Are you falling behind on credit card payments and worried about dealing with debt collectors? Read this guide to find out how you can take control of the debt collection process.
If you’ve been struggling with credit card debt for a while you may want to consider the possibility that a debt collector could become involved. It’s their job to follow up on and settle debts if the credit card issuer decides to enter the debt collection process.
In some cases, the tactics debt collectors use to contact you and negotiate payments can be intimidating, so it is important to know your legal rights and options throughout this process.
Debt collectors usually won’t get involved straight away. In most cases, your credit card issuer will contact you directly about the debt until more than 60 days have passed with no payment. Once that happens, the account is considered “in default” and your issuer can choose whether or not to enter the debt collection process.
Some issuers may continue to contact you directly after your account is in default, but they also have the option of using a debt collector to deal with the situation.
Debt collectors will contact you to discuss your credit card debt and different payment options. The way they contact you varies, but can include:
- Phone calls
- Social media
- In person
Debt collectors may use one or a combination of these contact methods to get in touch with you but there are also legal rights and limitations to the amount of contact they can have with you.
For example, they can only contact you by phone or mail up to 3 times a week or 10 times per month, and may only make phone contact between 7:30 a.m. and 9 p.m. on weekdays or between 9 a.m. and 9 p.m. on weekends. Debt collectors are also not allowed to contact you on public holidays and are advised to avoid face-to-face meetings as much as possible.
The Federal Trade Commission (FTC) has a general guide to the conditions and requirements debt collectors should meet when dealing with individuals. It’s a good idea to refer to this information if you think the contact you receive is unreasonable.
If written, phone or face-to-face contact does not lead to an agreement between you and the debt collector, they have two other options:
- Legal action. If your debt exceeds $3,000 and you don’t pay by a given time, the debt collector or provider can consider initiating legal action. If the debt process gets to this stage and you end up losing the case, the ruling makes it onto your credit file.
- Repossession or bankruptcy. If your debt is significant, your credit card provider or a debt collection agency can initiate proceedings to repossess some of your assets or even lead you towards bankruptcy. If a bankruptcy ruling makes it to your credit file it will make borrowing money in the future very difficult.
Confrontation by a debt collector can be intimidating, so it’s important to know exactly what your rights are if they ever contact you. Some of the key things to keep in mind include:
- Privacy. Debt collectors can’t let other people know about your situation without your permission. That means they can’t reveal that they’re debt collectors to anyone else connected to you in person, over the phone or on social media. In fact, if they use social media or email to contact you, they must be reasonably sure the account is private. If you ever believe a debt collector has violated your privacy you can report it to the Consumer Financial Protection Bureau (CFPB).
- Contact on public holidays. Debt collectors aren’t allowed to make contact with you on a public holiday unless you have agreed to it.
- In-person contact. A debt collector should only visit you face-to-face if they have unsuccessfully tried to contact you via phone or in writing. If they do show up, they have a legal obligation to treat you and anyone else present with respect. They should also leave immediately if you ask them to.
- Behavior. Debt collectors should always treat you with respect and be polite. It’s illegal for debt collectors to force, trespass, intimidate or harass you, and they can’t make false statements about you or the debt you owe.
- Negotiations. You have a right to discuss your circumstances with the debt collector and to suggest reasonable repayment terms.
- Disputing the debt. If you don’t believe the debt is yours, or if you disagree with the amount that is owed, you have a right to legally dispute it. The CFPB has detailed information on the different ways you can dispute debts based on different circumstances.
- Advice. You have a right, at any time, to seek legal advice to deal with a debt. In some cases, you may want to inform the debt collector that you plan to seek legal advice and suggest a time for them to contact you or a representative who will speak to them on your behalf.
Debt collectors have no right to mistreat you. Don’t hesitate to make a formal written complaint to the debt collection agency about any uncouth behavior. You can also contact the CFPB or the Federal Trade Commission (FTC) for further guidance and support.
As you may imagine, there are several things to be wary of when it comes to debt collectors.
- Forceful tactics. Don’t rush into paying off the debt until you’re certain the collection amount is legitimate and you’re able to — don’t let the debt collector pressure you into paying when they first contact you.
- Mistaken information. Verify the debt amount and any information associated with it. Gathering all applicable information and keeping your own records can help dissolve any erroneous data.
- Misleading information.
It’s important to know your rights, such as specifying when you can be contacted and how to challenge a debt. Proper treatment from debt colectors and due process is much more likely when you arm yourself with information.
When you’re having trouble making credit card payments, there are a few options you can consider either before or after a debt collector gets involved. The steps you can take include:
- Contacting your credit card issuer. Let your issuer know about challenges or changes in your circumstances so they can work with you to arrange a repayment plan. Many credit card issuers have support and hardship officers available to help you work through these difficulties before things get even more out of hand, so it’s important to contact them as soon as you can.
- Applying for hardship variation. This is a formal request for changes to the terms and conditions of the loan — in this case, your credit card. You can apply for hardship variation for difficulties such as illness, unemployment or changed financial circumstances. Contact your credit card issuer in writing or over the phone and explain your difficulties, how long you think they will continue and how much you can afford to pay off the card. The issuer will have to respond within 21 days of your request with the outcome of your request and your different options.
- Talking to a financial counsellor. Financial counsellors can give you specialized advice based on your situation, and may also negotiate with lenders on your behalf. The National Foundation for Credit Counseling website has more information about these services if you want to get in contact with someone near you.
- Seeking free legal help. There are community legal centers and free legal aid services across the US, such as Legal Services Corporation (LSC) and Legal Aid. The government’s website has a whole list of free legal services you can access when you need support and guidance about your debts.
Any of these options will give you a clearer idea of your rights and responsibilities, as well as ways to move forward and deal with the debt. It’s also important to remember that the sooner you deal with credit card debt issues, the better chance you have of working out payment terms that will fit with your circumstances.
Suze Orman’s credit card tips
Debt collectors can be an intimidating bunch, but with the right amount of preparation you can ease anxieties that may well up over the process. Knowing your rights and having all of your financial ducks in a row are two steps that can potentially save a large amount of frustration in the long run. You may not be able to steer the entire process but you can fully own what’s in your control.