Debt Collector Tricks and Secrets
If you’ve fallen behind on a debt, then you might start receiving phone calls and letters from collection agents. Many people visibly sweat at the words “debt collector” and for good reason. These folks have developed a reputation for scaring ordinary consumers who have simply run into some financial trouble.
The federal government has passed regulations that prohibit the worst forms of creditor harassment, such as lying that you’ll go to jail if you don’t repay a debt. Nevertheless, debt collection is a big industry, and the best debt collectors have still devised tricks to get people to pay up. Read on for more information about what to look out for.
Tracking You Down by Contacting Family and Friends
Maybe you disconnected your phone or switched numbers—anything to make the constant steady stream of telephone calls stop. What you might not know is that debt collectors will reach out to your family and friends to try to find out where you are.
Do you have a Facebook profile or Instagram page? If so, it is very easy for a debt collector to find out who your friends and family are. Don’t be surprised if your sister-in-law gets a call from a debt collector asking if she knows your new phone number.
Demanding Immediate Payment
Many people have full intent to actually pay back a debt. However, they need a little bit more time just to get back on their feet. For example, you might be able to continue to make payments if you can get a deferral for a few months.
Unfortunately, many debt collectors will push to get as much money from you now. They might even claim that they don’t have authority to stretch out payments (which is completely untrue).
Why are debt collectors so inflexible? The answer is easy: bankruptcy. If you file for bankruptcy, most unsecured creditors will see the debts completely erased. This means that they won’t get anything, which is why they push to get you to pay now.
Threatening a Lawsuit after the Limitations Period Has Ended
A statute of limitations sets the maximum amount of time a person has to bring a lawsuit. To sue for a written personal loan, the limitations period is 5 years. Other debts have shorter deadlines. However, many debt collectors will continue to threaten lawsuits long after the limitations period has run out, hoping to get unwary consumers to make a payment.
Buying Your Debt Very Cheaply
This is a secret that debt collectors absolutely do not want you to know. That $5,000 debt that got sold to collections? Do you know how much the collection company paid? Probably only $200.
That might seem shocking, but it is true. The average debt is sold to collections for only 4% its face value. If the debt is very recent, it might sell for 8 cents on the dollar, but older debt sells much cheaper, for around 2.2 cents.
For this reason, many collection agencies will settle for less than full value—even if they claim that they won’t.
Contact Nowack & Olson Today
There is one easy way to get debt collectors off your back: file for bankruptcy. Although this is not the right option for everyone, many consumers in South Florida could benefit from a fresh start by wiping out medical bills, credit card debt, and personal loans.
For more information, contact us today. We offer a free initial consultation.