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Credit Card Debt Collection

How To Stop Collection Calls From Credit Card Companies

Let My Credit Card Debt Go To Collections?

If you’re getting collection calls from credit card companies, you may have fewer options. Original creditors aren’t subject to the FDCPA and can collect on overdue debts much more freely.

While that doesnt mean they can call you at all hours or harass you with collection calls at work, there is less protection against these collection attempts at least federally.

In some states, like California, laws explicitly regulate creditor activity. If youre not in a state with a creditor-specific law, you have some options for stopping collection calls from a credit card company. Some laws governing telemarketing, for instance, may be applied to collection calls. In any case, it cant hurt to write a cease and desist letter if you want no contact and it might work.

Why Is Credit Card Debt Bought And Sold

Original credit grantors usually will pursue a debt as long as they believe there is a good chance youre going to pay the bill. Good customers are hard to come by and you are your creditors customer. So, they want to keep you if they can. They will go through their own in-house collection process with you to try to work something out. But there comes a time when it is no longer profitable to carry the debt, and they decide you are not the good customer they thought you were.

Thats when the credit grantor will sell the debt. These old debts are then bought by other companies for less than the amount owed. Professional debt collectors are confident in their ability to get you to pay up, so they can recoup their investment and make something for themselves. And once an outside collector gets involved, your value as a customer is gone.

Debts can be resold time and again, as the debt ages. Each time a debt is sold, its sold for less because of the increasing risk of not being able to collect an older debt when others have tried and failed. Each time, the documentation of the original debt is supposed to change hands with the debt sale. Often it does not. This becomes important, as you will see.

How To Stop Credit Card Collection Calls

Stopping collection calls depends on what type of company is trying to collect. If its a debt collection agency or a debt buyer whose primary business is debt collection, youre protected by the FDCPA and have some options.

When you hear from a collection agency or debt buyer, make sure you owe the money. Debt buyers and collection agencies often purchase old obligations, and the account might not be yours. Without acknowledging that you owe anything, make themin writing.

If you want to stop collection calls, write a cease and desist letter requesting that the agency stop contacting you. You can also ask the company to only contact you through your attorney or at particular times and via specific methods of communication for instance, you can say that you only want emails, not phone calls.

The Consumer Financial Protection Bureau has several sample letters you can use as your basis for this. To get started, you will need information about the debt collection agency, including its name and contact details, the debt it says you owe, any interest or added fees youre being charged, and when/how the debt accrued.

Make copies of the letter and send the original to the collection agency via Certified Mail. This will ensure youre notified once they receive it.

Beyond writing a letter, you might also consider:

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Do This If Your Debt Is Already In Collections

To start digging out of debt that’s already in collections, “get some help quickly,” says Eweka. Contact the National Foundation for Credit Counseling and ask to work with a nonprofit credit counselor.

With the counselor’s help, call the collections agency and arrange a payment plan so the delinquent marks roll off your credit report as quickly as possible. It can take up to seven years for your past-due history to disappear completely off your report, but as you work toward settling outstanding debts your score will consistently increase with time.

Even if your debt is already in collections, debt collectors are not allowed to lie to you, threaten you, use obscene language or harass you by phone. However, a new report from Pew Charitable Trust found that increasingly, collections companies are taking debt settlements to civil court. The study shows that, from 1993 to 2013, the number of debt collection lawsuits steadily doubled from at least 1.7 million cases to 4 million cases nationwide.

And although laws vary state by state, collections agencies are generally not allowed to use unfair practices like adding fees and interest on top of what you owe , nor can they threaten to take your property through illegal means. However, they may be able to leverage the legal system in surprising ways, like suing you or freezing your assets.

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What If Your Credit Card Debt Hasnt Expired Yet

What Lies In Your Debt?®

If you have old credit card debt that is still within the statute of limitations, its a good idea to try to pay it off if youre able. Consider transferring your old debt to a balance transfer credit card so you can use the cards interest-free grace period to make payments on that balance. You can also look into credit card and debt relief programs.

