How to protect yourself in the debt collection process
Unless you’ve received a phone call from a debt collector, you probably don’t know much about the debt collection process.
People get behind on payments and in debt for a variety of reasons, some unpreventable (a lost job or unexpected medical expenses) and some not (bad spending habits). No matter why you’re in debt, you should know what to do if a collector contacts you.
The timeline of debt collection is different case by case, but this is typically what happens:
You borrow money from a “creditor.” This can be a credit card, a special store card or even a loan for a car. After missing several payments to your creditor, they will change your account status to “charged off.” The term “charged off” does not mean your debt has been wiped away — it simply means the creditor doesn’t think they will ever get repaid. Usually, the creditor will sell your debt to a collector.
Once the collector buys the debt, they will start attempts to contact you. Within the first five days of contacting you, the collector is legally required to send you a written notice that says how much money you owe, who you owe it to and what to do if you don’t think you owe the debt.
So, what do you do when a debt collector starts calling? You can ignore their calls or you can get more information by asking these questions:
Who are you trying to reach?
What is your name and who do you represent?
What is my address?
What are the last four digits of my Social Security number?
How was the debt calculated?
How will this be reported?
Can you send me the documents in the mail?
Don’t give the collector any information they don’t already know. Debt collectors can call you between 8 a.m. and 9 p.m. by phone. They may also send you letters, emails or text messages. Debt collectors can call your work, family or friends to try to find you; however, they are not allowed to discuss your debt with anyone other than you or your spouse. It’s against the law for them to act like someone else, use obscene language, or lie to or threaten you.
Your best option is to write a letter to the debt collector. You have the right to ask for proof of what you owe, to say you don’t owe the money and to tell them to stop contacting you. After you send this letter, the only reason the collector can contact you again is to say they are taking you to court, to say they will no longer try to get you to pay or that they will use another legal remedy to collect (e.g., they will repossess a secured car).
A collector may suggest that you pay back a small amount of the debt, even a few dollars, as a goodwill gesture. But a small payment can lead to big problems. Here’s why: The statute of limitations on collection of a debt is usually six years (sometimes four), but each time you make a payment, that period restarts. So, by making even a small payment on the debt, you extend the six-year timeline when debt collectors can sue you.
If the debt collector takes you to court, you still can defend yourself. You should file a “sworn denial” and go to your court date. By doing this, you’re telling the collector they have to prove they have the legal right to collect the debt and that the statute of limitations hasn’t passed. If the company can’t prove you owe them or they waited too long to file the lawsuit, a judge may dismiss the collector’s case.
If you don’t go to court, the debt collector will win automatically. This is called a default judgment. The collector can then take legal steps to collect the debt — usually by putting a lien on your house, taking your personal property or garnisheeing your wages.
If you’ve lost a debt collection case in court, you should file a claim of exemption, which can protect up to $10,000 worth of your personal property, including money in your bank accounts. If you’re working, collectors can try to garnishee your paycheck. To stop a garnishee, you must pay the full amount you owe, make a written agreement with the collector who sued you, or file a slow-pay motion with the court.
Finally, some money, like Social Security, is protected by law. As long as the only money you get is Social Security, the collector can’t take it.
Don’t wait until you’re facing a lawsuit to take action about your debt. Know that you have options. If you need help or are being harassed by a debt collector, Legal Aid Society of Middle Tennessee and the Cumberlands might be able to help you. We give free legal help to people of all ages and backgrounds. Call us at 800-238-1443 to learn more.
Zac Oswald is the managing attorney of Legal Aid Society’s Gallatin office, practicing Housing and Consumer Law, and the team lead of the firm’s Housing Practice Group. He is a graduate of Oklahoma State University and a 2013 cum laude graduate of University of Miami School of Law. He started at Legal Aid Society in 2014 as a University of Miami Legal Corps Fellow, working primarily in the Family Law Unit. He was the 2016 recipient of the Tennessee Alliance for Legal Service’s New Advocate of the Year award.
Legal Aid Society of Middle Tennessee and the Cumberlands advocates for fairness and justice under the law. The non-profit law firm offers free civil legal representation and educational programs to help people in its region receive justice, protect their well-being and support opportunities to overcome poverty.
It serves 48 counties from offices in Clarksville, Columbia, Cookeville, Gallatin, Murfreesboro, Nashville, Oak Ridge and Tullahoma. Legal Aid Society is funded in part by United Way. Learn more at www.las.org or by following the firm on Facebook.
