Maintaining one’s standard of living without credit cards, car loans, house finance (basically borrowing of any sort), is almost impossible in today’s era. Whereas the increased demand for financing schemes has led to the introduction of many loan programs by the government as well as private companies, it has also raised the number of defaulters. Inability to recover the amount induces lenders to hire the services of a debt collection agency. One such agency in Honolulu, USA is the Credit Associates of Hawaii.
Many people have a misconception that this organization is a scam. Others tend to panic when they receive a call from it because they are clueless about the course of action that should be adopted thereafter. Before, listing down some facts about Credit Associates of Hawaii, let us explain how a debt collection agency works.
What is a debt collection agency?
Loans that are not repaid even after the due date has passed cause the creditors worry and stress. When they are unable to retrieve the amount despite multiple reminders, they outsource the task of recovery to a debt collection agency. These agencies adopt a combination of the following approaches to make the borrowers pay:
- Making repeated phone calls
- Sending numerous notices mentioning that the payment is still due
- Contacting the borrower’s friends, family, and acquaintances to confirm their contact details
- Showing up at their residence to demand the amount they owe
However, the Fair Debt Collection Practices Act (FDCPA) has laid down certain rules which these agencies must abide by, to ensure that the borrowers are not harassed. For example, debtors must not be pressured to pay if they have already filed for bankruptcy, nor should they be threatened by any physical attack.
If the respective agency can retrieve the amount from the borrower, it receives a certain pre-agreed percentage from the creditor as remuneration for its services. If not, a “collection status” is added to the debtor’s credit report which leads to a drop in their credit score. A low score decreases the affected party’s chance of obtaining a loan in the future and also reflects negatively on its integrity.
Credit Associates of Hawaii
Now, moving back to our discussion about this particular organization, it is a small-scale but legitimate debt collection agency that was incorporated in 1954. However, the Consumer Financial Protection Bureau (CFPB) has received certain complaints from debtors criticizing the agency for incorrect reporting and then paying no heed to their requests regarding debt verification. However, such occasional disputes occur between all businesses and their stakeholders and only a detailed investigation of each case can lead to a fair conclusion.
What we can help the debtors with, is guidance regarding how to respond to a call from Credit Associates of Hawaii in particular, and any collection agency in general.
How to respond to a call from a collection agency?
If you have outstanding debt, you would probably be aware of the fact that you owe someone a payment and would be making efforts to gather the amount. Therefore, there is no need to panic upon receiving a call from a debt collection agency. You should try to ensure that the call you received is not a scam or a prank by adopting the following approaches:
- Rather than being intimidated, ask questions from the representative of the collection agency. g., you may ask them details about their organization, your bank account number, information regarding the creditor they are representing, and so on. Not receiving satisfactory responses is a warning in itself.
- The first call should be followed by a written letter mentioning the collector’s name, their contact information (in case the recipient wants to respond with some queries or indicate a correction), and a summary of the debtor’s rights.
- It is very important to conduct verification at your end. Therefore, if you receive a call/letter from a debt collection agency, but you haven’t heard its name before, you should check online whether such a company exists in the first place. Next, you should contact their official details to confirm whether they are handling your case or you are being tricked by someone who is just pretending to be their employee.
For further security, you may check with the attorney general’s office in your state to confirm whether the agency contacting you is licensed.
- Since a person usually avails multiple financing schemes and loan programs at a time, s/he fails to remember all the dues by heart. Therefore, a glance at your credit report would help confirm whether you owe someone a payment or you are being fooled by a scammer.
- Most importantly, checking the timeline defined by the statute of limitations can save you the payment even if the agency contacting you is legitimate and you did borrow the amount you are being asked to repay. As per the law, a stale debt cannot be demanded. Hence, it is important to be aware of your rights.
By now, you must have had an idea regarding the approach that should be adopted when contacted by Credit Associates of Hawaii or any other collection agency. However, if you feel that you are being harassed, you may complain to the CFPB via a simple phone call. The key to your security is familiarity with the Fair Debt Collection Practices Act 1977.