How to Stop Credit Card Collection Calls
- Credit card collection calls are not the same as calls from collection agencies.
- The Fair Debt Collection Practices Act (FDCPA) does not allow debt collectors to harass, embarrass or inconvenience consumers by phone.
- However, the FDCPA covers debt collectors, not original creditors.
When you can’t make even the minimum payments on your credit card accounts, you’re in trouble. Your credit card balances will soon enter the cycle of debt collection, and your life is about to get stressful. Understanding who may come calling for repayment and what they can do is crucial for you. Then, you can form a plan and get out from under unaffordable credit card debt.
What Happens When You Stop Paying Your Credit Cards?
If you stop paying your monthly credit card bills, your card issuers seek payment. They may send letters demanding repayment of the overdue amounts, or they may begin calling you at home, on your cell, and at work. They close your account, and you won’t be able to charge any more purchases or take cash advances. Most credit card companies or banks report your non-payment to credit reporting agencies, and your credit score will plummet.
Typically, credit card companies pursue you for about 90 days. At that point, they may charge off the debt, essentially assuming that you won't pay the account. Next, they send your account to a collection agency or sell it to a debt buyer. That party takes over collection attempts and begins contacting you.
If you want to stop collection attempts, it’s essential to know which type of company is contacting you. Debt collectors and debt buyers are subject to a federal law protecting consumers and must adhere to specific rules during collections. Original creditors like banks and credit card companies can often be more aggressive.
How Do Debt Collectors Work?
A debt collector is an individual or company that attempts to collect repayment on overdue debts. Debt collectors are third parties that work on behalf of the original creditor or credit card company.
Debt collectors are governed by the Fair Debt Collection Practices Act (FDCPA) and must adhere to its rules. The Act was passed in Congress in 1978 and was "designed to eliminate abusive, deceptive, and unfair debt collection practices," according to the Federal Reserve.
Per the FDCPA, debt collectors cannot call before 8 a.m. or after 9 p.m. in your time zone, and they cannot contact you at your place of business if they have reason to believe your employer prohibits these types of calls. The Act also prohibits harassing and abusive practices, false representation, and unfair collection attempts. Additionally, if you request the collector to stop contacting you, the collector must cease communication except to let you know that it will stop contact or to let you know that it plans to sue you.
It’s important to note that original creditors — the credit card companies, banks, or personal loan providers who loaned to you — are not covered by the FDCPA and do not have to adhere to its rules. Some states have similar laws covering collection calls from original creditors, but no national law currently regulates these entities.
How Do Debt Buyers Work?
Debt buyers are companies or individuals that purchase an outstanding debt from a creditor — typically for much less than the overdue balance.
Unlike debt collectors, debt buyers do not work on the creditor's behalf. Once they purchase the debt, they own it. Because of this, as long as their main line of business is not debt collection, they have the same collection rights as the original creditor. If the debt buyer is a bank, for example, that purchases debt in addition to its primary banking business, it is not subject to the FDCPA's rules and can contact you just like your credit card company.
If your debt is sold to a debt buyer, it’s often worth exploring a settlement. Because debt buyers purchase debts at a fraction of their worth, they’re typically more open to negotiating than debt collectors are. This can often help you settle your debt for much less than you owe.
How to Stop Credit Card Collection Calls
Stopping collection calls depends on what type of company is trying to collect. If it’s a debt collection agency or a debt buyer whose primary business is debt collection, you’re protected by the FDCPA and have some options.
When you hear from a collection agency or debt buyer, make sure you owe the money. Debt buyers and collection agencies often purchase old obligations, and the account might not be yours. Without acknowledging that you owe anything, make them validate the debt in writing.
If you want to stop collection calls, write a cease and desist letter requesting that the agency stop contacting you. You can also ask the company to only contact you through your attorney or at particular times and via specific methods of communication – for instance, you can say that you only want emails, not phone calls.
The Consumer Financial Protection Bureau has several sample letters you can use as your basis for this. To get started, you will need information about the debt collection agency, including its name and contact details, the debt it says you owe, any interest or added fees you’re being charged, and when/how the debt accrued.
Make copies of the letter (keep one for yourself) and send the original to the collection agency via Certified Mail. This will ensure you’re notified once they receive it.
Beyond writing a letter, you might also consider:
Working with the agency to settle the debt: Settling to pay off your debt (usually for less than you owe) can stop collection attempts. You can try this on your own or enlist the help of a debt relief company.
Enrolling in a debt management plan (DMP): Once you enroll in a DMP, collections calls and attempts should stop – as long as you make your agreed-upon monthly payments.
Consulting an attorney: Suing a debt collector is an option if you believe it has violated fair collection practices or is harassing you. You’ll have to pay legal fees and court costs (though, if you win, the debt collector may be forced to reimburse you).
Filing bankruptcy: As a last resort, you can file for bankruptcy, which may discharge many of your debts. Beware, though: bankruptcy stays on your credit report for anywhere from seven to 10 years and could impact your financial options in the future.
How to Stop Collection Calls From Credit Card Companies
If you're getting collection calls from credit card companies, you may have fewer options. Original creditors aren't subject to the FDCPA and can collect on overdue debts much more freely.
While that doesn’t mean they can call you at all hours or harass you with collection calls at work, there is less protection against these collection attempts — at least federally.
In some states, like California, laws explicitly regulate creditor activity. If you’re not in a state with a creditor-specific law, you have some options for stopping collection calls from a credit card company. Some laws governing telemarketing, for instance, may be applied to collection calls. In any case, it can’t hurt to write a cease and desist letter if you want no contact – and it might work.
Reaching a settlement agreement
A settlement agreement is an arrangement you make with a creditor, allowing you to pay off your debt for less than you owe. You can negotiate with your creditors yourself or hire a debt settlement company to do this for you. According to an American Fair Credit Council study, the average debt settlement user saves $2.64 for every $1 in fees paid. Understand, however, that creditors are under no obligation to settle debt and that no debt settlement company can guarantee a result.
Keep in mind that it can take months to settle each account and two to four years to settle all enrolled debt, according to the AFCC. In the meantime, you may still get collections calls and mailed collections attempts from your credit card issuers. There also may be some tax consequences when settling a debt, so talk to your accountant or financial advisor to ensure you’re prepared for these.
Work with a credit counselor
Debt and credit professionals can help you determine the best path forward for tackling your debts. They can help you with budgeting, negotiate lower interest rates or payments with your creditors, or help you consolidate your debts into a debt management plan. In many cases, these options can help slow or even stop collections attempts from your card issuer.
File for bankruptcy
Most credit card debts are dischargeable under bankruptcy, which means those debts are forgiven and no longer need to be repaid. The card issuer cannot collect on the debt, and the calls and mailings should cease.
Bankruptcy is a last resort for most people because there are upfront costs like attorney charges and filing fees. Bankruptcy creates a public record and stays on your credit report for up to 10 years. You also may find it challenging to buy a home, purchase insurance, get certain kinds of jobs, take out a loan, or get a credit card (even a store one) for years to come. Depending on what type of bankruptcy you file, you could also lose assets in the process.
Should You Stop Credit Card Collection Calls?
Before writing a cease-and-desist letter, understand that once you cut off communication with your creditor, you may leave it no option but to sue you. For this reason, it might be better to keep the lines of communication open, even if it’s uncomfortable. If you’re working with a debt settlement company, you can choose to refer the callers to your debt consultant.
And if you think the collection attempts you’re receiving violate the FDCPA or could be considered abusive or harassing, file a complaint with the CFPB, contact your state attorney general, or seek legal counsel.