How Else Can You Get Help Settling Your Debt
If youre not confident in your ability to handle the process and negotiate the debt settlement successfully on your own, you can hire a company to do it for you. In general, it is best to utilize a debt settlement service with extensive experience in negotiations.
Check Out Our Top Picks for 2022:Best Debt Settlement Companies
Debt Collectors Cant Take Your Home Or Your Wages
In Texas, if your residence has been declared a homestead, it cannot be taken to pay a debtexcept for debts taken for the purchase of the home , for home improvements, for home equity loans or to pay certain taxes.
- Learn more about .
Wages may be garnished only to pay debts related to court-ordered child support, back taxes, and defaulted student loans. Debt collectors cannot garnish wages for repayment of consumer debt.
If a debt collector threatens to take your home or garnish your wages, you may be the victim of a debt collection scam. File a complaint with us immediately.
The Truth: Should You Never Pay A Debt Collection Agency
George Simons | July 21, 2022
Summary: When a collector contacts you, respond with a debt validation letter. You may not want to pay a collector if you will never have any income or assets, if you don’t owe the debt, if you want to settle for less, if the statute of limitations has expired, or if the collector doesn’t own the debt.
You’ve heard that you should never pay a debt collection agency, and now you want the truth. What happens if you never pay collections? Should you pay the debt collector or the original creditor?
Debt collection agencies can employ a variety of shifty tactics. They may start with harassing phone calls and escalate from there. But depending on your situation, you may never need to pay a debt collector. Not sure where to begin? SoloSuit can help.
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What Else Can Donotpay Do
DoNotPay is committed to protecting your consumer rights. We want to ensure that unfair debt collection practices don’t ruin your life and subject you to untold anguish.
You can stop unscrupulous debt collectors from harassing you by employing shady practices through our services.
With a few clicks on the DoNotPay website, you can learn more about collection letters, and more about:
How Do Debts End Up In Collections
A collection can result from a debt that hasnt been paid on time. If you fail to pay off a medical bill or credit card bill, for example, the original company owed may write off your debt as a loss and sell it to a debt collection agency.
Generally speaking, companies sell your debts to debt collection agencies after you become severely delinquent on a payment. Think of it as a last resort, of sorts. While different creditors and lenders have different definitions of severely delinquent, in most cases accounts are sent to a debt collection agency after 90 to 180 days of nonpayment.
The debt collection agency will then attempt to recover the money owed. In some cases, this could mean a nonstop litany of phone calls and notification letters.
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How To Check A Debt Collector With The Help Of Donotpay
DoNotPay can help you to determine if the debt collector is FDCPA compliant, so you can decide if you want to pay the debt or file a complaint.
Here’s how it works:
And that’s it! Once you choose the course of action you want, DoNotPay will handle the rest. We’ll deliver your request directly to the debt collectors via first-class mail or file your complaint automatically with the CFPB so that they can no longer use unfair debt collection practices.
How Reputable Collectors Operate
Debt collectors have a bad reputation for harassing consumers. The Federal Trade Commission receives more complaints about debt collectors and debt buyers than any other single industry.
The Fair Debt Collection Practices Act limits how collection agencies can collect a debt to keep them from being abusive, unfair, and deceptive, and there are debt collectors who are careful not to violate consumer protection laws. A collector who behaves properly will be fair, respectful, honest, and law-abiding. After you make a written request for verification of the debt youve been contacted aboutwhich is your legal rightthe collector will suspend collection activities and send you a written notice of the amount owed, the company you owe it to, and how to pay.
If the collector cant verify the debt, the company will stop trying to collect it from you. It will also tell the credit bureaus that the item is disputed or request that it be removed from your credit report. If the collector works as a middleman for a creditor and doesnt own your debt, it will notify the creditor that it stopped collection activity because it couldnt verify the debt.
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How Should I Respond To A Debt Collection Lawsuit
Getting sued can be stressful, and many people dont know where to start. The most important thing is to respond. That might mean writing a response and showing up to court, by any deadline listed in the court papers, regardless of whether you think you owe the debt or not.
