Crediful is committed to helping you make smarter financial decisions by presenting you with the best information possible. We are able to present this information to you free of charge because some of the companies featured on our site compensate us.
Compensation may impact how and where products appear on this site, including the order in which they may appear within listing categories.
While Crediful does not feature every company, financial product, or offer available, we are proud that the information, reviews, guides, and other tools found on our site are entirely objective and available to you free of charge.
Our #1 priority is you, our reader. We will never ever recommend a product or service that we wouldn't use ourselves. Our reviews are based on independent research.
What does this mean for you? It's simple: we will never steer you in the wrong direction just because a company offers to pay us.
How to Deal with Collection Agencies
It’s a situation no one wants to be in. Multiple phone calls throughout the day, always demanding that you pay for bills you can’t afford.
The constant messages left on your voicemail, the calls at your workplace or to friends and family, all of it quickly becomes both embarrassing and stressful.
No one likes dealing with debt collectors. But is there anything you can do about it? What are your legal rights when dealing with them?
This article will cover the rules that debt collectors have to follow and what you can do to stop the constant harassment. Knowing how to deal with debt collectors can save you a lot of time, money, and stress.
What is a debt collection agency?
A debt collection agency, or debt collector, is a company that pursues debts on behalf of creditors.
Debt collectors employ many methods to get you to pay your debts, including collection calls and letters. And in some instances, lawsuits may lead to asset seizure or wage garnishments.
There are two main types of debt collectors: third-party debt collectors and internal collection departments.
Internal Collection Departments
In most cases, you deal with the original lender or credit card issuer’s internal collection departments for the first 90 to 180 days that your debt is delinquent. The internal collection department is still your original creditor, though you will be speaking with agents specifically trained in debt collection versus customer support.
Depending on the debt collector, you may be able to negotiate a flexible payment plan and prevent harmful information from being reported to the credit bureaus.
Third-Party Debt Collectors
After 90 to 180 days, many companies will sell your debt to a third-party debt collector for pennies on the dollar. Others will contract a debt collector to act on their behalf, and they only get paid if you pay up.
Third-party debt collectors may or may not be able to negotiate. However, if your account has been sent to collections, you’re already looking at negative marks on your credit report.
Debt collectors are notorious for taking advantage of unwary consumers who make verbal agreements over the telephone. If you choose to negotiate with a debt collector on your own, you must get it in writing. Once you have an agreement in writing, you can make a payment.
Know Your Rights
There are strict regulations about what a debt collector can and cannot do in the United States. The Fair Debt Collection Practices Act (FDCPA) prevents the use of abusive or deceptive tactics to collect any debt, whether you owe it or not.
Knowing how to deal with debt collectors during the debt collection process can help you spot predatory practices and make the whole process much smoother for you. Know your rights and how to use them.
Is it legal for debt collectors to call family members?
They are not allowed to speak to anyone about your debt besides you, your attorney, and in some cases, your spouse. However, they can call your friends or relatives in an attempt to find out where you live to get contact information so that they can phone or write you.
In most instances, they are only permitted to contact your friends or family members one time and may not continue to make harassing phone calls.
Withholding Information About a Debt
Debt collectors cannot legally withhold information from you about a debt. They are required to notify you in writing within five days of their first contact with you that you have the right to dispute the debt. In addition, you are entitled to request the name and address of the original creditor.
You also have the right to request verification of the debt. The debt collector must provide you with the name and address of the original creditor, along with how much money you owe. If they can’t provide this information, they cannot legally pursue payment.
Debt Collector Calls
Debt collectors cannot keep calling you after you ask them to stop. But just telling them over the phone won’t help. You have to submit the request in writing, and it’s best to send it by certified mail.
Thereafter, they can only contact you to let you know they will be ceasing collection efforts, or that they will be taking a specific action against you, such as filing a lawsuit.
Debt Collector Harassment
If a debt collector can’t prove that you owe a particular debt, they cannot attempt to collect it from you. This is particularly true regarding identity theft, so long as you’ve filed the proper notices and reports.
Just because your name is on the paperwork, it doesn’t necessarily mean that the debt is yours. This is particularly the case if you have a very common name or relatives with similar or same-sounding names.
Always verify that a debt is legitimate before you let a debt collector pressure you into making a payment.
Wage Garnishment
Some states allow wage garnishment, while others do not. It is important to note that if you are in a state that does not allow wage garnishment, it is illegal for a debt collector to threaten to garnish your wages.
It is also illegal for them to make any claims they cannot or will not follow through on. This includes threatening to sue you or foreclose on your home.
How Collections Affect Your Credit
The missed payments that led to the collection harm your credit score. A collection account on your credit report further reduces your ability to qualify for new credit.
