Did an old electric bill from your first apartment go unpaid and is now coming back to haunt you? Debt collectors involved can be aggressive and intimidating, so it's important to know about your rights when it comes to dealing with collection agencies and long-lost debt, says credit expert Gerri Detweiler. Gerri shares with Jean tips for dealing with debt collectors:
- Check to see how old the debt is. If it's more than seven and a half years old, whether it is paid or unpaid, it is no longer on your credit history, Gerri says. "If they say, 'We can put it on your credit report forever,' they can't," she says. "And, they're breaking the law by saying that."
- Ask the debt collector to verify the debt in writing. Gerri says when you do this, the debt collector has to go back to the original source of the debt to verify it. This process could take several weeks and gives you time to find out what your rights are, she says.
- Debt collectors cannot harass you. They can only call you from 8 a.m. to 9 p.m., Gerri says. If you tell them you cannot take calls at work, they're not allowed to call you there. Also, Gerri says they're not supposed to tell anyone, other than your spouse, about your debt.
- In most cases, debt collectors cannot take legal action, such as sending you to jail, unless they go to court first, Gerri says.
- Never pay a collector a token amount to get them off your back. "If you do that, you can start that clock ticking again and it can basically force you into paying a debt that you might have been able to negotiate or not have to pay," she says.
- Negotiate a pay-off. If your debt is recent, start negotiating a pay-off at 50 percent of the original amount, Gerri says. If your debt is five to 10 years old, offer 20 percent, she says.
- Do not let collection agencies take money directly out of your bank account. By giving them access to it, Gerri says they could possibly take direct payments out of your account without your permission.