Creditors and Debt Collectors
When you first go into debt, you will have to deal with your creditors. But keep in mind that your creditors want to work with you before you become delinquent on your bills.
If there's a situation, such as a job loss or medical expenses, that will make it difficult for you to meet your financial obligations, call your creditors before you miss a payment. Waiting until your account is already delinquent will hurt your credibility. The creditor may not be as willing to work with you and may turn your account over to a debt collector, which can be an unpleasant experience.
Creditors are also quicker than ever to report late payments to collection agencies because more and more people are filing for bankruptcy and walking away from their debts. If you make arrangements with the creditors ahead of time, they may agree not to report your delinquency to the credit bureau.
Creditors will often try to work with you by allowing you to make interest-only payments for a while, deferring a payment or two to the end of the loan period, or reducing late charges. Sometimes these concessions are enough to help you get back on your feet.
When negotiating with creditors, don't agree to a plan that you're not sure you can stick to. If you make promises and then can't keep them, the chances of the creditor ever being willing to work with you again are slim. You'll need to do a budget and calculate how much money you can squeeze out of it each month to apply to the account in question before committing to a payment plan.
If you talk to a creditor over the phone, take good notes, including the name of the person you spoke to, the date and time you talked to her or him, and what arrangements were made. It's a good idea to then follow up with a letter outlining the key elements of your discussion, and to ask that they send you something in writing as well.
If you're not successful in getting the creditor to work with you, hang up and try calling again. Sometimes one customer service representative or credit manager will be more helpful or flexible than another.
Debt collectors are third parties hired by a lender to attempt to collect amounts you owe when you're late with your payments; they can be lawyers or companies in the business of collecting unpaid accounts. If your account gets turned over to a debt collector, you can save yourself a lot of grief if you're familiar with your rights under the Fair Debt Collection Practices Act, the federal law that specifies what third-party debt collectors can and cannot do in their attempts to get you to pay up.
Can debt collectors call me at work?
If you or your employer tells the debt collector that your employer doesn't want you to receive collection calls at work, the collector is prohibited under the Fair Debt Collection Practices Act from contacting you at your place of employment.
Collectors are allowed to contact you in person, by mail, telephone, telegram, or fax, but they're not allowed to contact you at inconvenient times, such as before 8 A.M. or after 9 P.M., unless you agree to those times. Debt collectors can't threaten, harass, badger, or abuse you or use false or misleading information.
The law includes a long list of specific restrictions governing third-party debt collectors. If you're being harassed by or experiencing other problems with a debt collector, report it to your state attorney general's office and the Federal Trade Commission.
The Fair Debt Collection Practices Act doesn't apply to employees of the creditor that you owe. They're governed by state laws, which vary from state to state. Consult the consumer information section of your state's Web site for information about your rights.