The COVID-19 pandemic has taken a financial toll on consumers and small businesses, but the debt collection industry keeps going. Federal, state, and local governments have temporarily paused collection of some debts owed to the government (e.g. student loans and federally-backed mortgages), but private collectors continue to collect on credit card debt, medical bills, and more.
Consumer debt and aggressive debt collection activity have been on the rise for a while. Now, because of the pandemic, record numbers of Americans have lost their sources of income, forcing millions to skip payments on their rent, mortgages, auto loans, and other bills.
Here are some steps consumers can take to tackle debt collection head on:
• Ask creditors for an accommodation — Consumers who believe they may fall behind on a payment should contact their creditors right away to explain their situation.
“Remember that even when you may be far behind on paying your debt, you still have legal rights and protections,” says Carla L. Sanchez-Adams, a consumer attorney at Texas RioGrande Legal Aid in Austin. “Because of COVID-19, you may even have certain added protections or your creditors may be willing to work with you on a payment plan.”
• Verify the debt — “Be sure to always ask for more information and documents from your creditor or a debt collector,” says Sanchez-Adams.
When contacted by debt collectors, consumers should make sure that the debt is actually theirs before going further.
Consumers can ask the collector to send a written validation notice which will have information on the amount owed, who the creditor is, and how to dispute the debt. The Consumer Financial Protection Bureau (CFPB) has sample letters for consumers trying to communicate with debt collectors.
• Tell the collectors in writing to stop calling — From Sanchez-Adams: “If you know you can’t pay right now and you want the debt collection calls or letters to go away, you can always request that a debt collector stop contacting you.”
Consumers being harassed by phone should send a certified letter telling the collector to stop calling. Make sure to keep copies of this letter. Asking the collector to stop communications may not mean the consumer no longer owes the debt but it can give consumers a chance to organize and plan their finances.
• Be wary of scam artists — Debt collection scams run amok. Before giving any personal information or agreeing to make a payment to someone claiming to be a debt collector, consumers should make sure the collector is legitimate. Ask for the collector’s name and the company’s name, address, and telephone number. Collectors who refuse to answer these questions are likely to be scammers.
• File a complaint — Debt collection is one of the most complained about industries in America. Consumers have gotten some relief when they report debt collection harassment or other bad behavior with the CFPB and/or the Federal Trade Commission. When the CFPB receives a complaint from a consumer, it sends the complaint to the complained-about company which is then urged to respond to the consumer and the CFPB within a reasonable time.
• Seek legal assistance — “If you are not sure about what your options may be or the legal rights you have, contact a consumer advocate or legal aid lawyer,” says Sanchez-Adams.
And especially if a consumer is sued or threatened with a lawsuit by a debt collector, or if they believe a collector has acted unlawfully, it is important to get legal representation quickly. More than 60 million Americans qualify for free legal aid due to their income status. Qualified consumers can look for free legal aid here. There are other ways to find a consumer attorney, such as through the NACA directory.
• Additional resources — The National Consumer Law Center has made a digital version of its popular resource guide Surviving Debt free to all during the pandemic. Consumers can get in-depth advice on every step of the debt collection process.
Looking for more guidance on consumer issues during the COVID-19 crisis? Check out Consumers Ascending’s tips on Navigating Evictions here.
Consumers Ascending thanks Carla L. Sanchez-Adams of Texas RioGrande Legal Aid for her help with assembling these tips and resources.
