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Dealing with Debt Collectors


How to Deal with Debt Collectors

When you don’t pay money you owe, your debt could be turned over to a debt collector.  Debt collectors specialize in collecting debts. They only make money when people pay the money they owe.

Debt collectors are regulated by the Federal Trade Commission.  The FTC developed the Fair Debt Collections Practices Act to regulate the practices of debt collectors. Understanding your rights can help you deal with debt collectors.

When a debt collector has your debt, it is classified as “in collections”.  This means:

  1. 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.  This is the statute a limitations for debt in your state. Statutes of limitations vary from state to state.
  2. Your credit history and scores have been damaged.  Debt in collections is seen as a negative.
  3. You have special rights spelled out in the Fair Debt Collection Practices Act.

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.

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 verification letter. The letter should 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, and 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
  • An itemized list of any additional interest, fees, or charges since the last billing statement
  • 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 you send this letter within 30 days of the first contact from the debt collector, it must stop its collection efforts until it verifies the debt.  Writing these letters can be difficult, so you may want to use an example letter.

You have the right to ask the debt collector to stop contacting you.  Do this in writing, and send it certified mail, return receipt requested. Doing this does not eliminate the debt.  It just stops contact, except that the debt collector can contact you one more time to tell you that they will not contact you again or that it will be taking specific action, like filing a lawsuit against you.

Additionally, debt collectors cannot:

Harass you. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:

  • Use threats of violence or harm;
  • Publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
  • Use obscene or profane language; or
  • Repeatedly use the phone to annoy someone.

Use false statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:

  • Falsely claim that they are attorneys or government representatives;
  • Falsely claim that you have committed a crime;
  • Falsely represent that they operate or work for a credit reporting company;
  • Misrepresent the amount you owe;
  • Indicate that papers they send you are legal forms if they aren’t; or
  • Indicate that papers they send to you aren’t legal forms if they are.

Say that:

  • You will be arrested if you don’t pay your debt;
  • They’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or
  • Legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.

May not:

  • Give false credit information about you to anyone, including a credit reporting company;
  • Send you anything that looks like an official document from a court or government agency if it isn’t; or
  • Use a false company name.

Use unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:

  • Try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge;
  • Deposit a post-dated check early;
  • Take or threaten to take your property unless it can be done legally; or
  • Contact you by postcard.

Knowing your rights can protect you and your money.  It can also empower you to take action if you feel like your rights have been violated.  Contact a lawyer or legal aid if you think a debt collector has violated your rights.