to get your free life insurance quotes and see how much you can save. That's policygenius.com. Get more out of your vacation with Norwegian Cruise Line, where you have more to see, more to do, and more to enjoy. Book today and get up to $1,000 off all cruises, plus unlimited open bar and more with Norwegians all new, more at C package. Visit ncl.com, call your travel advisor, or 1-888-NCL Cruise. Offer end soon. Norwegian Cruise Line shifts registry to Bahamas and USA. Restrictions apply. I love learning, and anything that makes learning easier. If your parent and your child need some homework help, then Ixcel is a right for your family. Ixcel is an online learning program for kids covering math, language arts, science, and social studies. Ixcel has interactive practice problems for topics from pre-K to 12th grade, and everything is organized by grade and subject. As kids practice, they get positive feedback, awards, and explanations for wrong answers. Ixcel figures out what your kids need more help with, and recommends more topics to practice. Their videos, lessons, sample problems, and learning games, too. One subscription to Ixcel gets you all subjects and all grade levels. Membership started just $9.95 a month. It's no wonder Ixcel is used in 95 of the top 100 school districts. I think the positive feedback that Ixcel gives is really crucial when it comes to learning. So make an impact on your child's learning. Get Ixcel now, and money girl listeners can get an exclusive 20% off Ixcel membership when they sign up today at ixl.com/moneygirl. Visit ixl.com/moneygirl to get the most effective learning program out there at the best price. Write #4. You control which debt a collector pays. If you owe more than one debt, a collector must apply your payments to the debt you choose. In other words, a collector can't use your money to pay a debt that you don't believe you owe. Write #5. A collector can't inflate what you owe. Debt collectors are prohibited from piling on additional interest, fees, or other charges to the amount you owe. However, if you signed a contract that permits additional charges, well, then they're allowed. So be sure to do the math and verify amounts that a collector is trying to get from you before you send any payments. But what if you're like Janice and don't owe money that a collector is pestering you for? Well, it could simply be an accounting error on your account. This has happened to me more than once. Or it could be a sign that you've become the victim of identity theft. A criminal may have used your personal information to open up an account or rack up credit card charges that you don't know about. Visit annualcreditreport.com, where you can view or download your credit report history for free every 12 months. Go over your report carefully to make sure that the ballot shown on each account is correct and look for unfamiliar accounts that you didn't open. If you have been the victim of fraud, immediately place a security freeze on your credit file. This will prevent new credit accounts from being approved in your name without your consent. Then contact the creditor or collections agency and explain the situation. When you begin communicating with a debt collector, keep good records, like the date, time, note to the conversation, and anything else you believe may be considered a legal harassment. This documentation will help you if you can't resolve a dispute or end up going to court. If a collector sues you, don't ignore them, even if you know it's a mistake. You must respond personally or through an attorney by the date on the lawsuit paperwork in order to preserve your rights. Likewise, if you've been harassed by a debt collector, you can sue them in state or federal court within one year. If you win the case, the collector may have to pay you for damages and court costs. Even if you don't sue a collector, be sure to report any illegal harassment to the Federal Trade Commission at ftc.gov and to your state attorney general's office at nag.org. That's the best way to put a creditor who's breaking the law in their place. For more money tips and advice, be sure to follow me on Facebook, Twitter, or Google Plus. Also, sign up for the free Money Girl newsletter. You'll find links to everything I've mentioned and a transcript of this show on the MoneyGirl page at quickanddirtytips.com. Just look for episode number 314 called "The Law About Debt Collections Harassment." I'm really glad you're listening to Ching. That's all for now. Courtesy of Money Girl, your guide to a richer life. Betterment LLC is an SEC-registered investment advisor. Brokerage services are offered by Betterment Securities, an SEC-registered broker dealer and member FINRA SIPC. 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