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How To Deal With Debt Collectors
By Jamela Adam MONEY RESEARCH COLLECTIVE
If you’ve ever been deep in debt, you’ve probably received those dreaded phone calls from a debt collector. Whether it’s regarding a personal loan, credit card debt, or medical bills, being hounded by a debt collection agency is never fun. And if you’ve never dealt with debt collectors before, this experience can be even more upsetting. But don’t worry. In this article, we’ll provide tips on how to deal with debt collectors and protect your rights.
What is a debt collector?
A debt collector is a person or a company that helps businesses collect the money consumers owe them. According to data by the Congressional Research Service, there are more than 7,000 collection agencies in the U.S., and in total, they generate over $13 billion in revenue each year. Creditors often sell your debt to a collection agency to recoup some of their losses from past-due accounts and free up time and resources that they can use to focus on other business activities.
If you’ve been repaying your debt on time each month, you won’t have to worry about your account going to collections. But if you’ve fallen behind on your payments for more than 30 days, there’s a good chance that your creditor will soon sell your debt to a collection agency. Once your debt is in the hands of a debt collector, you now owe money to the collector, not the original creditor.
How to deal with a debt collector
Though most debt collectors are legitimate and perform an honest service, there are, unfortunately, some unethical debt collectors that engage in deceptive practices. In 2021 alone, the FTC received more than 70,000 complaints from customers threatened by fake debt collectors to pay back the money they never owed.
If you ever find yourself on the receiving end of a debt collector’s call, don’t panic. Here are some tips on dealing with them so you don’t fall victim to fraud or be intimidated into paying back the money you don’t owe.
Know your rights
Knowing your rights is empowering and gives you the confidence you need to deal with debt collection agencies. Even if you haven’t received a call from a collector yet, it’s helpful to learn about your rights so you’re ready when the time comes.
According to the Fair Debt Collection Practices Act (FDCPA), you have the right to:
- Receive a debt validation notice within five days of the collector’s first contact with you.
- Dispute the debt, in writing, within 30 days of receiving the notice.
- Negotiate with debt collectors.
- Ask the debt collector to stop contacting you if they harass you.
- File a complaint if you believe the debt collector has violated your rights
The FDCPA governs what debt collectors can and cannot do when trying to collect a debt from someone. Thanks to the act, debt collectors must play by the rules.
What legitimate debt collectors can do:
- Contact you through phone, text, social media, and email.
- Contact your close friends and family to get your home address and phone number.
- File a lawsuit against you if you refuse to pay back the debt you owe.
What legitimate debt collectors can’t do:
- Contact you more than seven times a week.
- Publicly shame you into paying back the debt.
- Lie to you about how much you owe.
- Contact you at work when you’re not allowed to take phone calls.
- Reach out to you before 8 in the morning or after 9 p.m. without your permission.
- Threaten you with violence or use obscene language.
- Sue you after the statute of limitations expires.
Note: The law in most states regarding who can lawfully record a phone conversation is that only one party must consent to the recording. This means as long as the debt collector is part of the conversation, they can record the phone call without your consent. But in some states, such as California and Florida, both parties must give their consent before a phone call can be recorded — this is called the two-party consent rule. So if you live in a two-party consent state and don’t want your phone call to be recorded, let the debt collector know. You could take legal action if you later realize they’ve recorded the conversation without your permission. Generally, when a call crosses state lines, federal law is applied (which only requires one-party consent).
If you’d like to record the conversation for your own protection but aren’t sure what your state laws are, it’s better to err on the side of caution and get the debt collector’s consent before hitting the record button. Otherwise, you could find yourself in hot water.
Verify the legitimacy of debt and the collector
When you receive a phone call from a debt collector, you should first verify the legitimacy of both the debt and the collector.
Ask the debt collector to identify themselves by providing their name and information about their collection agency. If they refuse to give details, you might be dealing with scammers. These scammers often try to scare you by threatening to take legal action and garnish your bank account. Don’t fall for it. Just hang up the phone.
Next, make sure to verify the debt before proceeding. Debt collectors must send a written debt validation notice within five business days of contacting you. This notice will state your right to dispute the debt’s validity within 30 days.
Dispute or negotiate the debt
If you don’t think the debt is yours, you have the right to request more information by sending a validation letter. In this letter, you can ask for more details about the debt balance, the original creditor, the debtor’s name, the debt’s age, etc.
After receiving your dispute, the debt collector must provide the proof you requested. If not, they can’t continue to pursue you for the debt since they’ve failed to validate it.
