There is perhaps nothing more jarring than getting a collection call, particularly when the person on the other end of the line threatens to sue you. The experience might make you feel like you’ve failed, but you are not alone, and you are not a failure. Forty-four percent of people over the age of 65 have debt. If the phone rings, don’t be afraid. The right handling of the phone call could help you ease your way out of debt.
Overwhelmed by debt and not sure where to turn? If you’re living on a fixed income but own your home, a reverse mortgage could give you some breathing room, supplementing your income while you pay down debt or freeing up money so you can begin paying down debt.
Know Who is Calling
Third-party debt collectors are covered under a federal law called the Fair Debt Collection Practice Act. These collectors must follow very specific rules outlined in the next section, or face civil penalties. Third-party debt collectors are paid by other companies to collect debts; in other words, if you have a debt with Bank of America, a third-party collector is one who does not work in-house for Bank of America. The next section covers the rules governing these collectors.
What if you’re dealing with an in-house collection agency? That’s a good thing! In-house collectors have a vested interest in recovering the funds, even if it means working out a settlement or accepting monthly payments. Ask what you can do to pay down the debt, then get the agreement in writing. If the collector is unwilling to work with you, tell them you won’t be able to pay. You may find that, with the next phone call, they’re more willing to negotiate.
Know Your Rights
If you’re dealing with a third-party debt collector, the Fair Debt Collection Practices Act allows you to sue if the company violates your rights. You can even raise this with the collector if they abuse you. Sometimes it encourages them to back off. Your rights include:
- The right to request verification that you owe the debt; never pay until you get this verification.
- The right not to be contacted any longer if you request, in writing, that the collector stop calling you.
- The right not to be called multiple times per day.
- A right to privacy; the collector cannot tell other people about your debts.
- A right to freedom from threats; the collector cannot threaten to have you prosecuted or jailed, can’t threaten to hurt you, and cannot threaten to take any legal action that it does not actually intend to take.
- A right to notification that the collector is attempting to collect a debt; the collector cannot pretend to be an old friend or use other deceptive methods to gain information about you.
Don’t Pay Old or Unfair Debts
If you are not absolutely certain that you owe a debt, you are allowed to dispute it. Never pay any debt unless you are sure you owe it, and get any settlement agreements in writing; otherwise a collector could repeatedly attempt to collect on the same debt.
You do not have to pay any debts that are past your state’s statute of limitations, and debt collection companies cannot report any debts that are older than seven years. To find your state’s statute of limitations, click here. Remember that paying a debt may reset the statute, so proceed with caution, and talk to a lawyer if you have any doubts.
Get Credit Counseling
Sometimes, no matter how hard you try, there’s no way out. The statute of limitations hasn’t explored, you really do owe the debt, and you can’t afford to pay it. If this occurs, don’t reflexively file for bankruptcy, and don’t pay a scam debt settlement company to solve the problem on your behalf. The National Foundation for Credit Counseling is a great source for finding someone who has your best interests at heart.
Author Bio: Annie Doisy is a reverse mortgage expert who helps seniors enhance their lives by taking advantage of the equity in their homes. Annie writes for ReverseMortgages.com where her goal is to educate consumers on a wide range of topics around mortgages and other financial services.
[Photo Credit: Stuart Miles/FreeDigitalPhotos.net]
Hi, my name is Jon and I run Compounding Pennies. I’ve been interested in personal finance since high school and love writing and talking about it. You can learn more about me in the Authors section of this site.