Dealing with Credit Card Debt Collection Agencies
Few things in life are more painful and distressing than receiving a collection call. It’s embarrassing. You get defensive. And you’re not sure what to do. Often, the call is about a debt from several years ago that you may have forgotten and thought the credit card company had written off. But there is a multi-billion dollar market in the United States for “bad debt,” where portfolios of thousands of defaulted accounts are sold to third parties for pennies on the dollar. And it is these debt buyers who pursue most of the defaulted debts. These companies are governed by a series of federal and (usually) state laws and case law that set limits on how they do business, but also grants them significant leeway in proving their cases in court.
How do you, as a regular person, deal with these phone calls?
Know Your Rights.
The federal Fair Debt Collection Practices Act and the hundreds of associated cases are extremely complex and ever-changing. But there are certain essential points that every consumer needs to know. You are entitled to have the debt collectors stop calling you. You can tell them over the phone, but it’s best to send the demand to “cease and desist contact” in writing by mail. Whenever you are writing to a debt collector send the mail by first class and certified mail, return receipt requested. The date items are received is important.
You have the right to demand verification of the debt within 30 days of receiving a demand for payment. Unfortunately, the verification itself need only be a simple letter saying, essentially, “yes, this debt is valid.” But if the credit card debt collector fails to respond in time, then they lose certain rights to collect the debt.
If the case ever gets to court, you have the right to a hearing before a judge. The debt collector has the burden of proving the debt. They have to prove the amount of principal, interest, late fees and attorney’s fees they’re demanding. They have to prove that you, the defendant, owe the debt. And they have to prove that they, the debt collector, are the legal owner of the debt with the right to collect.
Negotiate Credit Card Debt from a Position of Strength.
It is in the credit card debt collector’s interest to settle your case quickly, and for as much money as possible up front. If the debt is valid, and you don’t have any valid defenses (speak to an attorney about this), it may be easier to work out a reduced payment on the balance, and/or a payment plan. Debt collectors accept payment plans that can be several years long. And they’ll reduce a debt as much as 80% in the right circumstances. Most cases can be settled for 50% of the total debt.
Most debt collectors do not have sufficient documentation to prove their case. Demand copies of credit card statements. Demand copies of the transfer of debt documents. Often, the interest calculation is outrageous and cannot be proven to any legal standard. Use these facts when negotiating.
Speak to an Attorney.
There is an army of consumer defense attorneys ready to help you. Some are sharks as much as the credit card debt collectors. Some are very professional and pleasant to work with. For a fairly small fee, they will help you negotiate the debt, or go with you to court to work with (or against) the debt collector’s attorney.
You don’t have to put up with harrassment from debt collectors. Take control of the situation and manage it to resolve your financial troubles.