Even if the debt collector validates your debt, be sure to check if the debt is within the statute of limitations. The statute of limitations is the length of time the creditor has to sue you for the debt. And it can vary pretty widely from state to state. In some states, it might be as long as 15 years. But in others, it could be as short as three years. So if it’s been a long time since you made a payment on the debt, it’s possible that the statute of limitations has expired and the debt is not collectible anymore.
Note, however, that even though a debt may no longer be collectible in court due to the statute of limitations, it will still show up as unpaid on your credit report.
Lastly, if you find yourself in a tight spot and aren’t able to repay the full amount, don’t be afraid to ask for some leniency. Though not always the case, some debt collectors might be willing to set up a payment plan or accept a partial payment. If you successfully negotiate a payment agreement with the collection agency, get everything in writing so there wouldn’t be any problems down the road.
What shouldn’t you say to a debt collector?
When you’re dealing with a debt collector, there are a few things you shouldn’t say.
First, don’t give out any personal information — especially your bank account number or Social Security number — over the phone. If you’re not ready to pay on the spot, there’s no reason to disclose confidential information to someone you don’t fully trust yet.
Also, even if you’re pretty sure the debt is yours, resist the urge to confirm it outright. The debt collector may use this information to start collecting the debt immediately.
Finally, don’t agree to make any payments on the debt until you’ve verified that it’s yours. Otherwise, you could end up paying off someone else’s debt with your hard-earned cash.
What happens if you don’t respond to a debt collector?
No one likes getting calls from debt collection agencies. If you’ve been dealing with collectors hounding you for payments, it may be tempting to ignore their calls and hope that the problem will resolve itself. But in reality, running away from the problem could worsen the situation.
If you don’t respond to a debt collector when you owe them money, they can file a lawsuit against you, and your credit score can take a hit. So don’t avoid them. If you need help with debt repayment, negotiate with the collection agency, or consider consulting a financial counselor to help you come up with a solution. And if you can’t come to an agreement with the debt collector, reach out to an attorney who has experience dealing with these kinds of situations.
How to deal with debt collectors FAQs
How can I get out of debt with a debt collector?
There's no easy way out if you owe money to a debt collector. The best course of action is to tackle the debt head-on. Don't feel helpless — You can do a few things to make the process more manageable, such as negotiating the debt or setting up a payment plan with the collection agency.
Apart from negotiating a lower payment, you can also look at your budget and see where you can cut back to free up some cash. And if all else fails, you can always start a side hustle to generate extra income to help pay off the debt.
How can a debt collector contact you?
Under the new debt collection rules approved by the CFPB in 2021, debt collectors can now contact you through text, email, and social media — not just phone calls. As long as the person identifies themselves as a debt collector, they can send you a friend request to join your network and send you private messages.
Note that debt collectors can only contact you privately. Posting messages on your public page or any online space your contacts can see would be against the law.
What should you do if a debt collector calls you?</h3>
Getting an unexpected phone call from a debt collector can be nerve-wracking. If you're not careful, you can easily overshare or make agreements on the spot that you later regret. Here's what you should do to protect yourself when a debt collector calls you:
- Make sure you're ready to talk: It's best to be in a quiet place where you can focus and take a few deep breaths to calm yourself down. If the debt collector catches you off guard, tell them to call back at a later time.
- Take notes: Write down the phone call's date and time and the conversation's details. Don't forget to get the collector's name and the amount you allegedly owe. This information can come in handy if you ever need to face the collector in court.
- Don't admit to the debt: Since you can't confirm whether the debt is yours yet, don't make any payment arrangements until you verify the debt afterward through the debt validation process.
- Don't overshare: Remember, anything you say during the phone call can be used against you. So don't give the debt collector information about your income, debts, or other personal details.
After the phone call, you can decide what courses of action to take next: requesting debt validation, disputing the debt, or negotiating a payment plan.
What is the Fair Debt Collection Practices Act?
The Fair Debt Collection Practices Act is a federal law enacted by Congress in 1978 that protects consumers from illegal and abusive debt collection practices. The FDCPA prohibits debt collection agencies from repeatedly threatening or harassing you to collect the debt. It also establishes clear rules about how these debt collectors can interact with you, including what hours they can contact you and how often they can reach out within a specific timeframe.
In 2021 alone, the FTC has refunded over $4.8 million to consumers harmed by abusive debt collectors. So if you think you might have fallen victim to illegal debt collection practices, don't hesitate to contact your state attorney general's office or file a complaint with the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB).
Summary of our guide on how to deal with debt collectors
Dealing with debt collectors can be stressful. But by keeping a level head and taking proactive steps, you can protect yourself from potential scams or harassment. And if you have some free time on your hands, familiarize yourself with the Fair Debt Collection Practices Act so you know what debt collectors can and can’t do. Knowing your rights will help you stand up for yourself and spot any potential red flags early on.
