Ways to Save - Coping With Collectors

If you’re too late for some of the advice given here, do not panic. However, do be prepared for a new phone mate - the bill collector. There are 6,300 bill collectors in the United States, and they all say business is booming. The borrowing binge has increased consumer indebtedness to over $1 trillion. Creditors who can’t handle all that debt have turned to collection agencies to do the job for them.

When you can’t deal directly with your creditors, it helps to know what their hired guns can and can not do. The Fair Debt Collection Practices Act, which became law in 1977, protects you from unfair collection practices. The following are some key provisions:

  • A debt collector may contact you in person or by mail, telephone or telegram, but not at inconvenient times or places. That means not before 8 a.m., or after 9 p.m., or on the job if you ask him or her not to do so in writing. Of course, make sure you send your written material as registered mail to the debt collector so they’ll know you mean business.
  • Family members, friends or acquaintances can be contacted to help locate you, but the collector cannot discuss details of your indebtedness with them.
  • If the debt collector knows you have a lawyer, he or she must contact the lawyer, not you.
  • Debt collectors are forbidden from using harassing or abusive tactics, such as: obscene language; false statements about who they are; threats to make public your name as a deadbeat or to use force against you; and sending documents that look like official court or government documents.
  • It is illegal for a debt collector to collect more than what is owed or to deposit postdated checks without notifying you in advance.
  • Within five days of contacting you, a debt collector must send a written notice that includes information about your debt, the creditor involved and the fact that you have 30 days to dispute the debt in question.
  • A debt collection agency must stop contacting you, if you request so in writing. However, the collector can subsequently tell you he or she is advising the creditor to sue you and may report your non payment to a credit-reporting agency.
  • The law covers only third parties, such as debt collectors, not the original creditor. However, several states have fair collection practices that cover both.

It is a good practice to keep a journal record of the dates, times and names of creditors who call. If they violate the rules, use your journal as documentation and consult a lawyer or state consumer protection agency for assistance.

Reality Check

There’s only one right way to cancel a credit card, and one additional but little-known reason to do it: too much credit may limit your chances of being approved for any new credit, including mortgages and auto loans. A cut-up credit card doesn’t mean a closed account, and potential lenders may deny you new credit, if they fear you might run up all those unused but still open credit cards. To close an account the right way, call the card issuer and ask them to close it. Follow-up with a letter stating that the account was closed at your request, and ask them to acknowledge it in writing and note it on your credit report.

Whether you go directly to your creditors or cope with collectors, you can survive, recover and prosper. Accomplish this and you’ll feel ready to negotiate world peace or the federal budget. However, managing your own life is the priority here.

It is difficult to destroy credit cards, but you have got to do it. Learn to "Just Say No" to credit card use. When the mail arrives, don’t even think about opening those envelopes that announce your pre-approval. Tear them up and throw them away!

Discipline will get you out of debt. It took a long time to get there, so expect a long road back. Once you make it, once you regain control of your finances, you will feel great.

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