Dear Debt Adviser,
I’ve been contacted by debt collectors concerning an old debt that has been written off by the original creditor. I’ve requested written proof of the debt, but nothing has been sent. I’ve also informed the collection agency that the IRS has frozen my accounts for back taxes, and I cannot pay it now. They have requested proof of the IRS debt and constantly call my job for a payment. Am I liable to debt collectors even though the original creditor wrote (my debt) off?
You certainly have a lot going on! I can tell from the IRS account freeze that you have been having challenges for a very long time. That you are working is a huge plus in your life, so let’s start there before the debt collectors get you in Dutch with your boss. The good news for you and many other underwater consumers is that you have protections provided by the Fair Debt Collection Practices Act. One of those protections pertains to when and where debt collectors are allowed to contact you regarding debt collection.
Lenders and their collectors have a right to contact you about money that you borrowed and promised to repay. This is only reasonable. However, there were so many abuses in debt collection that Congress passed a law specifying what debt collectors can and can’t do. I think we’ve all heard stories of people being called a hundred times a day and into the wee hours by abusive voices out of the night. This behavior is extreme and specifically outlawed. But even a reasonable collection agency will want to speak to you to get a promise of a payment. If it can’t reach you at home, it’ll try to get you at your mother’s or at work.
Rules apply for each type of contact so that you are protected from abuse or a violation of your privacy. Specifically, debt collectors may not contact you at work if you inform them that your employer does not allow those types of calls. So, the first thing you do is let the collector know you cannot speak to them and stop the calls at work. I suggest you do this over the phone and then follow up with a letter. The letter will go in your file and any new collection agencies assigned to your account will see it and be forewarned not to call you at work. The last thing you need to do is jeopardize your employment in any way. To be fair, though, debt collectors need to be able to reach you somewhere, so be sure to communicate at home, through the mail or through an attorney. But communicate!
You said that you asked for proof of the debt. Excellent! Everyone makes mistakes. That includes lenders and collectors. You have the right to be sure the debt is actually yours before you or they go any further. The collection practices act provides that you have 30 days from the time of written notification of the debt by a collector to write the collector and request verification of debt, dispute the debt or request the name of the original creditor of the debt. Once the collector receives your written request, the collector may not contact you regarding the debt until your request has been satisfied.
Now that I’ve explained your rights, I also need to answer your question about liability. Yes, if the debt is indeed yours, you are still responsible for it even after the original creditor writes it off. Charging or writing off a debt is an accounting practice; it does not negate the debt.
My recommendation is that you tell the collector not to call your job, wait for proof of the debt and then formulate a plan as to how you will repay the IRS and the debt in collections. Collectors are tenacious, but the IRS is in a league of its own. There is a reason for the expression that nothing is certain but death and taxes!