Who A Debt Collector Can Contact
A debt collector can only contact your friends, employer, relatives or neighbours to get your telephone number or address.
This does not apply in the following cases:
- the person being contacted has guaranteed your loan
- your employer is contacted to confirm your employment
- you’ve given your consent to the financial institution that they can contact the person
If you gave consent orally to your financial institution, you must receive written confirmation of your consent either on paper or electronically.
How To Negotiate Credit Card Debt In Seven Steps
Negotiating credit card debt can be an extensive process. It can go a lot smoother if you prepare ahead of time. Start with the following steps:
Best Overall: National Debt Relief
We chose National Debt Relief as the best overall in our ranking based on its track record for results, overall transparency, and a money-back guarantee. National Debt Relief has several examples of massive reductions of credit card balances on their website, showcasing their abilities.
More than 10 years in business
Proven results settling debts for less than consumers owe
No upfront fees
Does not handle certain types of debts like mortgages
National Debt Relief was founded in 2009 with the main mission of helping consumers get out of debt through a reliable debt settlement program. This firm is incredibly transparent about its process and resultsthey share examples of what they’ve done for past clients on their website: $15,000 reduced to $3,000 in debt, $22,500 reduced to $8,000, and $11,000 reduced to $2,000 in debt.
National Debt Relief helps consumers begin the process by offering a free consultation with one of its debt counselors. From there, you will have the option to explain your situation and talk over potential solutions, including using National Debt Relief for debt settlement.
Like other debt settlement programs, this company has you set aside a specific amount of money in a separate account each month, which you will later use to settle your debts for less than what you owe. In the meantime, National Debt Relief helps coordinate your efforts and negotiates with your creditors on your behalf.
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How Much Does Debt Relief Cost
Debt relief companies tend to offer a free consultation to get the process started. From there, they charge performance-based fees that typically work out to a percentage of the debt amount you have enrolled.
Based on the companies we profiled, common debt relief charges work out to 15% to 25% of the total debts enrolled in a program. This means that, if you sign up for a debt settlement program with $10,000 in credit card debt, you may wind up paying $1,500 to $2,500 to get it resolved. And remember, thats on top of the amount you pay your creditors to settle your debts.
Best Overall: Freedom Debt Relief
Freedom Debt Relief
Freedom Debt Reliefs transparent pricing, credit counseling referrals, Spanish language resources, daily customer service availability, and financial education resources make it stand out over the competition.
Spanish support and resources
Minimum debt of $7,500 required
Freedom Debt Relief was founded in 2002 and is accredited by the American Fair Credit Council , one of the most well-known professional associations serving the debt relief industry. Although it focuses on debt settlement, its website includes many free financial education tools and resources for Spanish speakers.
Not only is Freedom Debt Reliefs pricing transparent , but it can negotiate settlements on many types of unsecured consumer and business debt including credit cards, medical bills, and some private student loans. Keep in mind youll need at least $7,500 in unsecured debt to qualify.
As with all debt settlement companies, before enrolling with Freedom Debt Relief, youll get a free debt consultation. Consultations are available daily during the companys normal business hours. Freedom Debt Relief also makes referrals to non-profit credit counselors before enrolling potential clients, making it stand out from the competition. This is good since debt settlement should only be pursued after exhausting all other options.
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When You Should Seek Debt Relief
Consider bankruptcy, debt management or debt settlement when either of these is true:
You have no hope of repaying unsecured debt within five years, even if you take extreme measures to cut spending.
The total of your unpaid unsecured debt equals half or more of your gross income.
On the other hand, if you could potentially repay your unsecured debts within five years consider a do-it-yourself plan. That could include a combination of debt consolidation, appeals to creditors and stricter budgeting.
Avoiding Credit Card Fees
All credit cards typically come with fees. To name a few, there are annual fees, balance transfer fees, foreign transaction fees, and late payment fees. And there are a few ways you can get around these fees. With annuals fees, choose cards that dont have annual fees. Otherwise, consider calling the issue and asking to have it waived.
When it comes to balance transfer fees, credit cards with promotional offerings are the way to go. If you find that you travel to foreign countries often, choose a credit card that doesnt charge 3% fees on all foreign transactions. And for late payments, the simplest way to avoid them is to set reminders to pay your bills on time. But if youve made a mistake, you can call your creditor and ask to have the fee waived.
