Business Management / Finance

How to deal with debt collectors during pandemic

Andy Masaki

May 14, 2020 · 5 min read

Toolkit for download in this article

debt collection pandemic rights

The COVID-19 pandemic has affected almost every sphere of our lives.

In addition to taking a heavy toll on the health of our national community, it has adversely affected our country’s economy.

Many businesses are experiencing a decline in consumer activity. As a result, revenue is dwindling.

So, if you own a business you might be worried about how to manage it during this unprecedented crisis. Trust me, you need to plan instead of panicking. There are many ways to help your business survive COVID-19 and protect it, along with your employees.

But first, make sure to pay your bills on time. If you don't, your creditors might mark delinquency on your credit report, and your debts might be submitted to collection agencies after a certain time. Yes, you heard it right! Debt collections continue amidst the outbreak of COVID-19.

So, what if you've already missed payments and recently been contacted by debt collectors? How will you deal with them during this stressful pandemic? It's very important to realize that you have rights.

First of all, there's no need to pay as soon as you receive a collection call because debt collectors often take advantage of adverse situations. With that in mind, follow these measures:

  1. Ask for the details of the debt collector, such as the name of the caller and the debt collection company, its address, etc. If the collection company is legitimate, the collector will provide the details.

  2. Under the FDCPA (Fair Debt Collection Practices Act), you can request a debt validation letter from the collector. The letter will contain the information about your original debt amount along with other charges levied by the collection agency, if applicable. Usually, you'll receive the letter within five days from the initial contact. If you don’t, you have up to 30 days to send a letter requesting a debt validation letter.

  3. Don’t admit the debt unless it’s proven by the debt validation letter. Debt collectors often call for making payments for debts that have passed the statute of limitations or that don’t belong to you or are already paid. So, don’t readily admit that the debt is yours. Ask for the debt validation letter first, and then act accordingly.

  4. Don’t reveal additional information about your current debt, income, and other finances. Debt collectors might gather some of the information from your credit report and use it to force you to make immediate payment, but remember, you don’t need to provide these details over the phone. So, hang up if necessary. Your conversation with the debt collector should be short but informative. Take notes, like the name of the collector, collection company, debt amount, etc., while communicating.

  5. After receiving the debt validation letter, if you find out you don’t owe any or some of the debt, dispute it as soon as possible. Send a letter to challenge the validity of the debt with supporting documents. Keep in mind you have up to 30 days from receiving the validation letter to dispute the debt.

Due to the outbreak of COVID-19, some states have recommended stopping debt collection activity for the time being. So, check with your state's attorney general to learn if there are any recent updates about debt collections in your state. Plus, some states such as California, Alabama, Alaska, and some cities like Los Angeles and San Diego have temporarily halted evictions, foreclosures, etc. So, check with your local and state governments to find out if there is emergency protection due to the pandemic.

Is it possible to stop debt collectors from contacting you? Yes, it is! If you're exhausted by incessant collection calls, you can mail the debt collectors a letter to request that they stop calling you. I would suggest sending a letter via certified mail and keeping the return receipt as proof that the collector has received it.

Of course, stopping collection calls doesn’t mean that you don’t owe the debt anymore. But, you might get a temporary break from the incessant collection calls. Again, you will still owe the debt, and the debt collection agency might file a lawsuit against you to collect it. So, if you find that you really owe the debt, it’s best to pay it off as soon as possible. If you need help to do so, you can seek debt relief assistance.

The bottom line is that you have to handle the situation efficiently. You might be worried about your business during this pandemic. And a debt collection call might become an added burden. I hope, now, you understand how to deal with the debt collectors during the pandemic. The key is to stay calm.

Lastly, stay safe and follow the precautionary measures recommended by the Centers for Disease Control and Prevention (CDC). And, if possible, help others during this pandemic.


Was this post helpful?

Subscribe to our newsletter

Fresh small business insights and ideas delivered weekly to your inbox, gratis.

You may also like

{{ record.displayCategory || record.secondaryCategory || record.primaryCategory || '' | smartCapitalize }} | min read

 

Knowledge is power, get some more...