If youre struggling to pay off your debt on your own, a nonprofit credit counseling agency may be able to help, says Ross. They can help you create a budget and may enroll you in a debt management program that can help you pay off debt faster and save a bit more money than you would if you tried to pay the debt off on your own.

You should also be aware of your rights under the Fair Debt Collection Practices Act. According to the FTC, debt collectors are not allowed to call you after 9 p.m. or before 8 a.m., and they are not allowed to call your workplace if you have told them verbally or in writing that your employer does not allow such calls. Even if you have debt that is within the statute of limitations, you dont have to deal with debt collector harassment.

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Types Of Debt Collectors Covered

The most important difference between the two laws is that the State Act applies to creditors collecting debts owed to them in their regular course of business, while FDCPA generally does not.

Under the State Act, a debt collector is: any person who by direct or indirect action, conduct or practice enforces or attempts to enforce a debt owed as a result of a consumer credit transaction. This definition applies equally to:

  • Collection agencies attempting to collect on behalf of creditors for a fee or commission
  • Repossession companies specializing in seizing property owned by consumers but subject to security interests .

    Example: Dr. Helper’s office manager, Toni True, is in charge of collecting on past due accounts. Toni tries to be as understanding as possible but the doctor has bills to pay too. When Dr. Helper gets complaints about the overly zealous measures Toni uses to collect debts owed by patients, she discovers that Toni’s actions are covered by the State Act, although not by FDCPA.

The FDCPA applies to collection agencies, factors, and repossession companies but excludes most creditors attempting to collect debts owed to them in the regular course of their own businesses. However, this exclusion does not apply to creditors who suggest that their collection efforts are being performed by a third party.

How Debts End Up In Collections

The road to debt collections is long. It starts when a debt goes unpaid for a period of time, usually starting 30 days after the due date. The overdue payment may be reported as delinquent. Youll get notices and possibly calls seeking payment. At some point, usually after 180 days, the creditor such as a credit card company, bank or medical provider gives up on trying to collect.

The original creditor may then sell the debt to a collections agency to recoup losses. It may get only pennies on the dollar, but thats seen as better than having an old debt on the books and getting nothing.

If your debt is sold, youll start getting debt collection notices from a different company. Its the same debt, and you still owe payment its just that a third party has bought the right to collect.

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How Long Can Credit Card Debt Be Collected

In most states, as long as its a valid debt, there is no statute of limitations for how long a debtor can ask for repayment. However, many states do limit how long legal action can be taken to collect the debt. Additionally, the Fair Debt Collection Practices Act details what a debt collector can and cannot do while attempting to collect a debt.

How Long A Creditor Can Sue To Collect A Debt Varies By State

I Have 5 Credit Cards In Collections and I’m Being Sued!

States have different statutes of limitations for how long you can be sued in an attempt to collect on debts owed. Once the statute expires, you cant be sued, but some creditors or third party collectors may still try to contact you.

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What Are Credit Card Collections

If you know what a credit card is, youll know that credit card issuers allow you to make purchases with the promise of eventual repayment. But if you dont make even the credit card minimum payment, the credit card company eventually may send your debt to collections in an effort to recoup the money owed.

What Is A Time

Texas law gives someone a certain amount of time to bring a lawsuit for an unpaid debt. This time period is often commonly referred to as the statute of limitations.

Once the time period set out by the statute of limitations is up, a debt collector is prohibited from filing suit to recover the debt. This means the debt is time-barred.

In the past, taking certain actions such as making a payment or verbally acknowledging that you owe the debt could restart the clock on the limitations period. This created a problem called zombie debt where the time period set out by the statute of limitations could be constantly restarted.

A new state law introduced in 2019 aims to protect people from zombie debt. It also requires debt buyers to provide written notice if they are taking action past the limitations period.