Whatever you do, dont ignore the lawsuit. Even if you dont think you owe that debt. Responding to a debt collectors lawsuit in court will likely put you in a better situation, cost you less in fees, and give you more control over how you repay the debt.
Here are the main steps to take if you get sued by a debt collector:
What Are My Rights Against Debt Collectors
If youre being harassed by a debt collector, you have a right to fight back. The Fair Debt Collection Practices Act and other consumer protection laws are meant to protect you from the following creditor behavior:
- Contacting you at work
- Telling others about your debt
- Harassing or threatening you or lying to you about your debt.
If your debt collector violates the law, you can report them to your or even take legal action to recover damages.
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How To Deal With A Debt Collection Letter On Your Own
A creditor will send you a debt collector letter of demand before sending the debt to the collection. Typically, a creditor may send you two or three letters before the final notice debt collection letter.
If you fail to engage or respond to these legal letters for debt collection, the creditor may sell your debt to a collection agency.
Therefore, you may have time to engage the creditor and ensure they don’t sell your debt to a collection agency. Your options are somewhat limited, but you can make the most of the situation.
If you’re receiving debt collection letters when payment was made, you should immediately write and send a letter of dispute. DoNotPay can help you with this urgent and delicate process.
Harassment And Call Restrictions
Debt collectors cannot harass or abuse you. They cannot swear, threaten to illegally harm you or your property, threaten you with illegal actions, or falsely threaten you with actions they do not intend to take. They also cannot make repeated calls over a short period to annoy or harass you.
Debt collectors cannot make false or misleading statements. For example, they cannot lie about the debt they are collecting or the fact that they are trying to collect debt, and they cannot use words or symbols that falsely make their letters to you seem like they’re from an attorney, court, or government agency.
Debt collectors cannot call you at unusual or inconvenient times or places. Generally, they may call between 8 a.m. and 9 p.m., but you may ask them to call at other times if those hours are inconvenient for you.
Debt collectors may send you notices or letters, but the envelopes cannot contain information about your debt or any information that is intended to embarrass you.
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Options For Getting Out Of Debt Without Paying
Even if you have debt you can’t pay, you still have options. Bankruptcy may sound like an easy way to start over, but it can have long-lasting financial consequences. In general, the goal of the debt collectors is to get you to pay, so you may be able to negotiate a payment plan or lower amount. Debt relief programs differ based mainly on the type of debt.
Forgiveness Of Credit Card Debt
A Collection Agency or Credit Card issuer may choose to forgive the entire debt completely relieving the debtor of the entire amount owed. However, this results in a tax form sent to the debtor which requires the debtor to file the 1099 C form along with their taxes. The amount reportable varies from state to state.
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Verify The Debt Is Yours
When a collection agency calls, you might be tempted to hang up, but the call is your opportunity to get valuable information.
Be sure to ask for the following:
- The name of the original creditor and when the debt was incurred.
- The debt balance, including interest charges and fees.
- The name and contact information of the debt collection agency and the rep youre speaking to.
- Request written validation of the debt and ask to be contacted in writing only.
After the call, you have 30 days to check and see if the debt belongs to you. You can do that by pulling your free or by looking at financial records such as bank statements or old bills.
If the account doesnt belong to you, you can take steps to dispute the debt and put an end to the calls.
Collectors Taking Money From Your Wages Bank Account Or Benefits
Debt collectors can only take money from your paycheck, bank account, or benefitswhich is called garnishmentif they have already sued you and a court entered a judgment against you for the amount of money you owe. The law sets certain limits on how much debt collectors can garnish your wages and bank accounts. Certain federal benefits, such as social security benefits and veterans’ benefits, generally cannot be garnished. For more information about garnishment and what you can do if your bank account or benefits are garnished, see the FTC’s “Garnishing Federal Benefits”.
