A debt collection notice from an attorney makes you sweat on a chilly winter morning. The word ‘attorney’ is enough to increase your heartbeat. But is that really so scary? Does it mean the end of the world?
The short answer is ‘No.’
Undoubtedly, receiving a debt collection notice from an attorney is a matter of grave concern, and it is something that you should never ignore. But it is equally valid that a debt collection letter won’t send you to jail. There are several ways to respond to it.
In this post, we will discuss it and much more.
Table of Contents
- What is a Debt Collection Letter?
- When Can You Receive a Debt Collection Letter?
- What Should You Do Immediately After Receiving a Debt Collection Letter?
- How Should You Respond To A Debt Collection Letter From An Attorney?
- Should You Hire an Attorney?
What is a Debt Collection Letter?
It is a letter sent by a debt collection agency or an attorney to the debtor. This letter acts as a reminder to pay off delinquent debts.
Every attorney will occasionally have trouble getting debtors to pay them. Furthermore, it is inconvenient and difficult to follow up with debtors to collect debts. In that situation, a debt collection letter can aid law firms in increasing collections effectively and expertly.
The idea is the same whether you refer to it as a debt collection letter, a letter of demand, a demand letter for payment, etc. A legal debt collection letter asks a debtor to pay a balance on an unpaid debt. This kind of letter can assist in resolving delinquent debts by fostering dialogue to reach an amicable resolution for the debtor and the law firm.
The following details ought to be in a debt collection letter:
- The total debt amount
- The first due date
- A new payment deadline, whether it’s sooner or later
- Ways to pay off debt
- A polite but firm reminder that payment is due immediately
- A firm (but not entirely hostile) notice of impending legal action, such as taking the debtor to collections
- A notice that the debtor can challenge the amount owed by sending a debt validation letter within a specific time after receiving your debt collection letter.
When Can You Receive a Debt Collection Letter?
You can receive a debt collection letter in the following circumstances:
- You have defaulted on a debt for more than six months.
- Creditors have lost all hope of receiving payments from you and have assigned your accounts to a debt collection agency or a law firm.
- The debt collection agency or the law firm contacts you to collect payments from you.
- A fraudster wants to take money from you for an invalid account.
What Should You Do Immediately After Receiving a Debt Collection Letter?
1. Don’t Panic. Start Thinking Logically
After getting a debt collection letter, many people become anxious. Many want to call the creditor immediately to explain the debt, but this isn’t in their best interests. Debtors are disadvantaged and may be pressured into paying the debt entirely, whereas attorneys are skilled and have the upper hand in the scenario.
Debtors should assess the problem and the resolution route they wish to follow before calling immediately to remedy the issue. Consider the letter you received and consider the question, “Do I owe the debt? How well-equipped am I financially to repay this debt? What can we talk about over the phone?
2. Choose Your Course Of Action
You do have the option to bargain for a settlement if you are aware that the debt is yours. The Consumer Financial Protection Bureau advises developing a “realistic repayment proposal” based on how much you can pay each month after considering bills, other debt payments, and emergency expenses. You can contest the debt if you are not responsible for it.
Remember that each state has a statute of limitations that applies to debt. A debt collector cannot file a lawsuit against you for a debt that is more than a set amount of time old, which, according to the CFPB, varies from three to six years, depending on the state.
The attorney might be more open to negotiating with you if the statute of limitations is almost over. The CFPB advises speaking with a lawyer in your state if you are unsure whether the statute of limitations has run.
3. Should You Respond To A Collection Letter?
Depending on the debt your creditors assert you owe, you may or may not respond to a debt collection letter. If you can afford to pay the debt in full and believe the amount is accurate, do so. This will suffice as a response and should put an end to any collection efforts.
How Should You Respond To A Debt Collection Letter From An Attorney?
Here are a few ways to respond to a debt collection letter from an attorney.
1. Review The Debt Collection Letter Carefully
When a lawyer or collection agency writes to a debtor, they inform them that a certain sum is probably past due. Of course, that does not automatically imply that their assertion is true. Open a collection letter to know if the debt is valid.
Identify the type of debt
Identify the type of debt for which you have received the debt collection letter.
You already know about the debt and have a broad idea of how much is owed.
Although you may be aware of the debt, you might disagree with its specifics. In other instances, the debt collector might assert that far more is owed than you believe is true. Alternatively, you might have already paid a portion of the debt.
Unknown or invalid debts
Last, you can get a collection notice for a debt you have never heard of. Collection letters for debts that were previously unrecognized must be answered right away.
2. Request For Debt Validation
A debtor may give a creditor or collector formal notice by sending them a debt validation letter. A debtor often receives a debt validation letter after receiving a collection letter from a lawyer or an organization.
Debt collectors are required by state and federal laws to establish the legitimacy of a debt. Collectors and attorneys typically believe that a debt is legal if not disputed within 30 days.
The lawyer should send documentation of the debt in response to a timely request for a debt validation letter. After receiving a collection letter, you should consider writing a validation letter—especially if you think the debt is invalid.
3. Compile Financial Documents
Next, check to see that all pertinent papers and records are correctly arranged. Finding a solution will be simpler with more information on the disputed debt. Make sure you have proof of any payments you have already paid to the creditor, a collection agency, or another person.
4. Negotiate And Pay Off Valid Debts
Be proactive after a debt enters the collection. It may become more challenging to find a solution every month without taking action may become more difficult. Additional fees may be applied to the debt The unpaid debt may lead to legal action against you.
There are three fundamental ways to deal with past-due debt:
Pay the total amount
You must always agree to pay the total amount the lawyer claims is due. If you do decide to pay, be sure to obtain formal confirmation that all unpaid debts have been entirely settled.
Negotiations for a settlement are also an option. You might get a debt settled for less if you acknowledge that the debt is real but can only pay part of the amount.
You can never be forced to pay a debt. You may consider collection efforts if you think the debt needs to be more legitimate or enforceable. With the help of an attorney, you can decide on the best course of action.
Should You Hire an Attorney?
You can hire an attorney to respond to a collection notice, as there are several benefits. An attorney knows debt collection laws, state laws, and federal statutes. So, an attorney can help you draft the correct response to the debt collection letter.
The attorney can check the statute of limitations period and tell you if the debt is time-barred. If the debt has crossed the SOL period, it’s a relief. You can’t be sued, and your attorney can highlight this fact.
In case of a lawsuit, your attorney can help you deal with it. Your attorney can help you fight the lawsuit and win the case.
Moreover, if you have been scammed or if there is a case of FDCPA violation, your attorney can help you file a lawsuit against the debt collection agency or the law firm. If you win the case against debt collection abuse, you can win a reward of $1000.
Author bio: Lyle Solomon is a licensed attorney in California. He has been affiliated with the law firms in California, Nevada, and Arizona since 1991. As the principal attorney of Oak View Law Group, he gives advice and writes articles to help people solve their debt problems.