September 2008
About debt
I cannot pay all my bills and my creditors are
demanding payment. What can I do?
What if a creditor wants more money than I
can afford?
What if I don't owe the amount they say
I owe?
What can creditors do to me if I don't
pay my debts?
What if a creditor threatens to attach
my wages?
Do I have to use my social security,
unemployment or welfare funds to pay the debt?
If a creditor takes me to court, can I be
forced to pay attorneys fees and other collection costs?
Can a
creditor call me in the middle of the night or at my job?
How can I stop a creditor or collection
agency from contacting me?
What other things is a creditor or debt
collector prohibited from doing?
What can I do if a creditor or
collection agency keeps bothering me or violates the law?
Should I consider bankruptcy?
Instructions for Using Letters
About debt
If you owe money on something like an auto loan, a credit card purchase or a home
mortgage, you are usually required to make payments on time. If you are late or miss a
payment, you may be contacted by the creditor (person or business to whom you owe money)
or by a debt collector (person working for an agency which collects other people’s
debts).
Creditors or collection agencies will usually try to collect money from you even if you
cannot pay because of financial problems or will not pay because of a dispute you have
with the creditor.
However, there are certain things creditors and debt collectors cannot do.
The law protects you against certain common, but illegal, debt collection practices.
Knowing what these practices are can help you protect yourself.
You will find answers in this booklet to many of your questions about what a creditor or
collection agency can and cannot do when trying to collect a debt from you. The
information presented here applies to most businesses and debt collection agencies.
You will also find letters at the end of this booklet which you can use to make creditors
stop bothering you. Select the appropriate letter, complete it, and make a photocopy. Send
the copy, or save the completed letter in this booklet for your records. Or use the
letters in this booklet as samples and write your own letters.
I cannot pay all my bills and my creditors are demanding payment. What can I do?
What if a
creditor wants more money than I can afford?
Do not let the creditor pressure you into saying that you will pay more than you can
afford. Making a promise that you cannot keep will only lead to more trouble once the
creditor discovers that you cannot pay what you’ve promised. Send only what you can
afford each week, even if the creditor says it is too little.
What if
I do not owe the amount they say I owe?
You should let the creditor or collection agency know immediately. The law requires them
to check out your story and then provide proof of what you owe.
After the investigation, if there is still a disagreement between you and the creditor about how much you owe, the creditor will have to go to court to try to prove you owe the amount claimed.
To notify the creditor that you don’t owe the amount he or she says
you owe, you can complete Letter A. Check only the
boxes that explain why you disagree with the amount they say you owe. Then, make a
photocopy to keep and send the original letter from this booklet. If you have any
receipts, canceled checks or other documents to back up your statement, make copies of
these papers and send them too. Keep the originals. You may need them as proof if you need
to go to court to defend your claim.
For additional proof, you may want to send your letter by certified mail and get a receipt
when it is delivered. This receipt will be sent to you in the mail. Keep it with your
other papers concerning the purchase and what you owe.
What can creditors do to
me if I do not pay my debts?
The actions that creditors can take depend on the kind of debt it is.
If you are behind in paying rent, your landlord can take legal action to try to force you to move.
Utility companies can cut off service if you do not pay, except during winter months (November 1 - May 1) if you are a "hardship" case. (See the Legal Aid pamphlets, Rights of Utility Customers and How to Keep Year ‘Round Utility Service).
If you owe money on a "secured purchase" – something that can be "repossessed" by the seller – you must pay on time to avoid the risk of losing the purchase before you are finished paying for it. (See the Legal Aid pamphlet, Repossessions).
If you owe money on something that cannot be repossessed, the creditor may take legal action against you to try to collect the amount you owe. If he or she wins the case, you may be ordered to pay a certain amount a week. If you do have to defend yourself in court, you will probably need advice from a lawyer.
What if a creditor threatens to attach my wages?
It is common for a creditor or collection agency to threaten to attach your
wages or property. This cannot be done unless the creditor first brings a lawsuit and wins
in court. If you receive any legal papers, contact a lawyer immediately. Even if the
creditor wins a lawsuit against you, your wages can’t be attached if you faithfully
pay on time the weekly amount ordered by the court or if you have very low wages. If the
amount ordered is too high, you can try to have it reduced. (See the Legal Aid pamphlet, A Guide to Wage
Attachments).
Do I have to use my social
security, unemployment or welfare funds to pay the debt?
If the creditor sues you and wins, the creditor may try to take government
benefits which are directly deposited in your bank account. Under the law, government
benefits do not have to be used to pay many types of debts. However, there are
exceptions. For more information, call Statewide Legal Services at 1-800-453-3320 or
860-344-0380.
Don’t let anyone threaten you about taking these government benefits from
you. If you remind the creditor that these funds cannot be taken, you may persuade him or
her not to take any further action against you. Use Letter D
below.
If a creditor takes me to court,
can I be forced to pay attorneys fees and other collection costs?
Only if you signed a contract that says so. Check your contract. Even if you
did agree to pay these costs, you do not have to pay unless you are sued in court and you
lose. If this happens, attorneys fees are usually limited to 15% of your debt.
When a creditor or collection agency demands attorney’s fees or other costs,
you should probably contact a lawyer. In the meantime, however, you should be aware of
what a creditor is prohibited from doing. By knowing what these things are, you can
protect your rights. (See below).
Can
a creditor or collection agency call me in the middle of the night or at my job?
No. The law prohibits creditors or collection agencies from using harassment or
abusive tactics. That means they may not bother you by contacting you at an inconvenient
or unusual time (before 8 am or after 9 pm). If a certain time or place is inconvenient
(for example at your job), notify the caller in writing and keep a copy. A creditor or
collection agency may not call you at your job after being notified by you that such calls
are inconvenient or that your employer does not allow them.
