How to Effectively Deal with Creditors
A big problem when talking with creditors is keeping your emotions in check while speaking with them. It's very easy to get angry and frustrated with these people-- after all, they're the #1 most complained about industry on the FTC's website year after year, and things appear to be getting worse year after year.
What's the worst a debt collector can actually do to me?
Simply put, they can do little else other than call for payment. If the creditor has not taken your house, car, or other property as collateral for a loan, then there are only three things which they can legally do:
- Report a default to a credit bureau.
- Terminate business with you.
- Sue you in court; however most of the times threats to sue you in court are not pursued.
How can I stop them from harassing me?
Federal law, along with many state level laws prevent the harassment from collection agencies. Below are a few things you, as the consumer, can do:
- Cease Letter
Writing a cease letter is the simplest thing a consumer can do to end harassment. Depending on whether the collector is a creditor or a collections agency, your rights vary. It is Federal Law for that collection agencies stop harassment after a cease letter is given. This law does not apply to creditors who are attempting to collect their own debts, but it may still be worth sending creditors this letter as they will also likely end harassment after the letter is received. It is not totally uncommon for debt collectors to continue to harass even after a cease letter is sent out. It's in your best interest to keep keep a careful record of all phone calls and letters received after sending the letter, in case the consumer decides to sue.
Sample Cease letters can be found here and here.
- Lawyer's Letter
A Lawyer's letter is usually the second poitn of action which is taken after sending a cease letter and nothing is done. The lawyer may also make note in his letter the legal violations of federal law which the debt collection agency has committed.
- Negotiation
Before a debt is sent to a collections agency, it's always best to try and negotiate with a creditor. If a debt is already passed to a collections agency however, a consumer can still negotiate with a debt collector. It's always up to the creditor whether they are willing to negotiate or not, but it's always worth the effort. Usually the creditor will be open to negotiations; never offer too much money and always start low.
- File a Complaint
Consumers should definitely consider filing a complaint with either the Federal Trade Commission or the consumers' attorney general's office if debt collection abuse is suspected.
If writing to the FTC, the complaint should be sent to the following address (you may also call their toll-free helpline at 1-877-FTC-HELP):
Federal Trade Commission
CRC-240
Washington, DC 20580
It should be noted, however, that the FTC does not resolve complaints, but simply records them and puts the largest offenders under the microscope for potential further action.
- Bankruptcy
If you feel like you're faced with some serious financial debt, filing for bankruptcy may be an option to carefully consider. After filing the initial paperwork for bankruptcy, an automatic stay is usually triggered which terminates all debt collection activity from everyone. It's important to not file for bankruptcy for the sole purpose of ending the harassment, as filing for bakruptcy does have its caveats. It's always smart to talk to a bankruptcy lawyer to find out more information, however do keep in mind that these lawyer's wil always try and lure you into using them, even though it may not be in your best interest file file (for obvious reasons).