Ignoring a debt collector is a bad idea. You could easily end up in even greater trouble than having unpaid bills.
Wondering how exactly bad it can get? Before doing something you’re going to regret, understand the possible consequences of ignoring a debt collector and how you can avoid being in this situation in the first place. In addition, we’ll share what is legally permitted by you and a debt collector if a debt collection is initiated.
Repercussions of Pretending There’s No Problem
Ignoring your debt collector can harm your credit score, lead to an escalation in attempts to reach you, and may land you in further legal trouble. More specifically, here are some of the problems you could bring upon yourself by not dealing with your delinquent debts:
Drop in Credit Score
Unpaid bills will damage your credit score. Here’s how bad it can be:
- Thirty days late: A drop of 17-37points if you have a fair credit score, or a drop of 63-83 points if you have an excellent credit score
- Ninety days late: A drop of 27-47 points if you have a fair credit score, or a drop of 113-133 points if you have an excellent credit score
Plus, if you’re unresponsive and the collector tries their best to reach you but is unsuccessful, your debt will be charged off. In other words, the collection agency counts your loan as a loss. It will stop contacting you, but the charge-off will appear on your credit report.
A charge-off will make it more difficult for you to rent or purchase a home, acquire new credit, or get insurance. Lenders will not approve your applications easily, and even if they do, they’ll charge very high interest and fees because you will be considered high-risk.
Having a charge-off does not have to be the end of the road. Professionals at The Phenix Group can help you regain your financial health. We offer credit repair in Queens as well as many other locations in the United States. So, no matter where you’re located, don’t hesitate to reach out to our credit repair professionals if you’re being hounded by a debt collector.
Escalation in Communication Attempts
If you do not answer your debt collector’s phone calls, they will email you. If you don’t respond to that, they’ll write to you. They may send several written warnings to your home address, or even show up at your front door.
Some debt collectors may even reach out to you on social media, which they have the legal right to do if you’re not responding to their other attempts.
That said, here are a few things they are not allowed to do:
- Share details of your debt with third parties (not family, friends, or employers)
- Continuously contact you via methods you’ve told them not to use
- Disturb you at work when you’ve asked them not to
If they violate these rules, you can lodge a complaint against them with the Federal Trade Commission (FTC), Consumer Financial Protection Bureau (CFPB), or the attorney general’s office.
Possibility of Legal Action
If the debt collector has tried everything but is still unable to reach you, they might file a lawsuit. In this case, if you keep ignoring the problem, the court may rule against you by default. This means the debt collector will win and they can legally garnish your wages or place a lien on your property as a way to recover the money.
The judgment will also appear in your credit report, which will negatively affect your financial status and further contribute to your credit instability.
What to Do When a Debt Collector Contacts You
- Request a debt validation letter: If you don’t recognize the debt, request that the collection agency prove its claims.
- Negotiate: If you don’t have the means to pay back the money in full, explain your situation to the agency in a written letter and request an extension or debt settlement plan.
- Involve professionals: If the debt collector has already taken action against you or you don’t want to use all of your savings in a lump-sum debt repayment, consider involving experienced financial advisors like The Phenix Group. We can guide you in regaining control of your financial situation without further losses.
Take Action Now
Remember, avoiding debt collector calls won’t make your debt go away. It’s better to take charge before the situation gets any worse. When you need assistance in navigating debt collection and improving your credit score, The Phenix Group is here to help.
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