Dealing with debt is one of the most stressful experiences in anyone’s life. Even though it can be scary, debt is something that will only get worse until steps are taken to deal with it. Below are tips on managing your debt and steps that you can take to get rid of your debt as quickly as possible.
You have been contacted by a debt collector and are not sure about how to reply. The best way to reply to a debt collector is to send a letter that clearly states one of the following:
- I do not owe this debt.
- I need more information about this debt.
- The debt collector can only contact me through my lawyer.
Be sure to send your letter as soon as possible, and save copies of all communication.
It is important to come up with a realistic payment plan in order to pay off your debt. Before agreeing to pay your debt collector any amount of money, look at your monthly income and expenses to determine how much you can afford to repay every month. Do not agree to an amount that you cannot realistically pay every month!!
It may be helpful to contact a credit counselor. Credit counselors are usually non-profit organizations, who may offer free educational materials and workshops on how to manage your debt.
Watch out for signs of harassment or false information from debt collectors. As a consumer, you are protected by law from harassment from debt collectors. This includes protection from:
- Constant phone calls meant to harass or abuse you
- Use of offensive language
- Threats of harm against you
- Making public the names of people who do not pay their debts
- Not telling you who they are when they contact you
By law, debt collectors are not allowed to give you false information concerning:
- The amount of debt that you owe
- The debt collector claiming to be an attorney
- Threats to have you arrested
They are also not allowed to call family members and threaten them, and they cannot call before 8:00 am and after 9:00 pm
Keep all documentation from the debt collector. Also keep copies of anything that you send to the debt collector. It is a good idea to keep notes on the dates and times of phone conversations, as well as to write down what was discussed. These documents and notes can be helpful when disputing a debt collector, meeting with a lawyer or going to court.
Know the information that debt collectors are required to give you. Debt collectors are required by law to tell you the name of the creditor, the amount of debt that you owe and how to dispute or verify the debt.
If you do not believe that you owe a debt, or do not agree with the amount owed, you can dispute the debt. This must be done within 30 days after being notified of your debt.
Look out for signs of a debt collection scam. These include:
- The debt collector threatens you. This includes threats to have you arrested.
- The debt collector refuses to give you required information about your debt.
- The debt collector is trying to collect a debt that you do not recognize.
- The debt collector refuses to give you a phone number or mailing address.
If you think that you have been a victim of a debt collection scam, submit a complaint with the Consumer Financial Protection Bureau or the Department of Consumer Protection.
Never give out personal financial information to a debt collector over the phone. Scam artists may use this information to commit identity theft.
Both a credit counselor and a debt settlement company offer services to help you manage your debt, but they are different in a number of ways.
Credit counseling services:
- They are usually non-profit organizations.
- They advise you on managing your debt and debt payments.
- They make arrangements with your creditors to ensure that they do not try to collect late fees or sue you.
- They cannot help you reduce the amount owed. Instead, they can help you to lower your monthly payments.
- They help to negotiate the best monthly payment plan for you.
Debt settlement companies:
- They are for-profit companies or law firms.
- They arrange debt settlements with your creditors or debt collectors.
- They usually offer to pay off your debts with payments that are less than the full amount that you owe.
- Require that you stop making payments until a debt settlement can be reached.
It is important to keep in mind that, while they may help to manage or reduce your debt, neither credit counselors nor debt settlement companies can erase all of your debt. In most circumstances, it is safer to use credit counseling services. Debt settlement companies can be risky, and they often promise more than can they can deliver.
Debt is not a positive experience for anyone, but taking the proper steps can help to make the debt payment process as quick and as easy as possible. Pass this information on to friends, family and neighbors!
This article was written by Catherine Blinder, chief education and outreach officer of the Department of Consumer Protection of the State of Connecticut. To learn more about how the Department of Consumer Protection can help, visit us online at www.ct.gov/dcp.