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The next time you’re in a room with six other people, look around. One of you is probably being hounded by a debt collector.
An April report from the Center for Responsible Lending found that 1 in 7 Americans is on the receiving end of debt collection activities. More concerning is the fact that some of these consumers may not owe the debt at all. Accounts are bought and sold, and balances may be incorrectly stated, or settled accounts erroneously listed as in default.
If you’ve found yourself on the receiving end of debt collection calls – regardless of whether the debt is valid – you’ll want to watch the video below to see how Money Talks News finance expert Stacy Johnson recommends you respond.
Then, keep reading for four steps to stop abusive debt collection practices.
Step 1: Ask for proof of the debt
When a new debt collector contacts you, your first step should always be to ask for proof of the debt.
A popular scam involves collection calls for debt that doesn’t even exist. In other cases, third parties buy debts that may have been previously settled or paid off. The Federal Trade Commission says this about what debt collectors must send you to verify the legitimacy of a debt:
Every collector must send you a written “validation notice” telling you how much money you owe within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money, and how to proceed if you don’t think you owe the money.
After receiving the validation notice, you have 30 days to dispute the validity of the debt. For example, send a copy of the settlement agreement (you did get that in writing, didn’t you?) or other documentation if applicable.
Step 2: Stop letting them ruin your day
Nothing puts a damper on your day quite like a debt collection call. Regardless of whether it’s a valid debt, get off the phone with these people.
Rather than experience that sinking feeling every time the phone rings, ask them to communicate with you in writing. Under federal law, they have to comply. If they don’t, see Step 4.
The Consumer Financial Protection Bureau has several sample letters on its website that you can use to request that a collector contact you only by mail, through your attorney or by phone at certain hours.
Step 3: File a complaint about abusive behavior
Let’s say the collector continues to call even after you’ve asked them to stop. Or maybe they’re calling your neighbors and telling them you owe a bad debt. Both can be illegal and both should be reported to the government.
According to the Federal Trade Commission, debt collectors are prohibited by law from doing any of the following, among other things:
- Calling before 8 a.m. or after 9 p.m. unless you have agreed to early or late calls.
- Making threats, using obscenity or calling repeatedly to annoy you.
- Publishing a list of individuals with outstanding debts.
- Falsely claiming to be a lawyer or someone who works for a government agency.
- Discussing your debt with anyone other than you, your spouse and your attorney.
- Claiming you have committed a crime or will be arrested.
If a debt collector does any of the above, let them know you are aware of your rights and will be filing a complaint. Then do so by sending all of the details of the interaction, including the collector’s name, date of contact and specific statements made to the attorney general’s office in your state, the Federal Trade Commission or the Consumer Financial Protection Bureau.
Step 4: Get a lawyer
Finally, if that doesn’t work, it may be time to lawyer up.
Federal law allows you to sue a debt collector for abusive behavior, and you could be awarded $1,000, or possibly more, in damages, plus attorney’s fees. That doesn’t eliminate the debt if you actually owe it, but it should put a stop to incessant calls and any threatening behavior.
If enough other people are having problems with the same collector, you could file a class-action lawsuit and get up to $500,000 in damages.
Some consumer attorneys will take these cases for free, but you have to have great documentation. If you sent a “do not call” letter, it should have a return receipt so you can prove the collector got it. If the company is being abusive on the phone, keep a log to record the time of every call, the person you spoke to and what they said.
To find a free lawyer, look for consumer attorneys who offer free consultations.
Of course, the best way to get debt collectors off your back is to stay out of debt in the first place. However, even debt-free people can erroneously end up on the calling list of abusive collectors.
Have you had a nightmare debt collection experience? Let us know how you got the collectors off your back by commenting below or on our Facebook page.