For many of us, when a debt collector begins calling to collect
on a debt it usually is no surprise. Most consumers are aware
of their finances and their inability to make payments. When
the collection
calls begin it most often means your debt has not been paid in
quite some time and a collector has every intention of forcing you
to make payment. The collector is savvy, and has a lot of
tools at his or her disposal to coerce you to make a payment,
whether you are ready and able, or not. Knowing your rights under the Fair
Debt Collection Practices Act (“FDCPA”) will protect you from being
taken advantage of.
When communicating with collectors, it is important to
understand what type of
collector is contacting you so you can respond
accordingly. There are three different types of collectors:
collection departments of the creditor, third party or contracted
debt collectors and debt buyers. A clear understanding of who
you are communicating with will allow you to gain the upper hand
during debt negotiation and ensure you are not being taken
advantage of.
Type 1: Collection Departments
When first contacted by a debt collector the initial communication
often comes from an agent from a collection department. For
example, if you default on a store credit card, the collection
department from the credit card company or the store will contact
you in an effort to receive payment. This type of
collector will usually treat you like a client as they want to
work out payment, while still holding on to your business.
Collectors who work in house for a store or credit card company are
usually less forceful and more likely to negotiate a payment
plan. That is, until the account is “charged
off”. While most creditors will not still be collecting their
own debts at the time the account is charged off, some still will
on occasion. The trouble is that the FDCPA does not apply to
the original creditors, and therefore, this caller will get away
with some of the harassment and abuses that debt collection
agencies will not.
Type 2: Third Party or Contracted Debt
Collectors
After payment is not received and the creditor charges off the
debt, companies often hire an outside collection agency to do their
dirty work. In this situation, the original creditor holds
onto ownership of the debt and hires a collection agency to go
after you for payment. This type of collector is contracted
for their work and most often only get paid a percentage of what
they collect if they are successful. These collectors are
more aggressive. However, the FDCPA does apply to them in
every way, and as they tend to be more aggressive, they are more
likely to violate the law under the FDCPA because they only get
paid when you pay.
Type 3: Debt Buyers
Debt buyers most often purchase old debt for pennies on the dollar
that are considered uncollectable because they are either passed
the statute of limitations or a previous collector’s efforts were
unsuccessful. If you know that your debt is passed the
statute of limitations and you can no longer be sued for payment,
make sure this type of collector does not trick you into making a
payment. Making a payment, even a small one, can revive or
bring the debt back to life when you would otherwise not have been
responsible. While debt buyers themselves are
often also collectors, many debt buyers will hire out yet another
collection agency to perform the collection work. Thus, to
truly understand who is the owner and who is the collector, read
the letters that they send you thoroughly. They will disclose
who the current creditor is. If it is a different company
from whom you originally had credit with, you know that the debt
was bought. If that current creditor is a different company
than who is contacting you, you know the debt was bought and then
assigned.
If you are being contacted by a debt collector and feel your
rights may have been violated under the FDCPA, contact SmithMarco P.C. for a free case review.