You still owe time-barred debts, but the debt collector loses their most powerful way of collecting a lawsuit.

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Can A Debt Collector Force Me To Pay

A debt collector company cannot directly force you to pay a debt. However, depending on the statute of limitations in the state you live in and how long ago the debt was incurred, they may be able to sue you in court. If they win, the court may issue a judgment, which would allow them to collect by garnishing your wages and/or levying your bank account.

When A Debt Collector Contacts You

California Debt Collection &  Settlement Laws

The debt collection agency will make the first move. Within five days after they first contact you, they must send you a written notice regarding your debt. This notice needs to include the name of the creditor, the amount you owe and what to do if you believe there has been a mistake and you dont owe the money.

If you do owe all or part of the debt, you can arrange payment with the creditor. If you believe a mistake has been made, you need to contact the creditor in writing and inform them of the mistake. Youll also want to send a copy of your communication to the collection agency and inform them not to contact you.

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Repay What Is Realistic Based On Your Budget

Before you even consider bankruptcy, there are a couple of steps that you should take to deal with your debts that are in collections.

First, see whether or not there is a workable plan that you can arrange with either this lawyer or the collection agency. Dont let them twist your arm or manipulate you into paying anything more than you legally owe or into paying anything thats unaffordable for you on a monthly basis.

In other words, dont overcommit yourself. Only agree to pay what is realistic given your current budget.

And speaking of your budget, start taking a good, hard look at it.

Have you been overspending? Have you been mismanaging your finances? If so, you need to get that under control. Here is an easy two-step process to create a basic budget.

Know Your Debt Collection Rights

If you have a debt in collection or a collector is attempting to contact you, it can make a tense time feel even more stressful.

Its important to first verify their identity to make sure its a legitimate collector, but you also have a number of rights and collectors can work with you on realistic repayment plans.

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Debt Collection Cease And Desist Letter

This letter template should be sent to tell a collector that you no longer wish to be contacted. If the debt is past the statute of limitations for collection in your state, this should stop any further hassle for that debt. If the debt has not passed its statute of limitations, then the collectors only recourse would be to sue you in civil court.

File A Complaint About A Debt Collector

Credit Card Debt Spikes As Inflation Rises

Report any problems you have with a debt collection company to your State Attorney General’s Office, the Federal Trade Commission , and the Consumer Financial Protection Bureau . Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your state Attorney Generals office can help you find out your rights under your states law.

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What You Should Do Once Your Debt Is In Collections

Realizing you have debt in collections can be scary. Youll likely be informed via a letter in the mail, or a collector will start calling you. Once youre notified, there are a few different paths you can take to resolve the debt.

Leslie H. Tayne Esq., a debt attorney and author of Life & Debt, says consumers should take the following steps once they realize they have debt in collections:

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Make Your Minimum Payment If Possible

This may be difficult guidance if youve lost your income and youre having to prioritize your bills. There may be cases, though, where you get financial assistance from your credit card companies, but your interest continues to accrue. If this is the case, making the minimum paymentand making it on timecould help ease the burden later on.

How To Sign Up For American Consumer Credit Counseling

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If youre interested in using ACCCs services, you can schedule a free consultation online or over the phone by calling 800-769-3571. Youll need to provide your:

  • State and ZIP code

Youll also need to tell American Consumer Credit Counseling what services youre interested in and how much debt you owe.

Before your credit counseling session, youll want to organize a few important financial documents. The counselor may ask for copies of recent bills, pay stubs, credit card statements, and any correspondence with creditors or debt collectors. The counselor will use that information to suggest options for dealing with your debt.

Once the credit counselor offers their suggestions, you can decide which one youd like to pursue, if any. If you choose a debt management plan, for instance, the credit counselor will work out the amount youll need to pay each month and approach your creditors to enroll them in the plan. Once theyre enrolled, youd just need to make your one monthly payment as scheduled.

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