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Dealing with Collectors Tips
- Knowing your legal rights is essential.
- Avoid dealing with debt collectors after the statute of limitations has expired.
- Keep good records of any dealings with debt collectors.
- Request verification on any debt that you feel is incorrect.
- Always get an agreement in writing before making a payment.
- If your rights have been violated, file a complaint with the FTC.
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Dealing with Collectors Tips
- Knowing your legal rights is essential.
- Avoid dealing with debt collectors after the statute of limitations has expired.
- Keep good records of any dealings with debt collectors.
- Request verification on any debt that you feel is incorrect.
- Always get an agreement in writing before making a payment.
- If your rights have been violated, file a complaint with the FTC.
-
Disclaimer
The content in this page is not a substitute for professional financial advice. Please contact your financial adviser before using the information presented here.
- by Darcy Logan
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Introduction
- Whomever said that nothing lasts forever obviously never dealt with a debt collector. They can be relentless in their pursuit of debt. If you're dreading answering your phone or going to your mailbox because you are being hounded by debt collectors, then it's time to start taking action. No one, not even someone who owes money, deserves to be harassed in their own home. Knowing how to deal with debt collectors is essential because it can affect your credit report and your peace of mind. This page will help guide you on your rights and how to deal with debt collectors to get that debt paid off and/or removed from your credit report.
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Step 1: Understand Your Rights
- Before you can effectively deal with debt collectors, you have to understand your rights. These rights are outlined under The Fair Debt Collection Practices Act (FDCPA).Federal Trade Commission: Fair Debt Collections Practice Act This is a federal law which prohibits debt collectors from using unfair practices to collect on the debt.About.com: Fair Debt Collection Practices Act Overview However, this does not mean that you won't have to pay your debt if it is legitimate.CNN.com: Rogue Debt Collectors -- How to Fight Them Rather, it outlines exactly what a debt collector can and cannot do when attempting to collect on the debt.
- YouTube Video: ABC 7 Exposes More Debt Collector Illegal Tactics! (Time: 2:16)
- A debt collector cannot:
- Contact you if you have sent a letter telling them to stop.About.com: Fair Debt Collection Practices Act Overview
- Contact you at work if he or she knows your employer disapproves.CNN.com: Rogue Debt Collectors -- How to Fight Them
- Ask you to pay more interest, fees or expenses than are allowed by law.About.com: 15 FDCPA Violations
- Make false statements to collect the debt.Federal Trade Commission: Fair Debt Collection This can include:
- Harass, oppress or abuse you.Federal Trade Commission: Fair Debt Collection This can include:
- Calling continuously.About.com: 15 FDCPA Violations
- Using profane or threatening language.CNN.com: Rogue Debt Collectors -- How to Fight Them
- Calling you before 8 a.m. or after 9 p.m. (unless you have agreed otherwise).CNN.com: Rogue Debt Collectors -- How to Fight Them
- Publish a list of consumers who refuse to pay their debts.Federal Trade Commission: Fair Debt Collection
- Using or threatening to use violence.About.com: 15 FDCPA Violations
- Inform anyone else about your debt unless you have given permission.Federal Trade Commission: Fair Debt Collection
- -This does not include your attorney, the creditor, the creditor's attorney, credit reporting agencies, your spouse and your parent (if you are a minor).About.com: 15 FDCPA Violations
- -However, a debt collector can ask your friends and family how to get in contact with you.CNN.com: Rogue Debt Collectors -- How to Fight Them
- Claim federal benefits such as Social Security, IRA or 401(k).CNN.com: Rogue Debt Collectors -- How to Fight Them
- Threaten to take action that they cannot or will not take.Federal Trade Commission: Fair Debt Collection This includes:
- Having you arrested.Federal Trade Commission: Fair Debt Collection
- Filing a lawsuit against you (if past the statute of limitations).CNN.com: Rogue Debt Collectors -- How to Fight Them
- Garnishing your wages.About.com: 15 FDCPA Violations
- Seizing your property.Federal Trade Commission: Fair Debt Collection
- Causing you to lose your job.About.com: 15 FDCPA Violations
- Putting a lien on your property.CNN.com: Rogue Debt Collectors -- How to Fight Them
- Send you anything that looks like an official court or government document if it is not.Federal Trade Commission: Fair Debt Collection
- Deposit a post-dated check prematurely.Federal Trade Commission: Fair Debt Collection
- Contact you by postcard.Federal Trade Commission: Fair Debt Collection
- YouTube Video: Reporter Exposes NJ Debt Collector (Time: 3:39)
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Step 2: Understand the Statute of Limitations
- Understanding the statute of limitations on your debt is important. The statute of limitations is the amount of time that you can be held legally responsible for your debt. There are two ways this can affect you.
