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How To Guide: Arming yourself against Debt Collectors

Author: Jonathan Jones

It's not rocket science: if you're suffering under a burden of debt at present, it's only natural that you're probably dreading paying it off well into your senior years. Making the picture worse, a large amount of your debt repayments will be eaten into by the interest on the initial debt, often amounting to 70% or more of what you borrowed in the first place!

Here's how it usually happens...

As you fall deeper into the red, your creditors become more and more aggressive. As the harassment builds, you suddenly start to receive phone calls all day regarding your financial issues. You know you don’t have enough cash to get rid of what you owe, so you try to avoid the calls. Soon, debt collection agents are bothering you every second at your home and at work, bothering you for the moolah you haven't got. Thankfully, there is a means to fight back!

Know your Rights Under the Law

The Federal Trade Commission has released a debt collection information pack that makes it simpler for consumers to come to terms with their rights when interacting with loan collection agents. The FTC also mandates the Fair Debt Collection Practices Act (FDCPA), which makes it against the law for debt collectors to use high-pressure collection tactics that are abusive, deceptive, or unfair. Specifically, debt collectors are not allowed to:

- Annoy you or people who know you by using threats or explicit language

- Ring you an excessive number of times a day to hassle you, especially early in the morning or late at night (unless you agree to it)

- Lie about who they are, or lie about how much you owe

- Claim you will be arrested if you fail to pay your debt

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

- Contact you at all if you have told them – in writing — to cease making contact with you. After this step, the collector must only get in touch with you to tell you that they are in the process of taking a specific action against you, such as filing a lawsuit.

Don't get pushed around

When a debt collection company goes to the extreme, they may attempt to sue you to collect on the debt; And so, you need a gameplan that does more than just stops the line of communication between you and the debt collector. Rather than only defending yourself from these debt collectors, you might also opt to fight them so as to lessen your debt or escape possible bankruptcy.

Due to the fact loan collectors often collect a commission based on what amount they collect, you may be able to make a deal where you pay back only a portion of your outstanding debt. Any firm would rather have three quarter of the debt collected than none. By taking debt negotiation into your own hands, you should be able to decrease the interest rate on your loans, or even the total amount that you owe.

A word of caution: be sure to keep a record of all of your conversations with the debt collections agent, either by taping a telephone conversation or by keeping everything in writing.

This is doubly correct if the loan collections agent comes to an agreement to settle for less money than what's owed. By obtaining a proof of payment agreement on paper, you will have hardcopy evidence that you have satisfied your financial obligations. If you do not do this, the debt collector could show up again and pretend that you didn’t completely pay off the debt, and you will have no doccumentation to prove that the collections agent consented to part payment.

Give yourself a little Financial Space

By moving to either avoid debt collectors or talk to them when it's convenient, you will find some much needed peace from the continual hassle and abuse of the collectors. By understanding your rights, conducting all communication in writing, and arguing down your debts, you should be able to overcome the nefarious tricks of many loan collectors.

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