How to Deal With Debt Collectors – (Hint: Don't Ignore Them)
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The term "debt collectors" conjures up all sorts of thoughts. Many individuals consider debt collection agencies to be predatory—companies tasked to bring you down and take your money at all costs. But that's not the case at all. Debt collectors have to abide by a law called the Fair Debt Collection Practices Act, which governs how they interact with you. These companies are bound by law to treat you fairly and accommodate your financial situation as much as possible; they'll even work out a customized payment plan for you.
In order to deal with debt collectors professionally, it's important to know your rights, and what debt collectors can and cannot do. For the record, they have the right to seek repayment of your debt. There's a right and wrong way to deal with these collection agencies, and you wouldn't want to rub them the wrong way. Will it still make your skin crawl? Probably, but knowing the right information can help you manage your debt and start the discussion with a position of strength.
In this article
How to deal with debt collectors
Don't ignore them
If a debt collector contacts you, the worst thing you can do is ignore their calls or messages. Because know this: debt collectors won't rest until you've paid the money you owe, so ignoring them only prolongs the whole thing. The best course of action is to communicate with them and work out an arrangement so you can put this behind you.
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Don't give out personal information
Debt collectors ask for your personal information like your name, date of birth and Social Security number. But beware of disclosing this information on the phone. Debt collection scams are the most-reported fraud to the Federal Trade Commission (FTC). Before you give sensitive information on the phone, ask the caller for a callback number, their company's name and address, and information on the debt and original creditor. A legit debt collector wouldn't hesitate to give you this information. Once you're sure you are talking to a legit agency, you can provide the information if you'd like.
Ask for alternative arrangements
Paying back the full amount in a lump sum would be the best outcome, quickly making you debt-free. But if you don't have enough cash, you can ask the debt collector to accommodate your financial situation. A debt collection agency buys debt from the original creditor for pennies on the dollar, hoping you'll pay the money. And no debt is off the table, so your unpaid credit card bills and medical payments may end up with a collection agency. Because they're looking to make a profit, debt collectors will likely work with you on a customized payment plan.
When discussing these with the agency, agree only to the amount you can pay back; otherwise, you'll remain in debt for years. In addition, once your debt has been paid, insist that it be marked as "satisfied in full" on your credit report. As with all personal finance matters, make sure to get everything in writing.
Do not give in to pressure
As noted, debt collectors have a law they must abide by, and we'll go into more details later on what they can and cannot do. But broadly speaking, they can't threaten or intimidate you. The law also specifies the times they can contact you — debt collectors can't call you too early in the morning or late at night, for example. They're also prohibited from disclosing your financial condition to friends, family, or co-workers.
In addition, watch out for callers looking to extract money with urgency. That's a sign you're talking to a scammer. Another red flag is the means through which they say you should pay. Bad actors will tell you to pay via wire transfer or prepaid cards because they're difficult to trace.
Understand your rights
According to the Fair Debt Collection Practices Act, a legit debt collector will identify themselves and not contact you outside normal business hours. They can't charge you more than you owe and can't threaten to garnish your wages or with property liens or jail time. In addition, you should also read up on your state's statute of limitations. Generally, the statute of limitations on debt is anywhere from three to six years, though some can be up to 15 years. The time period is influenced by your state of residence and types of debt. If you know about your state's statute of limitations, you'll have a good lever to pull against an agency looking to collect on any old debts of yours.
Do you homework
Before finalizing an arrangement with the debt collector, do your research to verify and validate the nuances of the debt agreement because the odds of errors in debt agreements, when sold to debt collection agencies, are high. After the first official contact, you should receive a validation letter within five days of the call. If you do not, ask your debt collector to provide one. This letter includes details of your debt, the debt collection company, the creditor's information, and how you can challenge the debt if it is not yours. It's also a good idea to keep a record of your payments towards your debt.
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What debt collectors can do
Debt collectors can do the following things to collect debt:
- They can call you from Monday to Friday between 7:30 a.m. and 9 p.m. On weekends, they can call you between 9 a.m. and 9 p.m.
- They can work out a payment schedule that works best for you.
- Debt collectors can take legal action against you for wage garnishment and property liens. You'll have to spend even more as you seek legal aid.
- If debt collectors can't contact you, the law allows them to hire private investigators to locate you.
- In addition to calls, debt collectors can also contact you through email, text messages, and social media.
- They can contact your family members or colleagues to find out how to reach you.
What debt collectors can't do
The all-powerful debt collection agencies have certain limitations too:
- They cannot abuse or harass you.
- Debt collectors can't withhold any financial information from you.
- They cannot mislead, deceive or lie to you.
- Debt collection agencies are prohibited from disclosing your debt information to friends, family members, or colleagues without your permission.
- They cannot exploit your disabilities or illnesses.
- They can't make phone calls or message you at work after asking them to stop through a certified letter.
A note on debt collection scams
The scam begins with a simple phone call, text message, fax, mail, or email to you. These fraudsters pose as legitimate debt collectors and threaten borrowers with debt they do not owe. The debt in question may be completely made up, discharged, forgiven, or past the state's statute of limitations. Intimidation, lies, and harassment are some of the techniques these scammers employ in a bid to get you to pay money.
You should exercise extreme caution when talking to someone claiming to be a debt collector. You risk identity theft if you give out your personal information to the wrong person. Insist that they identify themselves and the agency and demand information on the debt. Once you hear from a debt collector, check your credit report to gauge the legitimacy of the debt. let you check your reports from the three major credit bureaus.
If you think you're talking to a scammer, you can report them to the FTC, the Consumer Financial Protection Bureau, or your state's attorney general's office. Attach as much evidence as you can with your complaint. Finally, you should report to a major credit bureau that you've been targeted by a fake debt collection scam and ask them to put a fraud alert on your credit report. They're required by law to pass on this information to the other two credit reporting agencies.
Related:
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- TurboDebt has a Trustpilot rating of 5/5 based on 1288 reviews
- Subject to qualification and approval. $1,500 monthly income required.
- Apply in 5 minutes. If you qualify, chat online with a friendly online debt representative.
The bottom line
Dealing with debt collectors can come off as a tedious task, but if you know your rights and the dos and don'ts of a debt collector, the experience can be less stressful. By not giving personal information without verification, not avoiding debt collectors' calls, not surrendering to any pressure, and doing your home, you can focus on your debt repayment journey and become debt free. In addition, you should look for red flags in how a purported debt collected agency communicates with you. If anything feels off, you can report them to law enforcement authorities.
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Writer
Jasir Jawaid is Joy Wallet's Assistant Editor. He has more than 13 years of experience as a journalist covering Wall Street, equities, financial policy and regulation, and cryptocurrency and blockchain.
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