Quick Answer: Debt collectors help the economy by recovering $55 billion annually for creditors, preventing business failures and keeping costs down, but consumers have legal rights and protections when contacted about disputed debts. Third-party collectors are essential for recovering everything from medical bills to government fees like unpaid taxes and traffic tickets.
MINNEAPOLIS, March 2, 2015 /PRNewswire-USNewswire/ — Have you ever been contacted by a debt collector? If the answer is yes, you are not alone.
According to the Federal Reserve, the total amount of consumer debt in the United States now exceeds $13.4 trillion. Based on a recent study by Ernst & Young, third-party debt collectors recovered $55 billion in 2013 on behalf of creditor, healthcare, government and other clients.
No one likes to get a debt collection call or piece of mail, but those who neglect to pay their bills harm everyone.
Each weekday I send one short email: one money story that caught my attention, why it might matter to you, and one manageable thing you can do with it. A couple of minutes, and a dad joke.
In the latest issue (Oct 9): Does Financial Literacy Make Financial Sense?
Free. I sell nothing. Unsubscribe any time.
Whether a mortgage, medical bill, student loan, auto loan or credit card debt; the repayment of consumer and business credit is vital to the national, state and local economies.
The Daily Money Brief — Free, at 10 AM
Money you may be owed, scams to dodge, and the fine print decoded — the consumer money news that affects your wallet, every weekday.
“Engaging third party debt collectors to recover these debts helps organizations survive; prevents layoffs; keeps cost down and credit, goods and services available; and reduces the need for tax increase,” ACA International CEO Pat Morris said. “It’s not only the non-profit and private sectors that benefit from debt collection. Federal, state, and local government also rely on the repayment of billions of taxpayer owed dollars in delinquencies including uncollected court fees, unpaid taxes, library fines, and traffic tickets.”
But what if you are contacted by someone claiming that you owe a debt, and you’re not so sure? Debt collection is one of the most highly regulated industries, and you, the consumer, have rights and protections under the law. The Federal Trade Commission’s National Consumer Protection Week, March 1-7, 2015, is a good time to encourage consumers to visit AskDoctorDebt.org for information to better understand debt collection and consumer rights.
Here are a few of the important rights and protections that consumers have under federal and state laws:
Respect. Expect to be treated respectfully. Consumers cannot be harassed, threatened with actions by a debt collector that they don’t intend to take, or be subjected to profanity and vulgar language.
Identify. Ask for identification. Debt collectors cannot call anonymously nor can they present themselves as representing a government entity. When contacted, collectors must identify themselves and the name of the agency they represent.
Communicate. Consumers can ask to cease all communication or ignore attempted contacts. However, avoiding contact with a creditor or debt collector will not erase a debt. Communicate to discuss the account, verify its accuracy and work on a plan for resolution. If you don’t owe the debt, communicating with them can help put a stop to calls or letters. Not communicating may lead to potentially non-consumer friendly activities such as credit reporting or legal action.
Validate. Collectors are not interested in pursuing a debt that is not owed. By law, the collector must inform you of your right to dispute the debt and request written verification if requested. Once sought, all collection activity stops until this proof is provided.
Protect. Do not confirm or provide sensitive personal information (e.g., Social Security number, credit card numbers, and bank accounts) until certain of the authenticity of the debt and the person collecting.
Morris added that debt collectors are not an enemy of consumers. ACA members are working with regulators, Congress and state leaders to ensure a balanced debt collection system that protects consumer rights and allows the legitimate collection of debt to function.
ACA International (www.acainternational.org) is the comprehensive, knowledge-based resource for the credit and collection industry. Founded in 1939, ACA brings together nearly 4,000 members in the United States and abroad, and their more than 230,000 employees, including third-party collection agencies, asset buyers, attorneys, creditors and vendor affiliates.
Know Your Rights: If a debt collector is contacting you, you have legal protections. See the complete list of FDCPA violations collectors commit most often. Use the free Debt Validation Letter Generator to demand proof of the debt, or check this collector’s complaint history with the Scam-O-Meter.
Dealing With Debt? Before you pay a collector, understand all your debt relief options — including ones the collector won’t tell you about. If the debt feels unmanageable, take the 2-minute bankruptcy quiz to see if the math favors a fresh start. Federal Reserve research shows filers recover faster than those who don’t file.
