What You Need To Know When a Debt Collector Comes Calling

Tagged: Credit Cards, Debt, Finance

If you have credit cards, chances are you may run into some debt at some point. And if you run up considerable debt, an official debt collector may contact you. Do not be afraid. Debt collectors are not evil, and there are rules that they have to follow. Being aware of those rules can take away some of the uncertainty and tension when it comes to debt collection. In 1977, the Fair Debt Collection Practices Act was passed to ensure that you are treated fairly. But you will want to be prepared in case a debt collector comes knocking at your door.

Just what is a debt collector?
A debt collector is a professional, sometimes an attorney; hired to collect outstanding debts by those owed money. Debts could include personal debts, credit card debts, medical debts, or car or house payments.

What will a debt collector tell me about my debts?
A debt collector will first contact you to inform you that you are being asked to pay off your balance. Then, within the next five days, you will be informed via written notice of the amount you owe, who you owe, and what to do to either pay off the debt or challenge the claim.

What ways might a debt collector contact me?
You may be contacted via phone, fax, email, regular mail, or even in person. However, a debt collector MAY NOT contact you at unreasonably early or late hours (before 8 am or after 9 pm), or while you are at work. Unfortunately, they’ll probably call just as you are sitting down to dinner.

Okay, I get it, my creditor wants their money back. How can I stop a debt collector from repeatedly contacting me, to the point of exasperation?
A debt collector is NOT permitted to harass you. If you feel they are harassing you, submit a written letter to the collection agency asking them to cease. After that, they cannot contact you again except to say they won’t contact you again. However, they may contact you or your attorney if legal action is going to be taken regarding your unpaid debt.

Can a debt collector inform just anyone about my debts?
If you have an attorney, your debt collector may contact them. If you do not, a debt collector is permitted to try to locate you through a third party, but they may not contact that third party more than once. In general, a debt collector is not allowed to go all over town asking about you.

So the debt collector has contacted me, now what?
You have the right to read your credit report in full. Make sure that it is accurate and complete. See our article about understanding your credit report to learn more, If you feel there is a mistake, submit your challenge to the creditor. If they insist there is no mistake, you can request that a statement from you be attached to your file that includes your testimony, so that anyone viewing your credit report will see both sides of the story.

Next, you have to work with the debt collector to start paying off your debt. That is their whole purpose. Your credit report will look much better once you have cleared that negative balance.

What is a debt collector NOT permitted to do?
A debt collector is NOT allowed to threaten you or abuse you in any way. This includes:

threats of arrest
using abusive language (such as profanity)
making your debts publicly known
annoying you via phone
A debt collector is also NOT allowed to falsify any information in attempts to collect your debt, such as:
faking legal documents
conversely, failing to inform you that an actual document is a legal document
misrepresenting themselves or who they work for
implying that you have broken the law and may be arrested (that’s a threat)
A debt collector CANNOT claim any action that is not legally intended by the people to whom you actually owe the money. Remember, the debt collector represents someone else, it’s not the debt collector you owe. So they cannot make any threats claiming they are going to seize your assets or garnish your wages. Only the creditors can do those things, and even then only if it is legal in your situation.

There are many practices a debt collector cannot do. If anything seems suspicious, check it out. Other examples of sketchy behavior includes:
making you pay for collect calls
making you pay more than you owe
What do I do if a debt collector is harassing me or violating my rights?
If you feel a debt collector is violating your rights, you may report the violation to your State Attorney General’s Office or the Federal Trade Commission. The Attorney General’s office will investigate your claim to determine if any laws have been violated. If this is the case, you may sue the debt collector for damages, possibly including legal costs.

I had to be contacted by a debt collector due to some bad outstanding debts, and my credit report looks bad. Will this incident haunt me forever?
You are in luck. Every seven years, negative information is cleared from your credit files, so long as the issue has been taken care of. If you have to file for bankruptcy, that information will be erased after ten years.

Do not fear the debt collectors. They are there to remind you that you owe someone some money, and to encourage you to get that balance squared away and get out of debt. Now that you know what to expect if you are contacted, you will be better able to maintain your rights and handle the situation with your rights maintained.

Mike Peterson is the author of “Reality Millionaire” and a co-founder and Spokesman of American Credit Foundation, an IRS 501 (c)(3) non-profit consumer credit counseling organization that has assisted thousands of individuals and families with their financial situations through seminars, education, counseling services, and, debt management plans. For more information, and free consumer resources visit: www.debtguru.com

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Credit crunch: Struggling singles join army of the ‘invisible’ poor

Tagged: Credit Cards, Credit Crunch, Debt, Inflation, Investment

The credit crunch’s forgotten victims, new research shows, are childless workers getting low pay, who are hard hit as basic bills rise

• Anushka Asthana and Jill Insley
• The Observer
• Sunday July 6, 2008

Five million of the poorest people in the UK have fallen below the radar of policymakers and become the country’s ‘invisible poor’, a new study will claim tomorrow.

