If you cannot pay your debts, the company you owe may hire a debt collector to persuade you to pay. The thought of that might strike fear into you. The popular image of a debt collector is a couple of heavy-set men in ill-fitting suits knocking on your door with a sledgehammer. Thankfully this is outdated.
Modern debt collection is subject to a series of rules and regulations, although people may still try to ignore them. Last December, the Consumer Financial Protection Bureau (CFPB) added to those rules by updating the Fair Debt Collection Practices Act (FDCPA).
Debt collectors must take several steps before they can report you to a consumer reporting agency
If a debt collector reports you to a consumer reporting agency, it will affect your credit score. This could affect many areas of your financial life. The new rules oblige debt collectors to give you a chance to sort things out before this happens.
First, the debt collector needs to contact you. They can do this via phone, mail or email. You have 14 days to reply to their mail or email. If the email bounces or the letter cannot be delivered, they need to make further efforts to contact you.
Second, the debt collectors need to provide information about your debts and your rights and who they are collecting for. It aims to stop cases where people make payments for debts they do not fully understand because they are scared.
Third, the new rule prevents debt collectors from making threats. Turning up with a sledgehammer has never been legal, but the new rules make threatening to sue you illegal, too.
Getting into debt that you cannot pay is frightening enough without an abusive debt collector making it worse. If you feel a debt collector is not acting within the law, there are legal ways to ensure they do.