MINNEAPOLIS, Minn. — Many Americans experience the challenge of dealing with a past-due bill or unpaid debt at one time or another. In fact, 40 percent of all American families spend more than they earn each year. When debts pile up they can seem overwhelming, but there are a few important steps all Americans can take to deal responsibly with debt.
“Dealing with past-due debts is stressful, but almost all Americans have unpaid bills some time in their lives,” said Gary Rippentrop, CEO of ACA International, the Association of Credit and Collection Professionals. “When called about an unpaid bill, the most important thing for a person to do is communicate, not panic. If you are having financial challenges, talk with the collector and work out a payment plan that you can manage.”
Working with a collection agency is an important step in resolving any debts you may have and avoiding financial challenges in the future.
If you are contacted by a collector:
Don’t avoid the collector: If you have questions about your bill or believe you do not owe the debt, let the collector know immediately in writing. If the first communication is by phone, the collector will need to send you a written notification within five working days of the amount of the debt and the name of the creditor who referred the debt to collection.
Once an initial contact by a third-party collector on a debt has been made, you have 30 days to dispute the debt, otherwise it will be deemed valid. If you dispute the debt, the collector will then provide you with a response to the issues you raise. If you do owe the bill, let the collector know when payment can be expected. If you are unable to pay it in full, explain why and ask the collector to work with you on a plan that works for both of you.
Ask the collector about options and programs: Although collecting past- due accounts is the collector’s business, collection professionals also are experienced and able to work with you in finding solutions to debt issues. If you are having financial difficulties, ask about an extended payment plan or other payment options.
Act early: Take action as early as possible to get your financial situation under control. If your debts are mounting, the most important thing is to look at your finances. Your monthly payments for all loans, including credit card balances but excluding mortgages, should be less than 20 percent of your net monthly income. If the number is 20 percent or greater, you should avoid taking on more debt and work to pay down your existing balances. Find ways to improve your cash flow by decreasing your expenses or increasing your income. After a few months, small steps on decreasing your expenses can make a big difference.
Pay on time: By paying on time, you can avoid incurring late fees and other penalties that credit grantors add to your debt. Establishing a payment plan that works for you will help you avoid these fees. If you agree to pay a certain amount, don’t miss payments or pay late. If you fail to follow a payment plan, a creditor may require the initiation of different collection efforts.
While the vast majority of collectors follow federal and state guidelines, ACA International recognizes that there are some bad actors in the industry that operate outside of government regulations and the ACA International’s stringent ethical standards.
If you feel a collector has acted unethically, you should know the collections industry’s regulations established to protect consumers’ and creditors’ interests.
* A debt collector may not:
- Use anything but business-like language. Collectors are prohibited from using profane, obscene or abusive language.
- Make repetitive or excessively frequent phone calls to annoy or harass.
- Misrepresent their identity.
- Misrepresent the legal status of a debt or falsely accuse a person of criminal activity.
- Threaten to take any action that is illegal or that the debt collector does not actually intend to take.
* A debt collector may:
- Call between the hours of 8 a.m. and 9 p.m., but not outside these hours without permission from the consumer.
- Report an account only to a qualified credit-reporting agency.
- Deposit a check on or after the date on the check. If a check is post-dated by more than five days, the debt collector must notify you in writing three to 10 days before depositing the post-dated check.
- Add charges provided for by law or by the original agreement with the creditor.
- Call a person at work, unless informed by the consumer that his or her employer prohibits it.
For additional information regarding the federal statutes and regulations debt collectors are required to follow, or to report unethical behavior, visit the Federal Trade Commission’s Web site at www.ftc.gov or ACA International’s web site at www.acainternational.org/consumers.aspx.
ACA International, the Association of Credit and Collection Professionals, is the comprehensive, knowledge-based resource for success in the credit and collection industry. Founded in 1939, ACA brings together more than 5,500 members worldwide, including third-party collection agencies, attorneys, creditors and vendor affiliates. The association establishes ethical standards, produces a wide variety of products, services and publications, and articulates the value of the credit and collection industry to businesses, policymakers and consumers. For more information about ACA International, visit http://www.acainternational.org.
