Unique Original Articles » How to: Dealing with Debt Recovery Agents

How to: Dealing with Debt Recovery Agents

Author: Jonathan Jones

The truth of the matter is if you are stricken with a pile of debt right now, it's totally reasonable that you are not looking forward to paying it off well into old age. Making matters worse, a significant proportion of your repayments will go towards the interest on your original debt, sometimes reaching 80% or more of the amount you borrowed!

Here's how it usually works...

As you fall deeper into debt, your creditors become more and more aggressive. As the pressure increases, you suddenly begin to get annoying calls every day regarding your financial issues. It's clear you haven't got nearly enough money to pay off your debts, so you try to dodge the callers. Soon, debt collection agents are intruding on you every second at home and at your place of business, hassling you for the moolah you don’t have. Fortunately, there is a way to hit back!

Know your Legal Rights

The Federal Trade Commission has published a debt collectors guide that makes it simple for consumers to figure out their rights when engaging with debt collection agents. The FTC also mandates the Fair Debt Collection Practices Act (FDCPA), which makes it an offence for debt collectors to use high-pressure collection tricks that are abusive, deceptive, or unfair. Specifically, debt collectors can't:

- Annoy you or people you know by using threats or offensive language

- Contact you a bunch of times a day to hassle you, especially early in the morning or late at night (unless you agree to it)

- Pretend to be someone they're not, or lie about what amount you owe

- Claim that you will be arrested if you refuse to pay off your debts

- Ring you at work if you notified them that you are unable to take calls there

- Make Contact with you at all if you have told them – in writing — to cease contact with you. After you've done this, the collections agent must only get in touch with you to inform you that they are in the process of taking a specific action against you, like filing a lawsuit.

Don't get pushed around

When a collections company gets nasty, they may attempt to sue you to collect on the debt; therefore, you need a strategy that does more than merely stops contact between you and the loan collector. Instead of only protecting yourself from these debt collectors, you may also decide to fight them in order to reduce your debt or have another option to potential bankruptcy.

Because debt collection agents routinely collect a fee determined by what amount they retrieve, you might be able to strike deals where you pay off only a part of your outstanding debt. Any agency would rather have half of the debt collected than none. By taking your financial situation into your own hands, you may be able to reduce the interest rate on your loans, or even the total amount that you owe.

A word of warning: keep records of all of your communication with the loan collections agent, whether by taping a telephone correspondence or by keeping everything in writing.

This is especially accurate if the debt collector agrees to settle for less cash than what they're owed. By getting a proof of payment agreement in writing, you will have documented evidence that you've met your financial obligation. If you don’t, the loan collections agent may show up again and say that you didn’t completely pay back the loan, and you will have no evidence to prove that the collector agreed to part payment.

Give yourself A bit of Financial Space

By moving to either avoid loan collections agents or speak with them when it's convenient, you will get some sorely needed peace from the continual phonecalls and annoyance of the collectors. By using your rights, recording all communication on paper, and talking down your debts, you may be able to safely navigate the treacherous tactics of many loan collection agents.

This article was written by Jonathan Xenophon. Check out his personal finance blog, Debt Loans, over at http://www.debtloans.com.au
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