There is nothing worse than the feeling of being trapped in a debt and constantly being harassed by creditors urging you to pay. However, it is important to understand that you have rights, and there are laws in place to protect your financial well being.
When it comes to debt collection, there are certain limitations creditors have that they must follow, and there may bay certain actions you can take to eliminate your debt in a timely manner.
The following four facts are pieces of information you are likely to never hear from a creditor, but understanding these facts can help bring you peace of mind when it comes to forming a plan to get out of debt.
Debt Collectors Must Follow Rules
According to the Fair Debt Collections Practices Act, there are certain things a creditor cannot do when it comes to debt collection, including contact you at unreasonable hours, harass or threaten you, make false statements, misrepresent themselves and threaten to seize your property or wages if you do not pay.
Any creditor who utilizes unfair collection tactics such as the ones mentioned above, are at risk of severe legal penalties, and by understanding exactly what creditors cannot do, you can ensure they do not bother or harass you in a way that makes you uncomfortable.
If a debt collector does begin to harass you (which may be in the form of calling constantly while you are at your place of work, threatening to garnish your wages or refusing to give out vital information pertaining to your debt) then you may be able to take legal action against them. At the least, you will be able to let the collector know that you are well informed about the FDCPA and recognize they are breaking laws in order to collect payments, which in many cases is enough to get them to quit calling as frequently.
Therefore, say no more to the days of constantly being harassed on unusual hours of the day, and be able to defend yourself against constant harassment from creditors.
You May Be Able to Settle Your Debt
Many creditors may play tough and insist on collecting their money, which leads many to fear even attempting to negotiate with them, but it is actually much easier to settle your debt than one may anticipate.
Creditors understand that debt is an issue that many people struggle with, and they understand that receiving full payments on every debt they are owed is simply unrealistic. Subsequently, many creditors are willing to negotiate with the one who owes the debt in order to at least get what they can.
By negotiating with creditors, you may be able to settle your debt at a much lower rate than you actually owe. Creditors do not like the actual process of collecting debt more than anyone else, and they simply want the process to be over just as much as the one who owes the debt does. Therefore, use the opportunity to your advantage and try and lower your interest rate, reduce your payments or even settle the debt for far less than what is owed.
Many times it can seem as if creditors have every bit of the power when it comes to debt collection, and the one who owes the debt is utterly trapped with no way out. However, the one who owes the debt has rights and leverage as well, such as offering to settle the debt at once at a lower rate. Be sure to take advantage of your right and ability to negotiate, and try and find a best of both worlds solution between you and the creditor.
Creditors Cannot Inflate What You Owe
One of the scare tactics of some creditors is to inflate your interest or simply add on to how much is owed. However, creditors cannot just inflate what you owe whenever they want to, especially if you have signed a contract.
In the event you have signed a contract with the creditor, which is almost always the case, they can only charge the interest rate that was established in the contract, and they cannot simply raise the interest rate due to a failure to pay. Of course, this means that it is very important to thoroughly read the contract or have a lawyer read the contract before agreeing. If the creditor tries to raise the interest or amount of debt owed without having the authority to do so, they are subject to serious legal trouble.
Creditors do not want you to know this as often times their goal is to squeeze every penny they possibly can out of you. By understanding your rights, however, you can prevent foul play from entering into the agreement. Be sure to know the contract well and let the creditor know that you are well aware of your rights to prevent any unlawful threats.
Your Debt Is Confidential
Some of the more shady creditors may even try to contact those who are close to you to get you to pay, such as a neighbor, friend or distant family member. However, your debt is confidential between you and the creditor.
In the event that your creditor attempts to contact someone outside of you or your spouse about your debt, let them know that you are well aware of the laws pertaining to debt collection, and you may even have the right to take legal action.
While many creditors are honest and respect the laws, any creditors who try and collect debts by using unfair tactics are subject to serious penalties. According to the third party disclosure laws, debt collectors are only allowed to contact third parties in order to try and locate you, and once they are able to do so their communication with the third party must stop immediately.
Therefore, if someone not involved in the contract is informed of your debt, especially the amount of debt you owe, they have broken laws under the FDCPA, and you now have the leverage in the situation to try and negotiate a better rate between yourself and your creditor.