How can I stop a
creditor or collection agency from contacting me?
Notify the creditor or collection agency in writing that you do not want to be contacted anymore. Use Letter B for this purpose. The legal effect of writing such a letter varies depending upon whether you are writing to a collection agency or to a creditor.
If you write such a letter to a collection agency, the collection agency is prohibited by law from communicating with you again except to tell you that there will be no further contact, or to notify you that a specific legal action such as filing a lawsuit may be taken.
If you write such a letter directly to a creditor, the creditor should be prohibited from contacting you again. When sending Letter B directly to a creditor, you should add the following statement in your letter:
"Any further contact from you about this matter will be deemed to constitute harassment and abusive conduct."What other things is a creditor or debt collector prohibited from doing?
1. A creditor or collection agency cannot harass you to get you to pay a debt. The law says creditors or debt collectors cannot:
Collectors are trained to get you mad so you'll say something they can hold against
you. Don't lose your cool...just hang up.
2. It is illegal for creditors or collection agencies to make false statements when
trying to collect a debt. They cannot:
Falsely suggest that the debt collector is an attorney;
3. Finally, it is illegal for creditors or collection agencies to use unfair practices. This means they cannot:
What can I do if a
creditor or collection agency keeps bothering me or violates the law?
You can report this situation to a few agencies. Use Letter C
to complain to these agencies.
Director, Consumer Credit Division
State Banking Department
260 Constitution Plaza
Hartford, CT 06103
Telephone (860) 240-8200 or 1-800-831-7225
Web: www.ct.gov/dob
The Better Business Bureau (listed in phone book)
Federal Trade Commission
Debt Collection Practices
Washington, DC 20580
Web: www.ftc.gov
You should probably also contact a lawyer if you think the creditor or collection agency
is doing something illegal.
Should I think about
bankruptcy?
You may want to think about filing for bankruptcy. See the Legal Aid pamphlet, A Guide to
Bankruptcy.
Instructions for Using Letters
Use Letter A: to inform your creditor or collection agency
you owe a different amount than you were billed for, or why you have not paid your bill
(check the appropriate box).
Use Letter B: to tell your creditor or collection agency not to contact you again.
Use Letter C: to file a complaint against a creditor or collection agency with the consumer protection agencies listed above.
Use Letter D: to tell a collection agency or creditor to stop contacting you and to tell them that your income is exempt from collection. (Exempt means that your income cannot be collected).
For each letter you send, do the following things before mailing:
1) Fill in the missing information in the blanks
provided.
2) Make a photocopy of your letter.
3) Send a copy of the letter to the creditor, collection agency or consumers’
protection department.
4) Keep the original letter. You may need it if you have to go to court.
________________
(your street number)
________________
(city, state, zip)
______________
(today’s date)
_________________________
(name of creditor or collection agency)
_________________________
(street number)
_________________________
(city, state, zip)
Re: Billing Error Notice - Account Number:________________________
(the number that is on your bill)
Dear Sir or Madam:
I have received your bill dated ___________ regarding an overdue bill for
______________________________________. (the item you were billed for)
q
I have paid this bill in fullq
I have paid part of this bill and I owe ______________. (amount)q
I have not paid this bill because _________________________ (reason)Please check your records and correct my account. In addition, please do not send me any more bills or call me until this matter is settled.
Sincerely,
____________________
Sign Your Name
Print Your Name
________________
(your street number)
________________
(city, state, zip)
______________
(today’s date)
_________________________
(name of creditor or collection agency)
_________________________
(street number)
_________________________
(city, state, zip)
Re: Credit Account:________________
Dear Sir or Madam:
This letter is to notify you that I do not wish you to call, write, or visit me at
home or work about the money you claim I owe.
Sincerely,
______________________
Sign Your Name
Print Your Name
________________
(your street number)
________________
(city, state, zip)
_________________________
(name of consumer agency)
_________________________
(street address)
_________________________
(city, state, zip)
Re: Collection Practices of:_______________________
(name of company)
_______________________
(street address)
_______________________
(city, state, zip)
To Whom It May Concern:
I would like to file a formal complaint against _________________ (company)
for actions taken while trying to collect a debt. My complaint is as follows:
______________________________________________________________
(State your complaint. If you need more room, use another
piece of paper.)
I would appreciate it if you would investigate this matter and have these
practices stopped. I may be contacted at the above address if additional
information is needed or you may call me between ________ and ________ at
telephone ______________.
(hours when you can be reached)
Sincerely,
____________________
Sign Your Name
Print Your Name
________________
(your street number)
________________
(city, state, zip)
______________
(today’s date)
_____________________________
(name of creditor or collection agency)
_____________________________
(street address)
_________________________
(city, state, zip)
Re: Credit Account No:________________
Dear Sir or Madam:
This letter is to notify you that I do not wish you to call, write, or visit me at
home or work about the money you claim I owe. This letter is also to advise
you that all of my income is exempt from collection as established by law.
Sincerely,
Sign Your Name
Print Your Name
Where Can I Go for More Information?
Call Statewide Legal Services at 1-800-453-3320 or (860) 344-0380.
If you are 60 or over, Consumer Law Project for Elders (CLPE) 1-800-296-1467.
This pamphlet was produced by the Legal Assistance Resource Center of CT in cooperation with Connecticut Legal Services, Greater Hartford Legal Aid, New Haven Legal Assistance Association, and Statewide Legal Services.
The information in this pamphlet is based on
the laws in CT as of September 2008. We hope that the information is helpful. It is not
intended as legal advice for an individual situation. If you need further help and have
not done so already, please call Statewide Legal Services (see above) or contact an
attorney.
Copyright: September 2008