How to Deal with Debt Collection During the COVID-19 Pandemic

Опубликовал Admin

7-07-2021, 15:50

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The 2020 COVID pandemic is an uncertain and stressful time — but it's even worse if you're trying to handle calls and letters from debt collectors on top of everything else. Maybe you've recently lost your job. Maybe you or a family member has gotten sick. Whatever the reason, you're not sure if you can continue making the payments on your debt. In the meantime, fees and interest are piling up. It's easy to turn off your phone and ignore all the calls — but ignoring them doesn't make the problem go away. Deal with debt collection head-on, contact lenders or collection agencies yourself, and explain your situation honestly. Be firm in your commitment to pay off the debt, emphasizing that your problems are only temporary. If they're still unwilling to work with you, get some help from a lawyer or consumer advocate.

Working with Your Lender

Contact your lender as soon as you realize you can't make your payment. If you've gotten sick, lost your job, or had some other financial emergency, the most important thing you can do is to notify your lender as soon as possible. This can be a difficult call for anyone to make, but you'll usually have more options if you talk to them before your payment is due.
- You might want to check the lender's website before you call. Customer service lines have long wait times, but you might be able to set something up online.
Ask about COVID relief programs that might help you. Many lenders have COVID relief programs that you can take advantage of. Be proactive and bring it up yourself. Don't wait for the customer service representative to volunteer information about a relief program, because they might not do that.
- Go to your lender's website. Many have a red banner at the top of the homepage that you can click to get information about their COVID-related program.
- Many of these programs are only available if you get started before you get behind on payments. If you've already missed a couple of payments, your lenders might be less willing to work with you, but if you're persistent, you can still make something happen.
Look at your income and expenses to figure out how much you can pay. If you can make a partial payment, that's usually better than nothing. While you still might get charged fees, it might be enough to keep your loan from going into default. However, you have to stay in communication with your lender during this time.
- Be honest with your lender about your financial situation. They may pressure you to commit to a payment that you can't afford. If you know that you can't afford to make any payments during this time because of other expenses, say so!
Assure your lender of your intention to pay back your loan. Your lender might assume that you're going to default on your loan if you keep talking about how hard the pandemic has hit you. Instead, convey the attitude that your current situation is just a bump in the road and you'll eventually be able to resume normal payments.
- For example, if you've recently lost your job, you might fill the customer service representative in on how your job search is going or whether you're receiving unemployment or other benefits. Showing them that you're actively seeking income can go a long way.
- This is especially important if you've already missed a payment or two, or if you've been dodging their calls. Explain that you've been having a stressful time, but reinforce your commitment to paying back the loan.

Handling Collection Agencies

Keep a log if you are being harassed by a debt collector. Even if you owe money, you still have rights. Federal law prohibits debt collectors from harassing, bullying, or abusing you. Write down if you experience any of the following:
- Calls at unusual times or places (generally, before 8 a.m. or after 9 p.m.)
- Repeated calls over a short period
- Threats to harm you or your property
- Profane or obscene language
- Threats to call the police or have you thrown in jail
- False or misleading statements
- Calls to your family, friends, or workplace (other than to find out where you are)
Answer the phone when a collection agency calls. This first step is often the most difficult one for you to make. Collection agency representatives have a reputation for bullying and intimidation, but even when they're perfectly nice, they're still not people you want to talk to. Take a deep breath and answer the phone.
- Talking to the collection agency at least once allows you to get verification of the debt and make sure it's legitimate. You can also tell them to stop calling you. It's worth that brief conversation to get the phone calls stopped, even if you aren't able to make any payments right away because of the pandemic.
Request written proof of the debt. When you first talk to a collection agency, don't give them any personal or financial information. Remember — they called you. You need to be certain that they have a legitimate reason to be talking to you. Simply say "please send me written validation of the debt." Don't even give them your address — a legitimate debt collector would already have this information.
- The collection agency is supposed to send you a letter, called a "validation notice," within 5 days of contacting you — but it's still a good idea to be proactive and ask for it. This notice establishes the amount owed and the name of the original creditor.
Check your records for the debt. When you get the verification letter, compare it to your own records. You might also check your credit report to see if there's an entry for the debt. If you don't already have credit monitoring, you can check it for free on websites or smartphone apps such as WalletHub and CreditKarma.
- Pay close attention to the amount owed. Collection agencies might try to say that your original debt is larger than it actually was so they can get more money out of you.
- If everything looks to be above-board, go ahead and look at your finances to see what you can do about paying the debt. If you can't do anything immediately because of COVID, consider what you might be able to do in the future.
Dispute the debt if you believe you do not owe the money. When you get your validation notice, read it carefully and compare it to your own records. If you don't recognize the debt and have no record of it, the Consumer Financial Protection Bureau (CFPB) has sample letters available at https://www.consumerfinance.gov/ask-cfpb/what-should-i-do-when-a-debt-collector-contacts-me-en-1695/ that you can adapt to fit your specific case.
- If you have proof that the debt isn't yours or that you already paid it, make a copy and include that with your dispute letter.
- Make a copy of your letter for your records before you mail it. Then, send it certified mail with return receipt requested. When you get the card showing proof that the agency has received your dispute letter, attach it to your copy.
- Once the collection agency receives your dispute letter, they have 30 days to investigate the issue and respond. If you were right, they have to make the changes you requested before they can resume collection activities.
Specify how the collector can contact you. If you don't want a debt collector to call you, tell them they are only allowed to contact you in writing. It's better if you send a letter than simply telling them on the phone (although you can do both) so you have a record of your demand.
- The CFPB has 2 sample letters you can use on its website. Choose "I want to specify how the debt collector can contact me" if you want to restrict contact. It's usually best to restrict the contact to written contact only. This not only slows down the process but also gives you a record of all communications you have with the collection agency, which could prove helpful if they sue you later.
- Choose "I want the debt collector to stop contacting me" if you don't want any communication from them at all. Keep in mind that even though you don't hear anything from the debt collector, the debt doesn't go away. If you choose to cut off contact entirely, they might decide to file a lawsuit against you.
Figure out a payment plan you can afford. Go through your income and expenses and determine how much you can put toward this debt each month. If you know that your current financial situation is temporary, you might do better with a plan where payments didn't start for a few months, so you have an opportunity to get back on track.
- If you have some money set aside, you might be able to put some of that towards the debt as well. However, if you've recently lost your job or if your finances are uncertain, it's better not to commit any of your savings right now.
- Collection agencies are often willing to settle a debt for pennies on the dollar — but you might not be able to afford a lump-sum payment during COVID, especially if you recently lost your job or have been sick. With a payment plan, you'll end up paying more, but it will still likely be less than the original amount you owe.
Propose your payment plan to the collection agency. Don't wait for the collection agency to come to you. Instead, contact them directly (either over the phone or in writing — writing is better because it establishes a record) and tell them what you're willing and able to pay.
- If you need a couple of months to get your finances back together because of COVID-related difficulties, include that in your plan. You could also propose smaller payments for a few months, then larger payments once you get back on your feet.
Demand an agreement in writing that outlines the terms of your plan. If you and the debt collector can agree to a payment plan, get a written agreement with the terms of that plan before you make your first payment to them. If the terms of the written agreement differ from those you agreed to, call them and demand a new written agreement.
- Collection agencies will often pressure you to make an initial payment over the phone after you reach an agreement. Tell them you won't make the first payment until you have the agreement in writing.
- Collection agencies might also pressure you for bank account or debit card information so they can auto-draft your payments from your account. This arrangement is often easier for you and them, but only do this if you have the payment dates in writing and are certain that the money will be in your account when the payment is due. Otherwise, you could end up with overdraft fees on top of your payment.