- First, it can affect your credit rating. The statute of limitations for this debt it dictated by the The Fair Credit Reporting Act. This law states that most items can remain on your credit report for seven years, except for bankruptcies, which can remain for ten years.Federal Trade Commission: The Fair Credit Reporting Act
- Second, it limits the amount of time the collection agency can take legal action against you. This statute of limitation varies from state to state.ABC News: Zombie Debt: The Bills That Won't Die (February 28, 2008) It can range from three years to 15 years.CNN.com: Rogue Debt Collectors -- How to Fight Them It is important to understand this because you can restart the statute of limitations on your debt if you:Forbes.com: Beware Of Zombie Debt Collectors
- Acknowledge that the debt is yours (in some jurisdictions).MSN Money: 'Zombie' Debt Is Hard to Kill
- Make a payment on the debt.Forbes.com: Beware Of Zombie Debt Collectors
- Promise to make a payment.About.com: Debt Collection Statute of Limitations
- Enter a payment agreement.About.com: Debt Collection Statute of Limitations
- Make a charge on that account or open a new account with that company.CNN.com: Rogue Debt Collectors -- How to Fight Them
- You can find out more about the specific statute of limitations in your state by contacting the Attorney General's office, or by going to one of the following sites:
- Credit Infocenter: States of Limitations on Debts
- CardReport.com: Statute Of Limitations For Debts
- BCS Aliance.com: Statute of Limitations on Debt Collection
- Fair Debt Collection.com: Statute of Limitations on Debt Collection
- YouTube Video: Statute of Limitations on Credit Card Debts (Time: 3:14)
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Step 3: Keep Good Records
- Once you realize what your rights are and understand the statute of limitations, you will need to decide on a course of action. You essentially have three options.
- Ignore the collection attempts.
- Request verification.
- Negotiate a deal with the debt collectors.
- Ignoring your debt is only a good option if it is past the statute of limitations in your state.ABC News: Zombie Debt: The Bills That Won't Die (February 28, 2008) Although old debts may still be listed on your credit report, it is not always beneficial to pay them because paying off old debt can lower your credit score initially.About.com: Should You Pay an Old Collection It makes the debt look newer than it is.
- Still, if you know it is your debt, you should make every effort to negotiate a deal with the debt collectors. (See Step 5: Negotiate with the Debt Collectors.) If, however, you don't feel the debt is yours or are unfamiliar with who is trying to collect it, then you should request that the debt collector verifies two things before you proceed:
- That the debt is indeed yours.
- That the collector with whom you are in contact has the authority to collect said debt.
- - Both of these actions are covered in-depth in Step 4: Request Verification and/or Dispute the Debt.
- No matter what option you decide to use, it is important that you keep good records of all action. This can help prove your case later on.
- Send any letters to the debt collectors via certified mail with a return receipt.Georgia.gov: Debt Collectors
- Tape any phone calls between you and the collection agency.CreditCards.com: 11 Tips for Dealing with Debt Collection, Collectors Most states allow you to secretly record the conversation. However, some states require you to inform the other party before recording.MSN Money: 12 Tips for Negotiating with Debt Collectors
- Keep notes regarding the time and date of calls, the name of the caller and the name of the agency.MSN Money: 12 Tips for Negotiating with Debt Collectors
- Keep copies of your records as long as possible.CreditCards.com: 11 Tips for Dealing with Debt Collection, Collectors
- Once you realize what your rights are and understand the statute of limitations, you will need to decide on a course of action. You essentially have three options.
