Bad things happen to good people. Loss of employment, divorce, death of a spouse, medical emergency or many other unforeseen events can take anyone by surprise. This often times results in a temporary or permanent reduction in household income leading to a mountain of debt and delinquent bills. The stress associated with the unforeseen event in and of itself can be devastating. To be put in such a vulnerable position and have to deal with the aggressive tactics of debt collectors can be overwhelming.
Over the years I have heard some very extreme reactions to debt collectors from changing phone numbers, moving, hiding assets and lastly, threats of suicide. People tend to have a natural fear when it comes to dealing with debt collectors. Fear is described in many circles as an acronym—false evidence appearing real. The dictionary meaning of fear is an unpleasant, often strong emotion caused by expectation or awareness of danger. What impending dangers do debt collectors pose on consumers?
The primary reason why many people are fearful of debt collectors has more to do with a lack of understanding of their rights under the Fair Debt Collection Practice Act (FDCPA). The FDCPA protects debtors from harassment, public embarrassment and unfair collection practices. Knowing your rights can give you the confidence to protect yourself from illegal harassment. Below is a summary of your rights under Fair Debt Collection Practice Act:
•Debt collectors can’t go public with your debts. A debt collector cannot tell anyone other than you, your attorney or joint applicant/co-signer about the debt.
•Debt collectors cannot call when they get good and ready. Debt collectors are not allowed to call before 8 a.m. or after 9 p.m. your time. If your employer prohibits personal phone calls, collectors are not allowed to call your place of employment after proper notice is given.
•Debt collectors may not use false, deceptive or misleading representation. A debt collector cannot pose as a government official or attorney in an attempt to collect on a debt. A debt collector cannot implicate that nonpayment of any debt will result in the arrest, imprisonment, seizure of assets, garnishment, attachment or sale of any property or wages of any person unless such action is lawful and the debt collector or creditor intends to take such action.
•Debt collectors may not engage in conduct that is harassment, abusive or oppressive such as threatening to use violence or criminal means against you, your family, your reputation or property. Publicize a list of people who neglected to pay debt (they can report information to the credit bureau). Using abusive or obscene language to intimidate or abuse. Calling you repeatedly on the phone to annoy you. Calling you and failing to identify themselves.
•Debt collectors may not use unfair practices to collect or attempt to collect a debt. Unless expressed in the contract, a debt collector cannot collect more than what is rightfully owed. A debt collector cannot force you to send a postdated check in order to threaten or initiate criminal prosecution.
In addition to knowing your fair debt collection rights, you should also know how to prioritize your debt when you are in a bind.
•Rent/mortgage payment. Your rent or mortgage payment should be your highest priority. A missed payment can result in an eviction or foreclosure.
•Food. The food selection will more than likely have to be modified. It should not however be ignored.
•Utility bills. Lights, water and heating are essential and should be given high priority.
•Medical insurance. With the escalating cost of medical expenses, medical insurance is needed, particularly if you or a loved one has a history of medical problems.
•Child support. You can go to jail for not paying child support. More importantly, your child’s well-being is of high priority and should be treated as such. If your income has dropped you may be eligible for a reduction in child support payments
•Unpaid taxes. The Internal Revenue Service and state revenue departments are known to execute whatever means possible to collect on debt including garnishing wages, attaching bank accounts and placing liens on your house or other property.
•Secured loans. Loans secured by collateral such as cars, furniture, stereos, etc. should be given high priority because a missed payment can result in seizure of assets and often result in a deficiency judgment.
•Student loans. Most student loans are government-backed loans. A missed payment can result in garnishment of wages, and/or collection of tax returns.
•Unsecured loans. Loans that are unsecured including credit cards, charge cards, department store cards, loans from friends and relatives, installment loans, and finance companies loans are often times given low priority because in most cases a missed payment will not result in loss of shelter or repossession of property.
•Health clubs, gyms and country clubs. These are considered to be luxury endeavors and should be among the first to be sacrificed.
(Mortgage and Money Coach Damon Carr is owner of ACE Financial. Sign up for Damon’s FREE online “Ask Damon” e-Newsletter at www.allcreditexperts.com. Damon can be reached at 412-856-1183.)