Dealing with debt collectors
Dear Debt Adviser:
Hi there. I have some debt collectors
telling me I have to pay the whole balance in full. I can't do that
and I tried sending a monthly payment that I could afford and they
sent it back saying my payment was insufficient.
Now that is pretty bad when I send them a payment
and they send it back because it was not good enough for them. Can
they legally do this to me?
Welcome to the combative world of debt collectors! Unfortunately,
once the original agreement with your creditor was not met and the
account balance was turned over for collections, all bets were off!
Some collectors demand full payment just to apply
pressure for larger monthly payments, and while many agencies will
agree to monthly payments, it is not legally required that they
do so. This is especially true of delinquent home mortgages that
are more than 90 days past due.
I would recommend that you communicate in writing
with the original creditor to whom you owe the money. Offer to make
regular payments at an amount you can manage and suggest that you
be allowed to pay them, not the collector. They may allow it or
not, but you can try.
If they keep your account with the collection agency,
write to the collector explaining how much you believe you can afford
to pay each month and detail the payment schedule. Send all correspondence
certified mail with return receipt and keep copies. The payment
you sent might have been refused because you did not establish a
payment plan in advance.
If you show that you are committed to paying off the
debt, it is likely that you can come to some payment arrangement.
If the collector is still asking for more than you can afford, I'd
suggest that you contact a reputable credit counseling agency or
attorney in your area to see if they can act as an intermediary
on your behalf and to get advice on your options. Beware of the
20-minute quick fix places. Expect to spend at least an hour going
through options and alternatives.
With that said, a collection agency can demand payment
in full and, if you refuse to pay, it can seek a civil judgment
in court to collect. You will be notified about the court hearing.
Go to it! Show the judge your correspondence, your repayment plan
and anything else you can come up with that shows you are willing
to repay, but need a realistic repayment plan. Often the judge will
side with you and the collector will have to abide by the terms
of the court.
If you don't go to court, and an uncontested judgment
is granted by the court, the collector becomes a judgment creditor
and will attempt to collect again. If that fails, then the collector
will get an execution of the judgment and may be empowered by the
court to collect the debt in one of the following ways (state laws
vary so check with your state attorney general for particulars on
civil judgments in your state):
- Personal property or bank
account levy. The collector can have your bank account
frozen and the funds removed to satisfy the judgment or seize
personal belongings that are not exempt and sell them at auction.
- Wage garnishment.
If you work and meet income requirements, your wages can be garnished
for up to 25 percent of disposable income per paycheck until the
debt is paid.
- Home lien. If you
are a homeowner, the creditor can place a lien on your home; ownership
cannot be transferred until it is paid.
Just in case you were thinking of pulling up stakes
and heading for the hills after reading this, know also that the
collector can file a petition with the court seeking information
about your assets. The court issues an order that you or any person
who has information about your assets must answer questions about
those assets at a place and time determined by the court. In other
words, you can run but you can not hide.
Keep in mind, the above is a worst-case scenario and
many collectors will not go through the court expense to seek a
civil judgment. However, the option is available to them and you
should be aware of the possibilities.
You should also be aware of your rights in the debt
collection process. You may request in writing that the collection
agency not contact you at work. You may even request they not contact
you at all about the debt. The collector is then not allowed to
contact you unless it is to let you know of a specific action that
is being taken such as filing a civil judgment. If you ask not to
be contacted, plan on legal action to follow.
For additional information regarding your rights under
the Fair Debt Collections Practices Act, go to the Federal Trade
Commission Web site.
The Debt Adviser, Steve Bucci,
is the president of Consumer Credit Counseling Service of Southern
New England. Visit CCCS
for additional debt
advice or click
here to ask a debt question.
-- Posted: May 2, 2003