The average person has over $90,000 in debt. Although borrowing money can be a great way to purchase a home or start a business, it can easily become overwhelming for many people. If you have debt that has gone unpaid for an extended period of time, it may be turned over to a debt collection agency. Here are five things you should know about debt collections.
1. Your Rights
As a consumer, you have rights protected by law under the Fair Debt Collection Practices Act (FDCPA). This law protects consumers from abusive, unfair, or deceptive debt collection practices. Debt collectors are prohibited from threatening or harassing you, using misleading tactics to get you to pay, or contacting you at inconvenient times or places.
Instead, they must provide transparent communication and follow specific guidelines.
2. Validation of Debt
If a debt collector contacts you, you have the right to ask them to validate the debt.
This means they must provide you with proof that you owe the debt and that they are authorized to collect it. You typically have 30 days from the initial contact with the collector to request validation in writing.
3. Negotiating
If you owe a debt, it is possible to negotiate with the debt collector to try to settle the debt for a lower amount.
Debt collectors want to get paid, so they may be willing to work with you to come up with a payment plan or lower settlement offer. However, be sure to get any negotiated agreement in writing before making any payments.
4. Credit Score
Unpaid debts that have been turned over to collections can negatively impact your credit score. A debt in collections can make it much more difficult to get a loan for a car or home.
This is a situation you want to avoid at all costs.
5. Statute of Limitations
Each state has a statute of limitations on debt collection, which puts a time limit on how long a debt collector can legally try to collect on a debt.
After this time has passed, you don’t have to worry about having someone take legal action against you. Be sure to keep this in mind when moving forward.
Managing Debt Collection
In some cases, filing for bankruptcy may be an option if you are unable to resolve the debt collection situation.
Working with a consumer finance lawyer can be helpful when dealing with debt collectors. They can help you understand your rights and create a strategy to manage the situation.
They can provide advice on how best to navigate the situation and protect your rights as a consumer. The most important thing to remember is that you have options, even if you owe an unpaid debt.
Understanding Debt Collections Is Simple
At first, debt collections can be intimidating and confusing. With a bit of knowledge, it’s easy to understand. Be sure to keep the above information in mind so that you can navigate to process fluidly.
Looking for more information about what we can do? Get in touch with us today to see how we can help.