Stop Debt Collection Actions

Being in serious debt is troubling enough. However, when debt collection agencies get involved, it makes the situation more stressful.

While in recent years, debt collectors have experienced some regulatory actions from congress, for years, they acted with impunity. Today we want to look at the tactics debt collectors use and how to best stop them.

What Is a Debt Collection Agency?

By using the term “agency”, debt collectors give an impression of legal authority. However, the truth is much less scary than that. Debt collection agencies are companies that specialize in recovering unpaid debts on behalf of their clients. These clients may be banks, credit card companies, healthcare providers, or other businesses that have extended credit to individuals or other businesses. Debt collection agencies employ various tactics and strategies to recover funds owed by debtors.

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Many times, these companies are investing in misery by buying debt from original creditors and then collecting what they can from it. They will buy the debt at a discounted rate and then attempt to collect all of the original amount owed. For example, let’s say you owe your credit card company $10,000. A third party debt collector purchases this debt for $1,000. They then employ the usual tactics to get you to pay the full amount. This results in a $9,000 profit for the collection company.

Debt Collection Strategies and Tactics

One of the most common, and obnoxious, tactics used by debt collection agencies is phone calls. They may call debtors repeatedly, sometimes multiple times a day, in an attempt to get them to pay their debts. Debt collection agencies may also send letters or emails to debtors, outlining the amount owed and warning of potential legal action if the debt is not paid. These calls are now somewhat regulated by the Fair Debt Collection Practices Act (FDCPA), and cannot be made before 8 AM or after 9 PM in your time zone.

However, there are still many unscrupulous collectors out there that will not follow the law, banking on the fact that many people are not aware of the restrictions. Many collectors have posed as law enforcement agents, threatened jail time, or even harassed family members of the debtor in order to pressure them into paying. If you believe a debt collector has gone beyond the scope of the FDCPA, you can report them to your state Attorney General’s office or the Federal Trade Commission.

Another strategy that debt collection agencies may use is offering payment plans. In some cases, debtors may be unable to pay the full amount owed all at once, but may be able to make smaller payments over time. Debt collection agencies may negotiate with debtors to establish a payment plan that works for both parties.

If phone calls, letters, and payment plans are not effective, debt collection agencies may resort to legal action. This may involve filing a lawsuit against the debtor, which can result in a court-ordered wage garnishment or asset seizure. In some cases, debt collection agencies may also work with local law enforcement to track down debtors who have skipped town or are otherwise difficult to locate.

Debt collection agencies may also use credit reporting agencies to negatively impact a debtor’s credit score. By reporting unpaid debts to credit reporting agencies, debt collection agencies can make it more difficult for debtors to secure loans or other forms of credit in the future.

Should You Pay A Debt Collector?

Debt collection agencies are notorious for implying that if you just pay them, your problems will go away. There is a lot of debate about whether you should engage with debt collectors. However, many times paying the collector can lengthen the amount of time the debt impacts your credit report. Remember, by the time a debt collection agency has become involved, the bulk of the damage to your credit report has already been done. You have other options:

not paying the debt at all (further consequences may come from this)
managing the debt payments through a negotiated plan
reaching a settlement
going to court

All of these options should be weighed carefully, and you may want to run them by a Michigan bankruptcy attorney.

Debt Collection & The FDCPA

It’s important to note that debt collection agencies are subject to federal regulations that govern their behavior. The Fair Debt Collection Practices Act (FDCPA) outlines specific rules that debt collection agencies must follow when attempting to recover funds. These rules include limits on the frequency and timing of phone calls, restrictions on who debt collection agencies can contact, and requirements for disclosing the amount owed and the identity of the creditor.

The FDCPA applies to third-party debt collectors, including collection agencies, attorneys who collect debts on behalf of others, and companies that buy delinquent debts and then attempt to collect them. It does not apply to original creditors who are attempting to collect their own debts.

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Under the FDCPA, debt collectors are prohibited from engaging in certain practices when attempting to collect a debt. For example, they cannot contact consumers before 8 a.m. or after 9 p.m., unless the consumer has given them permission to do so. They also cannot contact consumers at work if they know that the employer prohibits such calls.

Debt collectors are also required to provide consumers with certain information, such as the amount of the debt and the name and address of the creditor, within five days of their initial contact. They must also provide consumers with a notice explaining their rights under the FDCPA, including the right to dispute the debt.

The FDCPA also prohibits debt collectors from using deceptive or abusive practices when attempting to collect a debt. For example, they cannot make false statements or threats, such as threatening to sue the consumer when they have no intention of doing so. They also cannot use profane language or harass consumers by repeatedly calling them or contacting them at unreasonable times.

Consumers have the right to sue debt collectors who violate the FDCPA. If a consumer successfully sues a debt collector, they may be entitled to damages, including actual damages (such as money the consumer lost as a result of the debt collector’s actions) and statutory damages (up to $1,000). In addition, the debt collector may be required to pay the consumer’s attorney’s fees.

How To Stop Debt Collection Action

Debt collection agencies use a variety of tactics to recover funds owed by debtors. While phone calls and payment plans are often the first strategies employed, legal action and credit reporting agencies may be utilized if other methods are not effective. It’s important for debt collection agencies to abide by federal regulations and for debtors to be aware of their rights when dealing with debt collection agencies.

There are a few ways to stop debt collection, but the surefire way might be to file for bankruptcy. Either Chapter 7 bankruptcy or Chapter 13 bankruptcy might be the best option for you if you are overburdened by debt. The best way to discover what options are the best for you is to contact a bankruptcy attorney in Wayne County that can help you determine the best course of action.