Q: I was out of work for six months. During that time I lived off my savings and 401(k) and put my MasterCard on the bottom of the pile of bills. They called me several months ago and said I had to pay a certain amount to keep my account from being turned over to a collection agency, which I did. The following month, I got a call from a collection agency telling me they now have my account. They are putting a lot of pressure on me. I'm paying them $300 a month as requested, but with my new job I am really struggling. How do I handle this? How can I relieve the pressure?
A: You are protected by the Federal Debt Collection Practices Act (FDCPA). Among other things it allows for your creditor, the bank that issued your MasterCard, to turn your account over to a "third-party collector." The law states the conditions under which that collector can contact you, and also gives you the right to refuse to deal with that collector.
The law also says you can stop a debt collector from contacting you by writing a letter to the collector telling them to stop.
Once the collector receives your letter, he may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action.
It's important that you understand that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.
Under the circumstances, I suggest you tell the collector to stop. Then go back to your original creditor (the bank who issued your MasterCard) and without getting upset, tell them how they breached their agreement with you. You kept to the terms of the agreement but they did not. Let them know that you have been paying down the debt and that you are not running out on your obligation.
As them to agree to accept a payment plan you can handle. If you are unsuccessful, I would suggest you consider credit counseling.
Learn more by visiting the National Foundation of Credit Counselors at NFCC.org. From that site you will be connected with the Consumer Credit Counseling Services office closest to you.
Excerpted from Can I Pay My Credit Card Bill with a Credit Card? And Other Financial Questions We're Too Embarrassed to Ask! (DPL Press, Inc., 2009)
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