Debt collectors often buy and sell debt from one another, which can lead to multiple collections on your credit reports for the same account.
The Fair Debt Collection Practices Act provides you with many rights to ensure that debt collectors don’t take advantage of you. In particular:
Debt validation. You have a legal right to request debt validation on an alleged debt. Send the collection agency a debt verification letter. By law, they have 30 days to prove to you that the debt is really yours and the total amount is accurate.
Debt collectors may not threaten or harass you, call you repeatedly, swear at you, or publicly publish a list of debtors.
They must be honest about who they are and what they are attempting to do. They must notify you that they are a debt collector both orally and in writing.
Debt collectors cannot threaten to have you arrested, and they are not allowed to threaten to take legal action if they have no intention of doing so.
It’s also important to note that the FDCPA covers all debt collectors, and in some cases, your original creditors as well.
If your original creditor attempts to collect a debt using a different company name, they are also subject to the provisions of the FDCPA, the same as an unrelated third-party collection agency.
Many states also have their own debt collection laws, so it’s important to learn what they are when dealing with collection agencies.
More Tips on Dealing with Debt Collectors
Avoid the phone
Never talk to a debt collector on the phone. The less they know about you, the better.
Politely tell them it’s your policy to deal with everything in writing. Request a letter with the original debt information and then hang up. If they keep calling, send them a cease & desist letter.
Record their calls
If you must deal with debt collectors on the phone, record them. Thirty-five states and the District of Columbia allow you to record your phone conversations secretly.
In the other 15 states, you can record with the other party’s permission. If you tell the debt collector you are going to record, and they keep talking, that’s considered giving permission. They will usually hang up.
Don’t believe what they say
Debt collectors are known to make false threats, lie, and tell you whatever they need to tell you to get you to pay the debt.
Don’t pay or attempt to negotiate with them during the debt validation process
Make sure the debt has been validated before doing so.
Don’t attempt to hide money
Hiding money or assets from a legitimate debt collector is illegal if you owe them. However, it’s also best to avoid giving access to your bank account or credit card information.
Don’t apply for new lines of credit
It’s also considered fraudulent to apply for new lines of credit if you are unable to pay your current creditors.
Don’t ignore them
You can do things on your terms, but ignoring the situation will not make them go away. Ignoring them sets you up for a possible lawsuit.
Know Your State’s Statute of Limitations
Each state has a statute of limitations on debt. Once your debt reaches a certain age, it is considered “zombie debt,” and you are no longer legally obligated to pay it. The age limit varies from state to state, but it’s typically around 4-6 years.
Debt collectors are still allowed to contact you about these debts, but they can no longer sue you for them, and you are not required to pay them.
In some states, making a partial payment can restart the statute of limitations on a debt. It can also restart the period for how long the collection account can remain on your credit report. That’s why when the statute of limitations is close to expiring, a debt collector may be eager to negotiate more favorable terms.
Filing a Complaint Against a Debt Collector
First, get proof of the actions that they are taking. You may be able to record telephone conversations without their knowledge, depending on your state’s wiretapping laws.
If you live in one of the following states, you cannot record the conversation without notifying the collection agent: California, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, Michigan, Montana, New Hampshire, Pennsylvania, and Washington.
If you live in one of the states listed above, have a witness to listen in during the conversations so you have someone who can corroborate what was said.
The FTC keeps a list of debt collectors that are banned due to illegal collection activity. At the time of this writing, there were more than 100 firms on the list. If one of these firms is contacting you, they are in clear violation of the law.
How to Remove Collections From Your Credit Report
If debt collectors are harassing you, chances are you already have collection on your credit report. Collection accounts can stay on your credit report for up to seven years.
Follow these 5 steps to get the collections removed.
Step 1
Get free copies of your credit reports. You can order copies of your free credit reports once every 12 months from AnnualCreditReport.com.
Step 2
Review your credit report to see if the collection account was reported. If it was, confirm that the dates and amounts listed are correct.
If they aren’t, you can dispute this item on your credit report. Note that the credit bureau’s dispute response time jumps from 30 to 45 days when you access your report from AnnualCreditReport.com instead of paying for it.
Request that the collection agency validates the debt in question. While you are working on getting copies of your credit reports, don’t forget to request validation from them.
Remember, they must respond to your request within 30 to 45 days. If they don’t, then you’re off the hook for the debt.
Step 4
Dispute all errors with the credit bureaus. Any error on your credit report may be disputed. This includes the wrong dates, the wrong amounts, more than one collection agency reporting the same debt, or any questionable items.
Step 5
Keep track of your progress. There are multiple timetables involved in disputing an inaccurate item in your credit report. Keep track of what you’ve sent and when you’ve sent it to have the best option for removing these negative items from your credit history.
