When debts accumulate, debt collectors come calling and consumers must do their best to get back on track financially. Dealing with a debt collector can be stressful because the interaction can be filled with pressure.
When working with a collector to repay debts, it is important to document the interactions for personal protection. By having documentation, the debtor is covered if problems arise in the future.
The Administration of Justice Act 1970 and The Protection from Harassment Act 1997 are two laws that make harassment of debtors illegal. The Debt Collection and Debt Management Guidelines issued by the Office of Fair Trading establish the types of debt collection practices considered to be unfair.
Some collection agents are known for staying within gray areas of the law. They may claim a debtor never responded to their collection attempts or offered to make payments, causing problems for debtors in the future.
Documentation…Be Fanatical & Record It All
Debtors should document telephone conversations with collection agents, recording the date, time, and content of the telephone call. As further proof, they should retain copies of relevant telephone bills that reflect all calls. Debtors should also keep copies of written correspondence received from and issued to collectors. When correspondence is mailed, the debtor should obtain a signed receipt, serving as proof that the item was received by the collection agency.
Before acknowledging that any money is owed, a debtor should request a copy of the original credit agreement, which the creditor is legally obligated to provide. Debtors are also entitled to request that the collection agency contact them only via mail, which makes it easier to retain documentation. If the debtor is not aware of the debt in question, the collection agency should be notified of this in writing, indicating that the Trading Standards agency will be contacted if the firm makes future contact about the debt.
When the debt is legitimate, the debtor should request a final bill and pay this via debt card, credit card, or check. If payment can only be made in cash, the debtor should get a receipt and a written acknowledgement that the debt has been fully repaid. A debt collection agency that is a member of the Credit Services Association must comply with a special code of practice that includes a measure that provides debtors with a 30-day payment grace period from the time contact is made with a debt advisory service like Citizens Advice.
If a debtor cannot repay a debt in full, it may be possible to negotiate a repayment plan. Before doing this, the individual should contact a debt management expert. Once the debt is settled, the individual should ensure that the debt collection agency updates the credit file to reveal that the debt has been satisfied.
Debtors who do not retain proof of repayment can find themselves facing many headaches. The collection agency or the creditor it represents can file a judgment or petition bankruptcy against the debtor. Dealing with these legal processes usually involves more time, headaches, and money. Therefore, protecting oneself with documentation is the smartest approach.