While we all know that leaving a debt unpaid can have serious financial consequences — from seeing your credit score lowered to having to deal with collection agencies — you may be surprised to learn what collection agencies and creditors will try to do in order to get you to pay. If you are struggling with debt, make sure you know your rights and what you can expect from the most tenacious of collections agencies:
The Fair Debt Collection Practices Act (FDCPA)
The FDCPA is in place to protect debtors from abusive practices in the name of collecting a debt. Basically, this law guarantees that debtors will not have to deal with phone calls at all hours, phone calls at work after letting the collector know that it is prohibited by the debtor’s employer, or telling any third party other than a spouse or attorney about the debt.
Despite the protections offered by this law, collections agents will often try to get around the rules in a variety of ways.
Using Social Media
One such work-around that collections agents are exploring is using social media in order to contact debtors. According to John Ulzheimer of creditsesame.com, “one of the primary challenges in the debt collection industry is simply finding the debtor so they can ask them to pay the account… [Facebook and LinkedIn] provide a method to privately contact the consumer via the messaging functions on those sites.”
This is a somewhat sticky situation, because the FDCPA does not specifically mention social media, either as fair to use or not. And though collections agents are required to state that they are with a collections agency when they contact a debtor via phone or mail, there is no such requirement if they are simply monitoring your social media use — which they can only do if you accept their friend request.
The simple way to protect yourself is to make certain that you do not accept any friend requests from individuals you don’t personally know.
Using the Court System
Though debtors’ prisons have been outlawed in the United States since the 1830s, there are still states where you can find yourself behind bars because of non-payment of debts. While a debtor cannot legally be arrested for not paying their debts, they can be charged with failing to respond to a court summons or hearing, or failing to pay a legal financial obligation, which can happen if a collections agency or creditor decides to sue the debtor for the unpaid amount.
So while it’s not technically possible for a debtor to go to prison because of unpaid bills, creditors can use the court system to get their money, which can potentially land a debtor in jail.
According to a 2010 ACLU study that looked at only five states — Georgia, Louisiana, Michigan, Ohio, and Washington — individuals are “being jailed at increasingly alarming rates over legal debts.”
Only about a third of states allow police to get involved in unpaid debts. However, it is very important to make certain you read and understand all of your correspondence from your creditors if you owe money. You will not be vulnerable to legal loopholes that could land you in prison if you make certain that you respond appropriately to all correspondence.
The Bottom Line
Ultimately, creditors simply want to get paid. If you are in dire financial straits, try talking with your creditors—or even collections agents—to figure out a way to stay afloat while you are attempting to pay them back. They would prefer to work with you because it means they’ll see their money sooner, and you won’t have to worry every time the phone rings.