Debt collection: illegal practices and how to resolve debts effectively

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ALBANY, N.Y. (NEWS10)- Household and credit card debt was approaching $14.3 trillion at the end of the first quarter this year and with the coronavirus pandemic putting more New Yorkers further in debt it’s important for people to know their rights and options when it comes to debt collectors.

The Federal Reserve Bank of New York says the full financial effects of the coronavirus won’t be known until the second quarter has been analyzed. “As of March 31, 4.6% of all outstanding debt was in some stage of delinquency, a small decline from Q4 2019,” according to a report released May 5.

“It is critical to note that the latest report reflects a time when many of the economic effects of the COVID-19 pandemic were only starting to be felt,” says New York Fed Senior Vice President, Andrew Haughwout. “We do see a larger-than-expected decline in credit card balances based on past seasonal patterns, but it is too soon to confidently assess its connection to the pandemic.”

Even if an account is referred to a collection agency, there are illegal collection tactics. The New York State Division of Consumer Protection has an online handbook to help consumers identify illegal collection techniques.

Illegal collection tactics

  • Calling repeatedly
  • Use of profanity
  • Calling before 8 a.m. or after 9 p.m.
  • Saying they work for law enforcement, government agency, or credit-reporting bureaus like TransUnion, Equifax or Experian
  • Misrepresenting the amount or legal status of the debt
  • Using a false name

A debt collector or a bank CANNOT seize Supplemental Social Security (SSI); Social Security; welfare; alimony or child support; unemployment, disability, Workers’ Compensation or Veterans benefits; or public or private pensions.

NY Division of Consumer Protection

How to negotiate debt settlement with a collector

The Consumer Financial Protection Bureau gives advice for negotiating debt settlement with debt collectors on its website. They suggest:

  • Learning about the debt including who it’s owed to.
  • Setting up a realistic payment plan based on a household budget and other debt.
  • Explain to the debt collector your financial situation, they may be able to offer other solutions.

The Legal Aid Society of Northeastern New York has a website dedicated to helping people with coronavirus related financial issues.

Copyright 2020 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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