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Step 4: Request Verification of the Debt
- Unless you are absolutely positive that the debt is yours, you should definitely ask the debt collector for verification.WWJ Newsradio 950: How to Deal with Debt Collectors By law, the agency must verify the debt within five days after it initially contacts you. If they don't, then they can no longer attempt to collect on that debt or report it to the credit report agencies.Federal Trade Commission: Fair Debt Collection Practices Act: Commission Advisory Opinion If they do verify the debt, you can either provide them with evidence that disputes their claim or negotiate to pay the debt.
- If the debt is being collected by someone other than the original company, you will also want to verify that the company contacting you has the right to collect on it, even if you know you owe the original debt.About.com: Working With a Collection Agency
- Examples of letters that can be sent can be found on the following sites:
- About.com: Sample Debt Validation Letter For Debt Collectors
- Credit Infocenter: Sample letter 9 - Attempt to Validate Debt
- Debt Consolidation Care: Sample Debt Verification Letter
- California Debt Blog: Sample Verification Letter (June 8, 2007)
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Step 5: Negotiate with the Debt Collectors
- Once you are sure that the debt in question is indeed yours, that the agency has the right to collect it and that the amount is accurate, you should usually try to negotiate a deal with the debt collector. Here are some tips to use when negotiating the deal:
- Before making any type of payment, make sure you get the agreement in writing.MSN Money: 12 Tips for Negotiating with Debt Collectors
- Request that the creditor delete the account from your credit report.About.com: Working With a Collection Agency However, this will only remove the collection account from your report, not the original credit or account.MSN Money: Make a Deal with Debt Collectors
- Offer the debt collector less than you can afford.MSN Money: 12 Tips for Negotiating with Debt Collectors
- If they won't agree to remove it from your credit, insist that they mark the account "paid in full," even if you're paying less.MSN Money: 12 Tips for Negotiating with Debt Collectors
- Don't rush into anything.MSN Money: 12 Tips for Negotiating with Debt Collectors
- Negotiate at the end of the month, when collectors are more likely to want to make a deal.MSN Money: 12 Tips for Negotiating with Debt Collectors
- Never allow a debt collector direct access to your checking account. In fact, you're better off sending a money order than a check.Bankrate.com: How to Strike a Deal with a Debt Collector
- If you do pay by check, write on it "Cashing this check constitutes payment in full."MSN Money: 12 Tips for Negotiating with Debt Collectors
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Step 6: If Necessary, File a Complaint
- If at any time you feel that your legal rights have been violated, you should file a complaint to the Federal Trade Commission.National Consumer Law Center: Dealing with Debt Collection Harassment A letter of complaint can be sent to:
- The Consumer Response Center at Federal Trade Commission
- CRC-240, Washington, D.C. 20580.
- You can also call toll-free 1-877-FTC-HELP (1-877-382-4357) or use its online complaint form.Federal Trade Commission: FTC Consumer Complaint Form
- You should also send a letter to your state attorney general's office, your local office of consumer protection and the Better Business Bureau.National Consumer Law Center: Dealing with Debt Collection Harassment Rockford Register Star: Better Business Bureau Fields More Questions About Debt Collectors
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Conclusion
- While it is important to pay off any debt that you legitimately owe, it is also important that debt collectors not violate your rights when attempting to collect on that debt. If you're having financial troubles, you will want to check out Mahalo's How to Get Out of Debt, How to Consolidate Your Bills, How to Cut Household Expenses, How to Make a Budget and How to Save Money. While it may take time, working your way out of debt can be spiritually (as well as financially) rewarding.
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