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.

Types of Debt Collectors

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.

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.

frustrated woman

What should I do when a debt collector contacts me?

When a debt collector contacts you, they will try to pressure you into paying them. However, before making a payment, you should carefully consider all of your options.

Politely ask for information about the debt, then tell them you’ll call back later to discuss it. By making even a small payment on the debt, you acknowledge that it’s yours, and that can be a big mistake.

For example, if the debt is past the statute of limitations, you are no longer legally obligated to pay it. However, if you make a payment, it will reset the clock. This can lead to could lead to a lawsuit or wage garnishment.

How can I stop debt collectors from calling me?

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.

See also: How to Get Debt Collectors to Stop Calling

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.

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. 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

Any derogatory item on your credit report, including a collections account, may harm your credit score.

Debt collectors often buy and sell delinquent debt from one another. This can lead to multiple collections on your credit report for the same account.

When this happens, if you don’t dispute the error on your credit report, the collection account will definitely harm your credit score.

Your Rights When Dealing with Debt Collectors

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 or imprisoned over unpaid debts.

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.

past due bills

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. Ask for a letter with details about the original debt, then hang up. If they keep calling, send them a cease & desist letter.

Record their calls

If you must deal with a debt collector on the phone, consider recording the conversation. In 35 states and D.C., it’s legal to secretly record phone calls. In the other 15 states, you can record with the other party’s permission. Simply informing the collector of your intention to record may count as permission.

Don’t believe what they say

Debt collectors are notorious for resorting to false threats, deceitful tactics, and any means necessary to coerce you into settling your outstanding 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, bank account and credit card information should be kept private.

Don’t apply for new lines of credit

It’s considered fraudulent to apply for new 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 debt collection 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. Age limits vary by state, but it’s typically 4 to 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.

Debt Collection Scams

A debt collection scam is just one of the many ways someone can steal your identity and your hard-earned cash. Whenever you’re contacted by a debt collector, it’s imperative to know exactly who’s calling. You can also just avoid talking to them on the phone altogether.

If you’re talking to a debt collector, ask for their name, phone number and address. Legitimate debt collectors will be more than happy to provide you this information. If they don’t, hang up!

Lastly, don’t give out any financial information over the phone unless you know exactly who you’re talking to. You should only make a payment over the phone if you’ve called them. You also have the option of paying online or through the mail.

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.

File a Complaint with the FTC & CFPB

Once you have proof, file a complaint with the Federal Trade Commission (FTC) or the Consumer Financial Protection Bureau (CFPB). You can also file a complaint with your state attorney general’s office.

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

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 instead of paying for it.

Step 3

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.

If you’re overwhelmed at the prospect of dealing with debt collectors, having a professional credit repair specialist may make things easier for you.

Check out our reviews of the top credit repair services that can help you get rid of collection accounts and improve your credit.