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How Can I Avoid Being Affected By The Right Of Set
Ideally, Joan should do the following as soon as possible:
- Close her bank account at ABC Bank or withdraw all or virtually all of the money she currently has on deposit in that account
- Open a new bank account at another financial institution
- Deposit some money into her new bank account at her new financial institution
- Contact her employer and arrange to have her paycheque deposited into her new bank account
- Contact the government and make arrangements for her baby bonus payments to be deposited into her new bank account
- Contact her creditors to whom she was making monthly payments using Pre-Authorized Debit payments and provide them with authorization for Pre-Authorized Debit payments from her new bank account
- Contact her creditors to whom she was making monthly payments using Pre-Authorized Debt payments using her ABC Bank VISA and make alternative arrangements for paying these creditors
Negotiate Lower Rates With Your Creditors
A lower rate means more of each payment you make can go towards the debt instead of accrued interest. This does accelerate repayment, especially if you make larger payments.
Your chances of a successful negotiation increase if:
- Youre not behind on your payments
- Your credit score increased since you opened the account
- Youve been a loyal customer for a number of years
If you are not successful negotiating on your own, then that may be a sign you need the help of professional credit counseling services. Having a team of experienced negotiators on your side with established relationships with creditors can go a long way in making sure you get the results you want.
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Its Ok To Ask For Help With Debt
Life just happened. My debt got to the point where I started to feel like I was drowning. I didnt feel like I could fix it on my own, and I wanted to start living my life as an adult without debt. I decided to reach out for help. Feeling relieved, I knew that everything was going to be okay a lot of work but okay. I had a plan to pay back my debt and continue doing the things I love to do like yoga and travelling.
Will You Waive My Late Fee
Whether you plan to skip a payment or just need a few more days to get the money together, missing a due date can trigger a late fee in addition to interest charges. If you cant avoid missing a payment or paying late, its worth asking for a one-time waiver.
There are acouple other questions worth asking about a late payment, too.
- Will I be charged a penalty APR? Some credit card issuers may raise your interest rate when you miss a payment. The higher interest rate is known as a penalty APR. But if you miss a payment because of the financial impact of COVID-19, you could ask your credit card issuer if it would be willing not to charge a penalty APR due to the situation.
- Will you report my late payment to the credit bureaus? Even if your credit card issuer agrees to waive the late fee and interest charges, it could still report a late payment to the credit bureaus, depending on how late your payment is. When you talk to your card issuer, you should make sure to ask if they intend to do so.
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Check Your Credit Reports Regularly
You can typically check your credit reports for free, once a year. However, the three major credit reporting agencies Experian, TransUnion and Equifax are currently allowing consumers to check their reports weekly for free.
If you sign-up for a credit card relief package and are meeting the terms of that relief package, such as making a lower minimum payment, the company must report to the credit reporting agencies that you are current on the account. However, if you were already behind on your payments at the time you receive relief, the lender is not required to report that you are current.
And, if you find an error, you should work to dispute it, this is when it would be helpful to have a copy of the written agreement on hand.
How Can I Avoid A Right To Set Off Seizure
If you have credit card debt and your credit card was issued by the same financial institution that you have your bank account with you might be at the risk of having monies seized from your account.
If your bank holds a right to set off clause in their credit card agreement then they have the right to take money from your account if you default on your credit card payments.
In order to avoid a right to set off seizure you should either a) close your account with the ABC bank or b) withdraw your funds from your bank account. The best course of action would be to open a new account with a different bank.
Need Help Reviewing Your Financial Situation?Contact a Licensed Trustee for a Free Debt Relief Evaluation
- Open a new bank account and deposit her funds into this account
- Arrange to have your paycheque deposited into your new account
- Contact your creditors to whom you were making monthly payments from your ABC bank account and update them with your new account information
- Contact any creditors that were charging her ABC bank credit card and make alternative arrangements to pay these creditors.
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Will You Increase My Credit Limit
While we typically recommend you try to pay off your credit card statement balance in full every month, we realize that you might need to lean more heavily on your credit card right now.
