How can you use FDCPA to dispute and eliminate collection accounts?
Table of contents
If you become delinquent on your accounts, the original creditor can put your account in collection. And at that point, the original creditor may hire a debt collector for retrieving any outstanding amount that the creditor believes you owe.
In most cases, accounts go into collection accounts because of a dispute between the consumer and the creditor. Often consumers feel that they have already paid the money or do not owe any money to the creditor. In other cases, consumers default on their payments or become burdened with debt to the point that the creditor is forced to open collection accounts.
How can you deal with collection accounts?
Once a creditor sends your account to collection, you need to decide whether or not you should dispute your credit report or pay what the creditor is claiming.
If you think you do not owe the claimed money, you can ask the creditor or debt collector to verify the debt. You have the legal right to know everything about your debts. The creditor must send you authentic records that prove you owe the debt. If the creditor fails to provide the required documents, you will have strong grounds to dispute the claim. In that case, the credit bureaus will have to remove the collection from your report.
If the creditor successfully provides legitimate documentation, you must try to pay off the debt before it is charged-off.
How does the FDCPA intervene in collection procedures?
As soon as a collection account is opened, the collection agency will try to contact you via phone calls, e-mails, faxes, letters, and also in-person. However, the FDCPA imposes certain restrictions on the methods debt collectors can use to collect on a debt.
Some important restrictions imposed by the FDCPA are as follows:
- Debt collectors cannot contact you between 9pm and 8 am for debt collection.
- Debt collectors cannot use abusive or deceptive means to collect a debt.
- Collection agencies cannot collect more than your actual debt unless your state law permits it.
- The debt collectors must stop all the collection activities if you request in writing to stop collection procedures.
The Federal Trade Commission has the right to intervene if debt collectors violate the FDCPA.
How can you handle a collection dispute?
The best way to handle a collection dispute is to contact the original creditor and work out a deal immediately. Request the creditor to change your account status to "paid as agreed" after you pay the debt. Also, ensure the agreement is in writing.
If you really do not owe the debt, you can notify the credit bureaus and dispute the debt. Your creditor must respond within 30 days of your notification or the collection account will be completely removed from your credit history.
It is important to do away with collection accounts on your credit report, because they have a direct impact on your credibility as a debtor. Even if you have a good credit score, lenders and financiers can still deny you credit if you have unpaid accounts on your credit report. They may consider your unpaid debts in the past as an indication that you may default in the future.
How can collection accounts affect your credit score?
If a collection account appears on your credit report, it is likely to decrease your credit score by 20-50 points or more, depending on your credit history, and other related factors. Collections stay on your credit report for 7 years from the date of the initial default that led to the collection.