Bills in Collections
If you have a bill in collections, it means that the original creditor assigned it or sold it to a debt collector. When this happens, the debt collector will contact you either by phone or by letter. If they contact you by phone, they must follow up with a letter within 5 days of the initial contact they have with you.
Generally, a debt collector’s first letter will tell you:
- The name of the creditor the debt is currently owed to
- The amount of the debt
- That you have 30 days to dispute the validity of the debt and that if you don’t, the debt collector will assume the debt is valid.
- That if you DO dispute the debt, they will send you verification of the debt
If the debt collector doesn’t give this information to you when it first contacts you, they must within 5 days of that initial contact.
Understanding your rights can help you deal with debt collectors. Following is a list of important rights you have when a third party debt collector is trying collect payments from you.
You have the right to verify the debt. If you are contacted by a debt collector and:
- Do not recognize the debt it claims you owe,
- Dispute the amount it states you owe, and/or
- Question the right of the debt collector to collect the debt
You can send a debt validation or verification letter. The letter should include a specific request that the debt collector provide you with:
- The amount of the debt.
- The name of the creditor to whom the debt is owed and the account number used by that creditor.
- The name of the original creditor if different from the current creditor as well as a request for the original account number, address, and the amount owed when the debt was transferred.
- A copy of the last billing statement sent to you by the original creditor.
- Details regarding any additional interest, fees, or charges sine the last billing statement. Ask for itemization that shows the date and amount of each amount.
- Proof of the last payment made on the account to the original creditor.
- Proof that the debt collector is licensed to collect debts in your state.
If sent within 30 days of first contact from the debt collector, it must stop its collection efforts until it verifies the debt. Writing these letters can be difficult. Instead, model your letter after an example letter.
When a debt collector has your debt, it is classified as “in collections”. This means:
- There is a time limit on how long a debt collector can legally collect your debt. There is also a time limit on how long they can sue you for payment in court. This is the statute a limitations for debt in your state. Statutes of limitations vary from state to state.
- Your credit history and scores have been damaged. Debt in collections is seen as a negative.
- You have rights spelled out in the Fair Debt Collection Practices Act.