In America, debt is as stigmatized as it is necessary. Even when someone is working as hard as they can, they might not have enough for surprise expenses. When these situations inevitably arise, a credit card might come in handy. Unfortunately, credit card debt can easily spiral out of control, especially when people are living paycheck-to-paycheck. When consumers find themselves in debt, they often feel ashamed. When someone is ashamed, they do not ask for help. Herein lies the problem.
The industries of debt-buying and collection are a toxic cocktail of shame and fear. A $200 debt can increase to $1,400 and become a lifetime of harassment via phone calls, emails, and texts – even if the consumer didn’t spend the money in the first place. With identity theft on the rise, many Americans are the victim of credit card fraud. This causes average people to be entangled in debts they may not even know about.
How a $200 Debt Can Ruin Your Life
Even if they do know about their debt, most people do not know who owns that debt. Let’s return to the $200 for a moment. If you have that balance on your credit card, and you are not able to pay it for a few months, your bank or financial institution will write off the money as unlikely to be repaid for tax purposes. From there, the debt will go on sale to buyers, who, according to the Federal Trade Commission (FTC) pay an average of 4 cents per dollar to purchase the debt. This means an absolute stranger could buy your $200 debt from a legitimate financial institution for $8.
From there, the process of collection begins. The Consumer Financial Protection Bureau (CFPB) permits 7 phone calls per week, per line of debt. This means a collector could call you every day for a week, every week until they get their money back. If you owe multiple debts, the calls could be constant.
Sometimes, collectors resort to threats and degradation. In severe cases, collection tactics lead debtors to commit suicide.
What if You Didn’t Take Out the Loan in the First Place?
When a buyer purchases a debt, they receive a spreadsheet that may or may not be up to date. This is the only data they have to enforce the debt they purchased. Sometimes, the amount is wrong, or the debt is already paid off. Other times, the amount was established fraudulently or through identity theft. Occasionally, the debt is fabricated altogether. In fact, the FTC estimates that debt buyers try to collect over one million debts per year that consumers do not owe.
Even if the debt is bogus, the debt buyer or collector can take their claim to court. If the court rules in their favor, they may be able to garnish wages and take money directly out of your paycheck until the debt is fulfilled.
In many cases, consumers do not know about the debt, nor the case, until money is taken from their checks and ripped away from their families.
If you didn’t notice credit card fraud or identity theft soon enough, there’s also not much you can do without a lawyer. Because debt is heavily associated with shame, most people don’t reach out. Many people don’t even know they can reach out.
As part of a GQ Magazine exposé, our attorney, Omar Sulaiman illustrates:
“It can be hard to get people to talk about it,” he said, explaining that victims don’t understand or believe in the laws which protect them, or worry that hiring a lawyer might exacerbate the harassment.
What Are Your Rights?
If you need help dealing with debt, identity theft, or fraud, do not be ashamed. Ira Rheingold, executive director of the National Association of Consumer Advocates assures:
“Credit has become a substitute for people who don’t have enough money – they can’t afford health care, they don’t make a living wage, and their car breaks down… Being in debt is not a character flaw. It’s a sign that they don’t have enough.”
U.S. consumer debt is at an all-time high of $13.5 trillion.
If you are one of countless Americans who is weighed down by debt, you have rights:
- Debt collectors are not allowed to harass you before 8 a.m., after 9 p.m., or while you are at work;
- They may NOT purposely annoy you with repeated and continuous phone calls,
- Nor threaten you.
- Profane or threatening language is NOT permissible,
- Nor is reporting false and negative information to your credit report.
- You ARE allowed to ask for help and hire an attorney.
- You ARE entitled to fight fraud and identity theft.
- You MUST be notified of any court proceedings regarding your alleged debt,
- And you have the right to be defended in court.
If you need help dealing with debt collectors, contact our consumer law attorneys at Atlas Consumer Law today. We can be reached at (312) 313-1613 and offer free consultations.