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Your Consumer Rights with Debt Collectors

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With consumer credit leaping by $19.8 billion in November 2001 to a record $1.65 trillion, one shouldn’t be surprised by the trend toward aggressive debt collections. The nation’s surprising debt load comes at a time of high unemployment rates and an economic recession, making it harder for consumers to pay their debts. The result: more bankruptcy filings and loan delinquencies.

Collection Rules

If collectors begin calling you, it pays to know the limits of what third-party collection agencies can and cannot do. The Fair Debt Collection Practices Act (FDCPA) provides consumer protection, and lets you know how to set limits the debt collector must respect and abide by. The FDCPA prohibits harassment and misrepresentation in cases of collections on the following types of debt:

  • Personal - automobile financing, basic loan, charge cards
  • Family - medical care
  • Household - mortgage

Some of the features of the FDCPA cover limitations on phone contact and rules about written correspondence. Collectors:

  • Are not permitted to use obscene language.
  • Cannot call before 8 a.m. or after 9 p.m.
  • May not call you at work if you state that your employer disapproves of this communication.
  • Must provide a written notice within five days of contacting you stating the amount you owe, whom you owe, and what action to take if you believe you do not owe the money.
  • Cannot contact you if, within 30 days of receiving the written notice, you dispute the debt in writing. The collector cannot try to collect the debt during that time until they provide documentation of what is owed.

What's a Charge-off?

As a last resort, some people who simply can’t meet their payments may be relegated to the charge-off category, which means the creditor or lender feels there is no alternative except to write off the debt and will no longer pursue payment. Charge-offs stay on your credit report for seven years and are considered a serious notation. In addition, some charged-off accounts may be sold to collection agencies at a later date, allowing the collection of the debt to be reactivated, which means more collections calls.

Before debt collectors get involved, you might find it worthwhile to contact the creditors on your delinquent accounts to set up new payment plans. Even though charge-off notations can remain on your report for seven years, new notations that you have paid off these debts will also appear. In this case, current and future credit grantors would likely take a positive view of making such an effort to pay off old debts.

To see your free credit report, visit Experian, the preferred credit report provider for AutoTrader.com.

Source: Experian National Score Index

© Experian 2008. All rights reserved.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
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Your Consumer Rights with Debt Collectors