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The best way to avoid calls from debt collectors is to pay your bills on time. But if you get caught up in a collection process, know that you have rights under the law.
“If it’s a credit card debt, expect to receive a copy of your card application form — with your signature,” says former collector Michelle Dunn. “If it’s a medical debt, expect to see a statement or invoice outlining the services provided, dates and doctor’s name. Just getting a letter from the collection agency isn’t proof.”
But other collectors buy debts up front, usually for 30 to 50 percent of its original amount, and keep all of whatever is collected. They can make deals on their own.
Some collectors will accept monthly payments, even for amounts reduced by a settlement. “If you settle, the debt shows on the credit report that you paid it,” says Dunn. “It doesn’t say you paid less than what was owed.”
On your letter, signal with a “cc” that you’re filing copies to the Federal Trade Commission, Better Business Bureau, your state attorney general, your local chamber of commerce and ACA International, the collection industry’s trade association. This can help because “legitimate agencies like to brag about their memberships, and chambers and the ACA want members in good standing,” says Dunn.
The National Association of Consumer Advocates can give you more information about debt collection and your rights.
Sid Kirchheimer writes about consumer issues for AARP.org.
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