A report by the National Consumer Council has exposed an army of childless people working long hours for meagre wages, struggling to pay for basics such as food, rent and clothing. Ministers have spent so much time focusing on the plights of families, pensioners and the unemployed, the study found, that the group has become the country’s ‘forgotten working poor’.

Many scour cheap supermarkets for cut-price deals, buy damaged goods and hang around market stalls as they close to pick up vegetables discarded by traders, according to the research that paints a remarkable picture of their lives.

In one case a woman ate noodles priced at 8p for lunch every day because she had only £10 a week to spend on food. Others cut back on non-essentials such as sweets for their grandchildren or birthday parties.

Most of the ‘invisible poor’ work long, irregular shifts, six days a week - causing their relationships to suffer. Many take on second jobs to fund Christmas. ‘There are a lot of assumptions on the part of society and the government that this group is all right because it has no ties,’ said Nicola O’Reilly, author of the report. ‘Like a duck on water, they look fine on the surface, but there is a lot going on underneath just to stay still. If you are continually being ground down like that, your aspirations are going to evaporate.’ O’Reilly said that many of the workers felt that ministers rarely mentioned them .

‘Political leaders talk of hard-working families or pensioners or child poverty,’ she said. ‘All those groups need help. But these people, who might be cleaning our offices, serving our children school dinners, or doing odd jobs, need recognition too.’

Adele Phillips, a 25-year-old project manager from Whitstable, is left with £12,000 once she has paid her student debt and basic travel. ‘It is a nightmare,’ she said. Phillips said she loved to read, but could not afford ‘luxury’ items such as magazines and books. ‘I suppose people like us are no trouble to anybody. I pay my bills, I pay my tax, I contribute, I work hard.’

The soaring cost of energy, housing and food is also having a disproportionately severe effect on single people. A study published last week found that a single person needs to earn a minimum of £13,400 a year before tax to achieve an acceptable standard of living - half the amount needed by a family of four.

Donald Hirsch, poverty adviser to the foundation, said: ‘The study showed that the economies of scale achieved by a family are sometimes greater than people realise. Singles have quite a hard time of it, particularly when it comes to housing and heating.’

The typical two-year fixed-rate mortgage has increased from 4.25 per cent two years ago to 6 per cent, pushing the monthly payment of a £100,000 interest-only loan up from £542 to £644. Richard Morea, technical manager for brokers London & Country, said: ‘The people who are suffering most are those who bought a couple of years ago and are coming up to remortgaging. They could be in negative equity now and the lenders are not interested in giving them loans.’

Young single people on low incomes will be hard hit by the government’s scrapping of the 10p tax band, which means that 500,000 single adults under 25 without children and another 115,000 childless single people, aged 25 to 55, will lose an average of £83 a year, according to the Institute of Fiscal Studies. But it is the rise in fuel prices that is having most impact on singletons. The average household energy bill has nearly doubled over the past four years, from £590 a year in January 2004 to £922 this year, according to theEnergyShop.com, and the website’s founder, Joe Malinowski, predicts this will rise to £1,425 next year.

For Sarah Burns, a geography teacher in Salford, the increase in her electricity bill has proved too much: she has taken in a lodger to help cover the cost. Burns had been living alone for 15 months after buying a two-bedroom apartment for £130,000 last year. Her mortgage broker advised her to take out a fixed-rate mortgage , so she has not been exposed to the increase in mortgage interest rates over the past nine months. But the amount she pays for gas and electricity has risen more than she anticipated. ‘I had to borrow five times my income to buy, and after I had paid all the bills I was left with £200 a month for any extras. Every month I was panicking about whether I would be able to afford the bills,’ she said.

Martha Lawton, who runs workshops on budgeting and money management for the charity Toynbee House Services Against Financial Exclusion, said: ‘We have seen a big increase in single people expressing concern at the hike in bills which remain the same whether you are single or part of a couple - in particular, mortgages, electricity and gas.’

She cites the example of one woman who attended a workshop last week:

‘She said she had been looking forward to the spring because her gas and electricity bill would go down. But when her bill arrived, it was exactly the same amount as the winter bills.’

A Department for Work and Pensions spokesman said: ‘While it’s true that the government has focused its efforts on those who need help the most - children, pensioners, and those facing barriers to work - working people without children have not been forgotten.

‘Work is the best route out of poverty and everyone has benefited from record levels of employment, more investment in public services and measures such as the national minimum wage. On average, everyone has seen their incomes increase more than inflation over the last decade.’

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Read more July 6th, 2008

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