If youre in need of more purchasing power to deal with this crisis, it might be a good time to ask for a credit line increase.
Compare The Best Debt Relief Companies
|15% to 25% of total enrolled debt||Debt settlement on credit cards, medical debt, unsecured personal loans, department store credit cards|
|28 months||Not disclosed|
|Average of 20% of enrolled debt and between 15% and 25% of enrolled debt||Debt settlement on unsecured debt like credit cards, payday loans, and some private student loans|
|Best for IRS Debt and Back Taxes||$5,000||20% of total enrolled debt||Debt settlement on unsecured consumer debt, business debt, IRS debt, and back taxes|
|Best for Quick Debt Relief||$10,000||15% to 25% of total enrolled debt||Debt settlement on unsecured consumer debt|
|Best for Credit Card Debt||Not disclosed||Average of 24 to 48 months||18% to 25% of total enrolled debt||Debt settlement on credit cards|
|One-time setup fee of $0 to $50 and monthly fee of $0 to $75|
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Avoiding The Credit Card Debt Trap
If you do this, your monthly payments will start to stack up and you might run the risk of spiralling into a debt that can often reach into thousands.
If you’re going to take out a credit card, plan to repay what you owe in full at the end of each month.
If you don’t pay off the full amount every month on a credit card, you’ll be charged interest on the whole lot – not just the outstanding amount. The rate you pay will vary depending on what the annual percentage rate of the credit card is.
Debt Settlement Vs Credit Counseling
Credit counseling is a free or inexpensive service provided by nonprofits and government agencies. Interestingly, these services are often partly funded by credit card companies. By enrolling in a debt management plan with a , you may receive an interest rate reduction on your balances and a waiver of penalty fees.
Those concessions may or may not be sufficient to help you pay down your debt considerably faster, and you may or may not be able to afford the new required monthly payments. In addition, you may not qualify for an interest rate reduction, even if you have a significant financial hardship.
However, because you wont have to default on your debt, your credit score may suffer less. Also, credit counseling may offer additional financial assistance that can help you avoid similar problems in the future, such as budget development and financial counseling, and referrals to low-cost services and assistance programs to help you reduce your expenses. Fox says a credible debt settlement company will also work with clients to help them learn how to budget, use credit responsibly, and live within their means.
So how do you know which to choose if you dont want to pursue bankruptcy? Credit counseling is best suited for consumers who have $2,500 to $15,000 worth of unsecured debt and simply need a reduction in their interest rate to make the monthly payments manageable, Fox says.
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What To Do When A Debt Collector Calls
Make sure to ask for and write down the following information:
- the name of the person calling
- the company the debt collector works for
- the name of the company the debt collector is collecting money for
- the debt collectors telephone number
Ask for details on the debt, such as:
- the amount you owe
- who you owe it to
- when you started owing it
Tell the debt collector that you’ll call back as soon as you verify the information. Look at your bills and bank statements to help you confirm if the debt is yours and the amount you owe is correct.
You can ask the collection agency to contact you only in writing. Ask your legal advisor to send a written request to your creditor by registered mail, including an address and phone number at which you may be contacted.
If Credit Card Relief Programs Arent An Option
If youre dealing with financial hardship because of COVID-19, and are having trouble making monthly payments, but your credit card company doesnt have an option that works for you, there are still things you can do to manage your situation.
Even if you do get some relief, keep in mind that its temporary, and the bills will still be there, and may be worse, once the relief period ends.
No matter what your situation, the number one thing to do is sit down and get a solid understanding of your finances. Make a budget that lists expenses and income. Figure out ways to lower the first category and increase the second.
Keep in mind that interest rates on credit cards are also determined by credit scores and can range from 16% up to the high-20s, so work on using credit cards less and paying them down is a win-win.
Debt management programs, offered by nonprofit credit counseling agencies can provide advice on your budget, how to get credit card payments down and how to improve your credit.
A may also recommend a debt management program as a way to help you reach financial goals. Agencies have agreements with major card companies to reduce rates for those enrolled in their programs. The counselor will offer you the lower rate, and you can decide if it works for you. You make one monthly payment to the credit counseling agency, and the agency disburses the money to each credit card company in agreed upon amounts.
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