How To Deal With Debt Collectors

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.

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.