Consumers have multiple laws at their disposal regarding their credit reports and debt collection. One of the most important laws regarding collection agencies and the collection of debt is the Fair Debt Collection Practices Act (FDCPA). This law provides behavioral standards for acceptable third-party collections.
According to this law, at all times, debt collection agencies must treat the consumer with courtesy, respect and fairness. The FDCPA prevents bill collectors from using profanity, making threats, falsely inflating the amounts owed, bullying the consumer or engaging in other abusive tactics. Moreover, this consumer protection statute requires collectors to provide full account history and proof of account ownership before being able to collect a debt or even to report information about it to credit bureaus. Unfortunately, there are collectors out there that don’t abide by the rules. So you benefit by knowing your rights.
Why Collectors Exist
When a debt collector contacts a consumer, it usually indicates that the creditor has not received a payment on the debtor’s outstanding bill for multiple months. Because these payments are typically well past their due dates, the creditor has entered into a contract with a third-party debt recovery company or in-house affiliate in an attempt to collect the outstanding balance. To obtain the services of a collection agency, the creditor usually pays the company a percentage of any money collected. Clearly, this payment strategy motivates the bill collector to recover as much money as possible.
Perhaps the worst thing a consumer can do is to ignore a bill collector. The sooner a person addresses a debt problem, the better off they will be. It is important to respond as quickly as possible to a debt collector, especially if you are certain the debt is not yours. Frequently, it is a call from a bill collector that first alerts an individual to the potential of identity theft. Moreover, stalling could mean further unwanted phone calls, lawsuits, judgments and more.
Because most creditors report your credit repayment history, when you stop making payments, that information is also passed along to the credit bureaus which ultimately lower your credit score. Frequently, a single collections account can generate multiple derogatory entries on a consumer’s credit report. Often, both the original creditor and the collection agency make separate entries on a single outstanding account balance. As an added insult to a person’s credit score, the amount owed might be listed in multiple sections of the credit report such as the collections section and in the public records section if a court judgment occurred. These types of repetitive entries from one account can drastically lower a person’s overall credit score.
When dealing with a debt collector, it is highly recommended that a consumer review their credit report on a regular basis. This review can help establish the accuracy of listed information and assist with the credit repair process. If an account is entered on multiple sections of a person’s credit report, investigating, challenging, or disputing the unfair repetitive entries could help resolve the problem and increase a person’s overall credit rating.
Do not allow any bill collector to coerce, intimidate or bully you into immediately paying a bill. Any payment of a debt could be interpreted as legal verification that you are the individual responsible for the outstanding balance. Let the caller know that you cannot pay until you have received written documentation from them that verifies that you owe the amount. Request that they send to you, in writing, the original amount of the debt, the current amount, how the current amount was calculated as well as any fees, as well as proof that their agency now owns the account and is bonded to collect it in your state. More and more, debt collectors have no records to back up their claims, and some are actually filing and winning lawsuits without this documentation. In some instances, consumers endure wage garnishments for debts they do not owe. Consumer credit law firms can often be of great assistance in resolving such unfair treatment.
Lexington Law is a general service consumer advocacy law firm. We have the experience to address multiple aspects of your collections issues. Our Concord level service provides consumers with the most comprehensive credit repair service available. Creditors and debt collectors must comply with several legal requirements in order to report your personal information to the credit bureaus. Our legal interventions are designed to protect your rights in this regard.