Our Advice Team answers thousands of consumer questions each year. Writers most often ask about their rights when it comes to debt collection. In case you are struggling with debt collection and your rights, following are a few of the common questions received and answered.
Dear Advice Team: I am behind on payments and a collector is now calling my sister. Not only is he harassing me, but he’s harassing innocent people. It’s humiliating! Someone told me that it is illegal for a collection agency to do this. Is it? -Charles, Iowa
Charles: It may be hard to swallow; however, your collector is permitted to contact other people. They are only supposed to do this to find out where you live, what your phone number is, and where you work. Fortunately, in most cases, the collector may not divulge the reason for the call to anyone other than you or your attorney. To learn more about your rights, I recommend you read the Fair Debt Collection Practices Act at FTC.gov.
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Advice Team: I am working on repaying a debt owed to a home-based fitness trainer. To get a commitment, she requested six post-dated checks. I’m not sure I’m comfortable with that. What are your thoughts? -Michael, Colorado
Michael: In my opinion, post-dating a check is a bad idea. Most people believe that a post-dated check may not be paid until the date that is shown on the check. Unfortunately, a bank can pay a post-dated check even if the check is given to the bank prior to the date posted on the check. Instead, write to the trainer explaining when and how you plan to repay the debt. Then, stick to your plan!
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Dear Advice Team: I owe a debt to a collection agency. I offered them a payment plan, but they refused it. The collector said, “That’s too little, we have to have at least $50 dollars a month.” If a collector refuses a payment plan, does debt become void? –Cheryl, New Mexico
Cheryl: Even if the creditor refuses your payment plan, you still owe the debt. That being said, many collectors will apply partial payments if you send them. I highly recommend that you begin communicating with the creditor in writing. Keep copies of all correspondence for your files.
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Dear Advice Team: A credit collections agency calls every day. I can’t talk to them about the account because it is in my wife’s name. I have explained that my wife is dealing with the issue. In the meantime, what can I do to stop the calls? -Jim, Texas
Jim: Under the Fair Debt Collection Practices Act (FDCPA), your wife has the right to stop the calls. To do this, she will need to write to the collection agency asking them to cease further communication. Once the letter is received, the collector is not permitted to call unless they plan to terminate collection efforts or they intend to “invoke a specified remedy.” Just be aware that stopping the calls does not mean that she no longer owes the debt; in fact, it could even escalate the collection process. To get your finances back on track, you might both benefit from working with a reputable credit counseling agency.
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Advice Team: I am 26 and have NEVER been late on my credit card. Recently, the credit card company (that I worked with for years) changed my rate from 7.99% to 28.99%. When I contacted them, I was told about a notice I received and that the rate was raised based on my credit report. I do not get how a company could do this. –Elizabeth, Maine
Jeri: One of the most common triggers of a rate increase lies in what is called the Universal Default clause. Basically, this clause permits your creditor to raise your interest rate, or even close your account, based on your overall credit situation. You should have the opportunity to close the account and keep your current interest rate. Contact your creditor for information.
If you have a question for the Advice Team, please don’t hesitate to ask! It’s free and confidential; however, please do keep in mind that we are not attorneys. For legal advice, it is always best to seek legal counsel.