Everyone has missed a payment at least once in their lives. Something urgent comes up and they completely forget until days or weeks later when they receive an email, phone call, or letter informing them of late charges.
Sometimes, it goes a step further. If you change your phone number or address, maybe those letters and phone calls aren’t reaching you, and after a few months, the unpaid account balance is sold to a debt collection company.
Even though the original company couldn’t locate you, the debt collectors found you with ease, and now, they won’t stop blowing up your phone. Should you get a lawyer? Should you consult a credit repair company in New York or relevant state? That might be a great idea–in this article, we’ll explain why!
What Happens When My Debt Goes to Collection?
Often, your debt will be sold to the debt collector for pennies on the dollar. The collection agency now legally owns the debt, and you are obligated to pay it.
The next thing that happens is the debt collector opens a file on you with the three national credit reporting bureaus: Experian, Equifax, and Transunion. As a result, there is now a record on your credit report that you have an outstanding collection account that has not been paid. Additionally, the prior creditor may have also made reports to the credit bureaus.
This new collection on your credit report, along with any prior negative listings, can destroy your credit score. It acts as a red flag for prospective lenders.
The last step in the process is collectors trying to wrangle payment out of you by repeatedly contacting you via every means at the company’s disposal, including letters, phone calls, and emails.
Collectors who are paid commission on any debt they collect are strongly incentivized to get you to pay. A collection agency can even sue you.
What Are Debt Collectors Not Allowed to Do?
Debt collection used to be quite unregulated, with all sorts of unsavory and predatory tactics used against ordinary people. Thankfully, in the 1970s, the US government passed the Fair Debt Collection Practices Act (FDCPA).
The FDCPA sets out rules for what a debt collector may not do when attempting to collect a debt. Here are just a few of the many protections offered by the FDCPA:
They May Not Call at Unreasonable Times or Places
Collectors are not allowed to call you outside of the hours of 8:00 AM to 9:00 PM. They must also cease calling you at work if instructed to do so.
They May Not Discuss Your Debt With Anyone but You
If someone other than you answers the phone, collectors may not disclose why they are calling. This is to prevent the company from slandering your name to others, a common tactic before the FDCPA was put in place. If you live in a community property state, they may disclose the reason for the call to your spouse.
They May Not Harass You
Collectors may not threaten you with arrest or harm. Furthermore, they cannot verbally abuse you, scream at you, or use profane language.
When to Contact an Attorney
If a collections company violates any of the above, it’s time to call a lawyer. The penalties for the companies are gigantic if they violate the FDCPA.
That being said, there is another reason to contact an attorney. If the debt doesn’t belong to you or is inaccurate in any way, you should call a lawyer and not pay the debt collector or original creditor.
Credit repair companies such as the Phenix Group have lawyers on staff who know the ins and outs of the entire credit industry. On your behalf, they will reach out to collectors, credit bureaus, and other relevant parties to remove errors and clear your name. Removing a single collections account can boost your score immediately, allowing you to obtain loans and interest rates previously unavailable to you!