Dealing with debt collection is something that most consumers dread. Most people get intimidated when a debt collector calls them up to ask about an unpaid credit card debt, a past due medical debt or an auto loan. Fearing that they might be put behind the bars or their wages will be garnished, the majority of consumers ignore collection calls and debt collectors’ letters. But, as per the consumer credit counselors and state regulators ignoring phone calls and letters from collection agencies is a bad idea; they advise consumers to deal with it, otherwise matters can only get worse.
The Fair Debt Collection Practices Act Collection (FDCPA) empowers the consumers with certain rights to deal with collection agencies. As per the FDCPA the debt collectors may not:
• Call a consumer before 8 a.m. or after 9 p.m.
• Talk to a third party including your family, friends, colleagues, neighbors or employees about the debt. The debt collector can talk to your attorney (if you have one) about the debt.
• Threaten to initiate legal action unless they are actually planning to do so. In some states, third-party collection agencies may not sue.
• Threaten to garnish wages, imprisonment or foreclosure of property unless they actually intend to do so. Wage garnishment is not legal in some states, and in others it requires a court order. In many states, property seizure is also not permitted. Thus, it is advisable to check with your state attorney general’s office or state consumer protection office to find out what is legal in your state.
• Threaten you with arrest or jail.
• Engage in unethical or unprofessional behavior that may mislead, harm or defraud consumers.
• Use obscene language or racial slurs.
• Annoy, harass or threaten with repeated calls or letters.
• Call at work despite knowing that your employers do not like such calls.
• Misrepresent themselves as attorneys, representatives from a credit bureau or members of law enforcement.
In case you find that the collection agency you are dealing with is in the violation of FDCPA then contact your local state attorney general’s office and file a complaint against the agency. You can also register a complaint with the FTC.
If you don’t want to take the calls from the collection agency then as per the law you can send them a “cease and desist letter.” While sending a “cease and desist,” include your name, contact address and account number, and notify the company that you do not wish to communicate with them any further. Send the letter via certified mail with a return receipt request so that you have the evidence that the collection agency received your letter. However, you have to remember that sending a “cease and desist letter” doesn’t cancel your debt. The original creditor or the collection agency may even sue you, or the original creditor can simply hire another third-party debt collector.
Archive for March, 2010
Dealing With Debt Collection Agencies
It’s Free And To Your Benefit – Debt Advice
The best thing that any person can bestow on another is a piece of advice that may lead him to a position of security or, in a position where he wants to be. The area in which people are more vulnerable than in any other is the one related to money or a more sophisticated term for that would be finances or debts.
The advice in terms of finances would be called as debt advice and would include things such as what money to take, from where to take, and what to do when we are in debt from multiple creditors. A debt advice would seek to answer questions relating to these implications.
Some of the techniques that are included in the process of Debt Advice are:
Debt management
Debt consolidation
Debt negotiation
These techniques aim to provide answers to the people who are either struggling with their debts or want a better way to deal with the accumulated debts.
Debt management is a tool by which the people who are struggling with debts can bring down their debts gradually. This includes a few steps, which the borrower has to follow diligently. Steps such as these are recommended:
• Making a schedule which the borrower will be following until the borrower gets out of his debts.
• Follow the made schedule in a manner that it ought to be followed in order to achieve the success.
• Try to reduce the expenses which are not that necessary and only spend within your limits.
This will surely help any borrower who is having problems with his debts.
The second technique that concerns the debts includes the process of debt consolidation. With this technique, the borrower has the option of taking all his debts and take a single loan to pay them. This is an easy way and the borrower may get a few benefits with this loan.
The third technique is that of debt negotiation. In this technique, the borrowers meet with the creditors and try to sort out a plan where both the parties should not lose out on their share of the money. This may include compromises made by both the parties involved.
Including all these pieces of debt advices there are other debt advices that the borrowers of loans can receive, it can be done by going online and clicking to the relevant links. There the people can find experts advice, various forums and other resources to solve their problems for once and for all. And with this they can now start afresh in their endeavors.
Major Differences Between Credit Counseling And Debt Reduction
Most of the credit counseling programs that you will enroll for might require you to do away with all your credit accounts. These programs however, do offer some concession for accounts that are required for your business needs and accounts where you have little balance. But with debt reduction there are no such impositions and therefore you can keep your credit accounts working. So if there is an emergency need and you are required to draw money from your credit card account, debt reduction programs will give you that option but credit counseling ones wouldn’t.
Compared to a credit counseling program a debt reduction program will rid the client of his debts in considerably less time. Whereas credit counseling programs take an average of five years to do away with the entire debt, a debt reduction program can liquidate the entire debt even under a year.
With debt reduction programs a consumer would need to pay much less than what he will have to if he enrolls into a credit counseling program. The reasons are simple to understand. In a credit counseling program what is negotiated is your rate of interest on the credit you have. But in a debt reduction program it is your actual debt amount that gets reduced. And this reduction can be anything between 40%-80%. Now that is a lot of reduction we are talking about. The industry average of 50% is a very attractive figure for anyone who is in debt.
The client’s credit score is also affected differently with different programs. When enrolled in a credit counseling program the agency generally re-ages the accounts after three payments are made by the client. But there are no such changes made by a debt reduction program. The status of the account remains unchanged. So if the client has a current account, it will stay that way. If the account has past its due, no alteration will be made.
In a debt reduction program the client has a much greater bargaining power than what he has in a credit counseling program. What happens in a credit counseling program is that a submission is made to the creditor on how the client plans to repay his loan. It depends on the creditor if he accepts the new terms. In a debt reduction program a lot of negotiation happens and a the creditor is made fully aware of what the situation of the client is.
Posted in Debt Cutback 
Tags: Between, Counseling, Credit, Debt, Differences, Major, Reduction 
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