If you get a summons notifying you that a debt collector is suing you, don’t ignore it. If you do, the collector may be able to get a default judgment against you and garnish your wages and bank account. If you are sued by a debt collector, you may want to consult an attorney to discuss your options.
For more information about debt collection and your rights, visit the following:
- FTC’s Dealing With Debt: Information about managing debt, credit repair, and different debt collection issues.
- CFPB’s Debt Collection: Common questions about debt collection.
- FTC’s Fake Debt Collectors: How to tell if a debt collector is legitimate or a fraudster.
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Is It Legal For A Debt Collector To Harass You
No! According to the Fair Debt Collection Practices Act, a debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.
If youve been receiving threats or repeated, annoying phone calls, we recommend consulting with a legal professional before proceeding with a debt payment plan. You can also report any problems you have with a debt collector to your state Attorney Generals office, the Federal Trade Commission and the Consumer Financial Protection Bureau. If your state has debt collection laws that differ from the Fair Debt Collection Practices Act, your Attorney Generals office can let you know exactly how they differ.
Where Can I Get Help
Going to court can feel overwhelming to do alone. But there are options to get legal help, including
- Free or reduced-fee legal help, if you have a low income. To find a legal aid organization near you, use the Legal Service Corporations search tool. Or search for a pro bono program using the American Bar Associations pro bono directory.
- Free online answers to debt collection questions from an attorney in your state, which you may be able to get at org.
- Hiring an attorney, if you can afford it. Find a lawyer in your state using the American Bar Associations Directory. Be sure to ask if they have experience with consumer law, debt collection defense, or the Fair Debt Collection Practices Act.
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Put A Stop To The Calls And Letters
Consider asking the debt collector to stop contacting you. This could prevent the anxiety that comes with answering phone calls from debt collectors or opening the mailbox to find a threatening letter. In most situations, a debt collector must quit reaching out to you if you make that request in writing, except to acknowledge that it will give up contacting you or to inform you that you’re being taken to court.
But putting a stop to collection-related calls and letters won’t make your debt disappear. Your debt in collections can still be reported to the credit bureaus, and the debt collector still can file a lawsuit against you to recoup its money.
Why Should You Avoid Having Your Debt Sent To Collections
Its better to deal directly with the original creditor than to have your debt sold to a debt collection agency. Debt collection agencies are often more aggressive in their collection attempts and may take extreme measures.
The original creditor is the first source of the money loaned. However, if they cant get you, as the debtor, to pay your debt, they often turn the effort over to a debt collection agency.
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Fair Debt Collection Practices Act
This federal law applies only to collectors working for professional debt collection agencies and attorneys hired to collect a debt. It is similar to Texas law, but also prohibits:
- “Unfair or unconscionable means to collect or attempt to collect a debt”
- Any conduct to harass, oppress, or abuse
If you are being subjected to harassing, abusive, or fraudulent debt collection tactics by professional debt collectors and you want to stop further contact with you notify the collector in writing. Keep a copy of your letter and send the original to the debt collector by certified mail.
Avoid Debt Collection Scams
It makes sense. When youre in debt, anything that looks like a solution to getting out of debt sounds good. But unless your plan includes getting all the facts in order about your debt and obliterating the debt, youre headed for trouble.
You may be in debt, but youre not desperate. Sleazy debt collectors are a dime a dozen and so are their ugly counterparts: credit report clean up companies and companies that promise to settle your debts for you. Dont ever pay someone to provide these services. Theyre scams designed to squeeze even more money out of hurting people.
If you want to know the best next step for your situation, book a free call with a Financial Coach and get advice we stand behind.
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About the author
Ramsey Solutions
Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.
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How Can I Find Which Collection Agency I Owe
It can be hard to find out where a collection account came from. Your debt may have changed hands multiple times, so its not uncommon to get a call from a company youve never heard of.
The first step to find out who you owe it to look at your credit reports. Your credit reports show a list of your collection accounts, and each one states who the debt was purchased from and when.
You can also ask debt collectors where the debt came from, and then compare their information to your own records, including bills and financial account statements.
