Hopelessness, despair, frustration and confusion are words normally associated with major life catastrophes, but for many people, these are the exact feelings experienced when in debt.
If you're in debt and being hounded by calls and letters from debt collectors, a little knowledge may go a long way to helping you feel more empowered about your situation.
Recommended Videos
Here are five things every consumer should know about debt collection and being in debt:
1. You can stop them from contacting you.
You have an absolute right to stop debt collectors and collection agencies from calling you or writing to you. All you have to do is write them a letter telling them to stop. The letter doesn't have to have any fancy legal language, and you don't have to give any reason why you don't want to be contacted. You can, but don't legally have to, send the letter certified.
Your phone should stop ringing after that. If collectors contact you after you've made the request, it's a violation of federal consumer protection laws.
2. You may never be sued on your debts.
Not every collection agency or debt collector sues for debts owed to them. Someone with two debts may be sued on both, and someone else with 10 may get sued on none of them. There is no way to tell if you will be sued for your debts. But it is certain that there's a good chance some, if not most, will never sue you.
Many debt collectors use law firm letterheads to frighten you into thinking your debt has been transferred to a law firm and a lawsuit is imminent. But that's not always the case. Many law firms are actually just "collection mills" and won't actually ever sue.
3. You may not owe the people trying to collect your debts (or the amount they claim you owe may be incorrect).
Debt buyers are companies that purchase huge portfolios of debts for pennies on the dollar. They may not ever get your original loan applications, records of payments and other information about your loan from your original creditor.
That means that, although they're calling you to collect, they don't actually have any way of proving you owe the debt. They often don't even have accurate records of your payment history. Many may even be collecting debts that were discharged in a bankruptcy or which are too old to legally be collected.
You can and should ask them for records of your loan, including payment histories to make sure all your past payments were credited, before you voluntarily pay them anything. You'd be surprised how many simply disappear after such a simple request.
4. Debt collectors can't call anyone other than you or your spouse about your debts.
Many debt collectors will call relatives, co-workers and even neighbors to get a hold of you. But debt collectors can't contact anyone other than you and your spouse about your debt.
This includes leaving simple messages on others' voice mails. For example, a message left on your mother's answering machine that simply says "Please have Jane Debtor call us about a very important business matter" is illegal, even though the message didn't specifically mention your debt. Almost any communication of any kind or nature that's left with anybody other than you is a violation of federal consumer protection laws.
5. Your debt collector may actually be a scammer.
There is a nasty underworld of scammers who act like debt collectors by trying to make you pay them money. They defraud both you and your creditors. If you pay them, you actually haven't paid anything towards your debt.
These scammers obtain your information through identity theft or black-market sales of your personal information. As a result, they sound legitimate because they are often trying to "collect" a debt you may actually owe.
In reality, they aren't your creditor and have nothing to do with your creditor. They will often be extraordinarily harassing -- more so than a normal collection agency. They'll threaten to speak to your employer and have you arrested.
Always get the exact name and physical address of the company calling you, and do a Google search for them to see if they're legitimate. If they aren't, your best bet is to ignore them (obviously, never pay them anything). They'll often move on to easier targets.
Most of the advice above applies to consumer and not business debt. That includes credit cards, medical debts, student loans, repossessions and any other kind of personal or household debt.
By knowing your rights and asserting them, you can start taking a little control over your situation and feel a bit more empowered (without having to change your phone number and address), even if you owe money you can't pay.