Getting Legal Help

Contact your state attorney general to find out about state COVID relief. Search online for your state attorney general's website. Typically, you'll find a link on the front page to COVID relief programs that are available in your state. You'll likely also find links to nonprofit organizations and charities that offer COVID relief funds and assistance in your area.
- Many states have COVID relief measures specifically related to collections that go above and beyond anything ever offered at the federal level. These measures can help you keep your head above water during the pandemic and get back on your feet once the threat has passed.
- More information about state COVID relief programs is also available at https://www.consumerresources.org/covid-19-resource-page/.
Talk to a credit counselor if you're in over your head. Credit counselors who work for nonprofit agencies can help you manage your debt if you're having problems. They can be especially helpful if you have a sudden loss of income. Often, they'll work with your creditors to come up with reasonable payment plans that can keep you from getting sued or having your wages garnished.
- To find a nonprofit credit counseling agency near you, go to https://fcaa.org/. At the top of the page, select your state from the first drop-down menu, then select "Credit/Debt Counseling" from the second drop-down menu. You'll get a list of licensed agencies near you.
- Credit counselors can help you get lower interest rates, have payments deferred, or have fees waived, among other services.
- Most credit counselors can work with you online or over the phone if you're concerned about social distancing.
File a complaint with a consumer protection agency if you're being harassed. State and local consumer protection agencies work to protect you from lenders and collection agencies that harass or abuse you. To find the consumer protection agency in your state, go to https://www.usa.gov/state-consumer and choose your state from the drop-down menu. Many of these agencies will take your complaint online or over the phone.
- Once the consumer protection agency gets involved, they'll contact the lender or debt collection agency that's harassing you and get them to stop. In some situations,
- While the federal Consumer Finance Protection Bureau (CFPB) accepts online complaints about lenders and collection agencies, this agency has been practically gutted, as of 2020. Your complaint will likely get more attention at a state or local agency.
Schedule a free consultation with a consumer attorney. You don't have to be sued to get assistance from an attorney. Consumer attorneys represent consumers in all kinds of debt collection situations, and most of them offer a free initial consultation.
- A consumer attorney can also tell you if a debt collector is charging you too much or using illegal abusive tactics.
- Legal aid agencies and nonprofit organizations in your area also might be available to give you free legal advice or representation, if you can't afford to hire an attorney.

Tips

Keep a log of all of your attempts to communicate with lenders or debt collectors. If you end up getting sued, this log can help you establish that you did attempt to work out a resolution with them. Write down the name of the person you spoke with, the date and time of the phone call, and a brief summary of what you talked about.

Warnings

This article covers how to deal with debt collection during the COVID pandemic in the US. If you live in another country, there might be other processes involved and you might have different resources available. Consult a local attorney who specializes in representing consumers in debt-collection lawsuits.
If you are served with a court summons, do not ignore it . You can't go to jail for not paying a debt. If you respond to the lawsuit, you'll have more options available to you than if you don't.

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