Consumer: How to Deal with Debt Collectors

A debt collector is someone who regularly collects debts of another. Collectors are regulated by federal law, The Fair Debt Collection Practices Act.

Sometimes debt collectors engage in collection tactics that are illegal. For example, a collector that calls an excessive number of times in a day or calls at unreasonable hours such as before 8 AM or after 9 PM; or threatens to have you arrested for nonpayment of a debt is in violation of federal law.

**You have the right not to be called at work by telling the collector not to call you at work and providing an alternative number to call**

If you get a phone call from a debt collector, it is a good idea to plan ahead what you are going to say. It is also important to keep a record of the calls you receive. You can use the sample phone log included to record the calls.

You can stop a debt collector from contacting you, by writing a letter to the collector telling them to stop contacting you. Once the collector receives the letter they may not contact you again except to notify you that the debt collector intends to take specific action such as filing a lawsuit. Included is a sample letter below.

Often you will be asked from a debt collector to make payments or enter an agreement of payment. Be careful about entering any agreements to pay if you are not convinced you can afford the payments. You can tell the collector that you need time to think about entering any agreement to pay.

**If you are asked to enter a confession of judgment or consent to entry of a judgment you should not agree and consult with a lawyer**

If you have fallen behind in your payments or anticipate falling behind in the payments, you may want to work out a plan to lower the monthly payments.

To work out or negotiate a lower payment plan in your account it is crucial that you prepare a budget first. Preparing a budget will allow you to know the amount you can pay and avoid agreeing to pay an amount that you cannot afford.

**If you contact your creditor or collector to negotiate lower payments do not agree to an amount that is more than what you established you can afford with your budget**
 

Sample script to follow when negotiating with collector/creditor:

"Hello my name is___________________. I am unable to make the regular payments on my account _______________(acct. number). I am ______months behind or I am going to fall behind."
"I would like to bring my account current. Can we arrange a payment plan?"

The collector may offer some suggestions. Remember NOT to agree to any amount that you cannot afford.

"I am currently working with a financial counselor or I have carefully prepared a budget and I can afford to pay______ ( state the amount you can pay NOT the amount the creditor may be demanding)."

You can also negotiate what will be reported to the credit bureau. Ask how the repayment will affect your credit report and if once you have repaid the debt any negative information will be removed from the credit bureau.

Record the information given to you by the creditor/collector. Note the name of the person you talked to, the date and time of the conversation and specific details about the agreement.

If you have reached an agreement with the collector repeat it back to the collector.

"Thank you Mr./Ms. _____ for working with me. I understand that I will not be able to receive any additional credit until my situation changes. I will make _______(amount of payment) beginning on___________. I will send you a letter confirming the agreement.

Within 5 working days send the creditor a confirmation letter detailing the agreement.

Remember to always keep a copy of any correspondence for your records.

To find other Legal Aid of North Carolina materials, including any materials mentioned in this document, go to lawhelpNC.org. If you need legal help please go to legalaidnc.org/.