What You Need to Know When Hassled by Debt Collectors
When you’re being hassled by debt collectors, it’s crucial to know your rights and how to protect yourself. This article provides comprehensive information about handling debt collectors and the legalities involved in the process.
Understanding Debt Collection Agencies
Debt collection agencies are firms that specialize in recovering unpaid debts. If you default on your debt payments, these agencies might contact you to collect the amount you owe on a credit card, loan, or line of credit.
Your creditor, the entity to whom you owe money, may try to retrieve their funds by:
- Utilizing their in-house debt collection department, if they have one.
- Contracting a debt collection agency to recover the money on their behalf.
- Selling your debt to a debt collection agency.
The Debt Collection Process
Before a collection agency approaches you to collect the debt, you usually receive a written notice. This notice should include:
- The name of the collection agency.
- The name of the person or business you owe money to.
- The amount you owe.
Actions to Take Upon Receiving a Notice
If you receive a notice about your debt being transferred to a collection agency, it’s crucial to contact your creditor right away. You may have the option to:
- Pay a part of the amount or the full amount owed to prevent the debt from being transferred.
- Negotiate alternate arrangements with your creditor to repay your debt.
Impact on Your Credit Score
Once your creditor sends your debt to a collection agency, your credit score will likely decrease. A low credit score can lead to:
- Lenders refusing to provide you credit.
- Higher interest rates for new credit.
- Increased insurance policy rates.
- Landlords refusing to rent to you.
- Potential employers hesitating to hire you.
You can find out how long information stays on your credit report from various resources.
When a Debt Collector Contacts You
If a debt collector contacts you, ask for and note down the following information:
- The agent’s name.
- The company they work for.
- The company they are collecting money for.
- The debt collector’s phone number.
You should ask for details about the debt, such as:
- The amount you owe.
- Who you owe it to.
- When you started owing it.
After gathering this information, tell the debt collector that you’ll call back once you’ve verified the information. Review your bills and bank statements to confirm if the debt is yours and if the amount you owe is accurate.
Repaying Your Debt
If the debt is yours and the amount is correct, paying the full amount you owe will resolve the issue.
When you repay your debt:
- Avoid sending cash.
- Always get a receipt for any payment you make.
- Deal only with the debt collector who contacted you to make payments.
If you’re unable to pay the full amount:
- Explain your situation to the debt collector.
- Propose an alternate repayment method, such as monthly payments.
- Follow up with them in writing.
If the Debt Isn’t Yours
If you believe that the debt isn’t yours, or there has been a mistake:
- Inform the debt collector.
- Contact the creditor to understand the steps you should take to correct the error.
- Check your credit report to see if the debt appears on it.
Your Rights When Dealing with Debt Collectors
You have rights concerning how a debt collector collects your debt. This applies whether it’s a federally regulated financial institution or another party acting on its behalf.
Who a Debt Collector Can Contact
A debt collector can contact your friends, employer, relatives, or neighbors only to get your telephone number or address. Exceptions might apply in the following cases:
- The person they contact has guaranteed your loan.
- They contact your employer to confirm your employment.
- You’ve given your consent for the financial institution to contact the person.
When a Debt Collector Can Contact You
A debt collector can only contact you at the following times:
- Monday through Saturday between 7 a.m. and 9 p.m.
- Sundays between 1 p.m. and 5 p.m.
Debt collectors are not allowed to contact you on holidays.
What a Debt Collector Can’t Do
A debt collector can’t:
- Suggest to your friends, employer, relatives, or neighbors that they should pay your debt, unless they’ve co-signed your loan.
- Use threatening, intimidating, or abusive language.
- Apply excessive or unreasonable pressure on you to pay the debt.
- Give false or misleading information.
- Call you on your cell phone, unless you’ve provided that number as a way to contact you.
Making a Complaint About a Collection Agency
If you feel that a debt collector isn’t respecting your rights, contact the appropriate regulator. If you’re dealing with a federally regulated financial institution’s debt collection department or an agency hired by such an institution, you can make a complaint with the Financial Consumer Agency of Canada.
If your creditor sold your debt to a collection agency, you can make a complaint with your consumer affairs office.
While being hassled by debt collectors can be stressful, knowing your rights and the legalities involved can help you navigate the situation more effectively.
