What To Do When Creditors Call
Dealing with mounting debt is already stressful, and constant calls from creditors only add to the pressure. But don’t panic—there are steps you can take to manage the situation and protect your rights.
Stay Calm and Assess the Situation
You don’t have to answer every call, but if you choose to engage, do so calmly and with a plan:
- Explain Your Situation: Be honest about your financial difficulties.
- Propose a Plan: Offer a realistic payment plan if you can. Some creditors may agree to freeze interest or hold off on further action while you catch up.
- Avoid Empty Promises: Don’t commit to payments you can’t make. It’s better to say nothing than to create unrealistic expectations.
Understand Your Rights Under the Law
Creditors and collection agencies must follow the Fair Debt Collection Practices Act (FDCPA), which prohibits:
- Harassment: Repeated calls, threats, or profane language.
- False Claims: Misleading statements about the debt or consequences of non-payment.
- Unlawful Actions: Threats of jail or seizure of property without a court order.
If a creditor violates your rights, you can report them to the Consumer Financial Protection Bureau (CFPB).
Know What Creditors Can and Cannot Do
- Before a Judgment:
Creditors cannot garnish wages, take property, or freeze bank accounts without a court judgment. - After a Judgment:
- Creditors may garnish up to 25% of your wages.
- Bank accounts can be levied unless exempt funds (like Social Security) are involved.
Protecting Social Security and Other Exempt Income
If you rely on Social Security or SSI benefits:
- Keep those funds in a separate account. Mixing them with other income can make them vulnerable to garnishment.
- Provide creditors with an affidavit proving the account only holds exempt funds if needed.
Debt Relief Options
If your debt has become unmanageable, explore relief options to regain control of your finances:
Bankruptcy
- Chapter 7: Discharge eligible debts entirely for a fresh start.
- Chapter 13: Create a repayment plan to manage debts over 3-5 years.
Bankruptcy provides a comprehensive solution, halting creditor harassment through an automatic stay.
Debt Settlement or Negotiation
For smaller debts, negotiating directly with creditors may allow you to settle for less than the full amount owed. Be aware of potential tax consequences for forgiven debt.
Take Control of Your Financial Future
When creditor calls become overwhelming, it’s time to take action. Consulting with an experienced bankruptcy attorney ensures you understand all your options, from negotiating payments to filing bankruptcy.
Schedule a consultation with our Kansas City bankruptcy attorneys today to discuss your specific situation and develop a strategy to move forward with confidence.
