If you are in debt, you may be constantly receiving calls from creditors and third-party collection agencies. You are no alone in this.
According to the Financial Protection Bureau, roughly 28% of people with a credit history are in debt, and these debts have already been reported to a third-party collection agency. Around 9% already have 60-day delinquency on their cards.
It’s important to learn how to handle such issues, and especially how to deal with debt collectors. This guide will cover the important do’s and don’ts in settling credit card debt.
What You Should Do and Not Do
As a consumer, you have options, and you also have rights. For example, a third-party entity should never intimidate you to the point of even threatening your life. The following do’s and don’t’s will help you navigate settling debt.
Don’t Wait
Don’t wait until you have a missed payment in order to fix the problem.
Do Contact your Lender
Ensure that you contact your lenders in good time to explain what you are going through. In most cases, you might be surprised that they are willing to listen and understand. They can also give you more time to clear the debt.
Most lenders accommodate hardship and can delay your payments when you request them, provided you do not make it a habit every month.
Don’t Accept Intimidation
Do not allow a debt collector to intimidate you. The regulating body that is responsible for the debt collection agencies is the Fair Debt Collection Practices Act (FDCPA). According to the act, you have rights.
Do not allow a debt collector to intimidate you to the point where you are scared for your life or feel threatened. Here are some rules that debt collectors must adhere to when carrying out their collection duties.
- Cannot threaten you.
- Cannot contact you at your workplace.
- Cannot call you very early in the morning or late at night.
- Must be able to provide you with adequate documentation to prove the validity of the claim that they are bringing against you.
- They cannot arrest or imprison you. It is illegal for them even to suggest it.
- Cannot send letters that have the appearance of a government office or court letter.
- Cannot threaten you with legal action, threaten to harm you, or threaten to garnish your wages.
Do Know Your Rights
Ensure that you verify your debts and understand your rights. The above rights MUST never be violated.
Further, once a third party agency contacts you, the first thing you should do is ensure that you have verified the debt owing with them before you even start the process of paying, or negotiating on how to pay it.
Don’t Avoid Seeking Help
Do not be afraid to consult with a credit counselor. When you are dealing with a financial crisis, a debt counselor can help you understand how to go about managing your debt and clearing it.
Their knowledge and expertise in this area means that they can explain to you anything that seems confusing.
Do Verify a Counselor’s Validity
Be careful when looking for a counselor. As much as they are trained to help, some could be out to take advantage of you and frustrate you. You must verify their credentials before you even hire them, and make sure you have a reliable reference point for them.
Also, be careful about debt relief. This is the process of consolidation, which might not be the right road for everyone. You may end up in more debt than before if you do not take your time to research and find the lender that is willing to consolidate your debts at a lower interest rate.
Conclusion
Perhaps the most important point to note when it comes to debt settlement is that you must know your rights. Seek assistance from the lender where possible, or from a debt counselor to help climb out of debt.