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If you owe a debt of any sort, you are likely worried about bill collectors reaching out to you over and over again to collect payments. You might even be worried about a bill collector calling you at work, calling your family members or suing you. The reality of the situation is rarely as bleak as imagined. Let's take a look at the ins and outs of how to deal with debt collectors.
Debt Collectors can Only Pursue You so Far
If you would prefer that debt collectors do not contact you via phone, you can send a letter certified mail return receipt requested in which you demand that all communications be sent to your home address. This will reduce the annoyance of debt collector phone calls, allowing you to answer your phone without worry that you'll be speaking with a debt collector. Also, debt collectors are not allowed to discuss your debt or the payment of monies with anyone else who answers your phone. They can't call you early in the morning or late at night either.
You Don't Have to Engage in a Dialogue With Debt Collectors
You can simply do nothing when debt collectors reach out to you to discuss payment options. Each time you engage in communication with a debt collector, it resets the debt's statute of limitations. So be careful when you choose to engage through a response of any sort. Debt collectors will eventually decide to stop pursuing your debt or they'll serve you with a summons and complaint outlining their lawsuit against you. Plenty of law firms end up dismissing lawsuits filed against those who prove to be destitute. It is not worth their time or money to pursue people who have no means of paying their debts. So if you are broke, make it known right away.
Sometimes, Negotiating Really Does Pay Off
Though it is tempting to avoid all interactions with debt collectors, it is worth noting that some debts can be paid for a small percentage of the charge-off amount. For example, if you have a credit card debt of $8,000, the creditor might reduce the amount owed to $5,000 or even $3,000 in an attempt to recovery some cash. After all, many of these debts go unpaid forever. From the perspective of the lender, getting something today is better than nothing in the long run. So don't be afraid to float out a low-ball offer that is 20 percent or so of the balance owed. The creditor just might bite at the offer to avoid paying the cost of filing a lawsuit and spending the time that is necessary to prepare the accompanying legal documents.
Debt Collectors Can't Threaten You
Debt collectors can be awfully intimidating over the phone or even in written correspondence. You don't have to take their abuse though. If a debt collector curses at you or threatens you in any way, report him and his employer to the Federal Trade Commission (FTC) for violating the Fair Debt Collection Practices Act. Though few debt collectors resort to personal harassment or threats, it does occur from time to time.
Debt Collectors are on the Clock. Time is Ticking Away
Your state has a law known as the statute of limitations that prevents creditors from pursuing any allegedly unpaid debt beyond a certain number of years. This means that your creditor's opportunity to file a lawsuit against you for your unpaid debt will eventually expire. As long as you do not respond to the communications of opposing counsel/debt collector, the clock will start ticking as of the account's charge-off date. If the creditor fails to file a lawsuit before the statute of limitations' 7 – 10 years (differs by state) has passed, you can't be sued for the debt. So don't lose sight of the fact that one of your options is to simply wait it out and see if your creditor is willing to spend the money required to file a lawsuit.