Getting a call from a debt collector can feel frustrating and overwhelming. But, if you receive a call from a collection agency, don’t freak out. Take a pause and make a plan, so that you can handle future calls and get your debt paid off if you need to.
It’s important to know your rights when it comes to debt collection. Let’s discuss exactly what a debt collector can and can’t do according to the law so that you can make an effective plan to handle your debt collectors.
How debt collectors get your information
When you haven’t paid a debt to a creditor (for a loan or a medical bill, for example), they may sell it to a agency or hire an agency to collect the debt on their behalf. The responsibility of collecting the debt then falls to the collection agency.
The creditor will likely pass along some of your personal information — like your address and phone number — so that the collection agency can contact you. If this information is incorrect, they may also try an internet search to find your current contact information.
If a debt collector got your information from the original creditor, they’ll have your personal details, such as where you live, the amount owed and the company you originally owed money to. If you’re dealing with legitimate debt collectors, they should have no problem sharing information related to your debt.
5 ways to deal with debt collectors
If you’re dealing with a third-party debt collector, there are five things you can do to handle the situation.
1. Don’t ignore them
Debt collectors will continue to contact you until a debt is paid. Ignoring a debt collector when a debt is yours can cause further damage to your credit score and report.
2. Get information on the debt
Without admitting the debt is yours, get information from the debt collectors before you make plans to deal with it. Ask who the original creditor was, the original debt amount and how much is owed. The more details the debt collector can provide, the better. If the statute of limitations has expired, the debt collector can no longer sue you to recoup the debt. Admitting a debt is yours may reset the clock on old debt, so never confirm, even if you know the debt is yours.
3. Get it in writing
Legitimate debt collectors are required to send you a letter in the mail detailing your outstanding debt, such as who the original creditor is and how much you owe. You should also get information about how to dispute the debt, which can come in handy if the debt in question isn’t yours.
If you want a verification letter from the debtor, send a written request, so that it is documented. When you receive a letter back from the creditor with information about the debt, verify that it is your debt. If you don’t think the debt is yours, you can send a dispute letter, but you must send it within 30 days.
4. Don’t give personal details over the phone
Regardless of if you can pay the debt or not, avoid excessive talking. Don’t share anything over the phone, including if you can pay and how you plan to. Instead, request a letter with the original debt information.
5. Try settling or negotiating
After you’ve received your letter and can verify that the debt is yours, see if the debt collector will settle for a portion of the cost if you pay upfront. If they still want the full amount due, ask if you can set up a payment plan.
Understand your rights when dealing with debt collectors
In accordance with the Fair Debt Collection Practices Act (FDCPA), The Federal Trade Commission makes sure that certain debt collection laws are followed by all debt collectors. It’s important to know what these laws are so that you know if your rights are being violated by a debt collector. All debt collectors must follow these rules:
- They have rules for contacting you. Debt collectors are only allowed to call you between 8 a.m. and 9 p.m., and they’re not allowed to call you at work. If you get a call outside of these hours, you might be dealing with a debt collection scam. If a debt collection agency is legitimate, it should have no problem providing you with company information, including a callback number, company name and address.
- They can’t lie or harass you. Debt collectors can’t make you pay more than you owe or threaten you with arrest, jail time, property liens or wage garnishment if you don’t pay. Wage garnishment might be legal in your state, but your debt collector will need to take you to court first. If a debt collector is posing as police and threatens to arrest you, there’s a chance that it’s a scam; in this case, you can report the threat to the Federal Trade Commission and the Consumer Financial Protection Bureau.
- Debt collectors must provide you with information about your debt. They have to tell you a few key facts about your debt, also called “validation information.” This includes things like how much you owe, who the original debt was owed to and what you can do if you don’t think this is your debt.
How to spot a debt collection scam
Having debt can mean you are open to debt collection scams. You may even encounter these types of scams if you don’t have any real debt. To make sure that a debt collector is legit, keep an eye out for the following signs:
- Watch your mailbox. A validation letter is one way to make sure that you’re dealing with a legitimate debt collector. If you’ve just gotten a phone call from an alleged debt collector, request a validation letter before making any attempt to pay off the debt in question.
- Verify your details. Even if the company is legit and the debt is legit, there’s a chance that it might not be yours. Request personal details about the debt, including the original creditor and the amount. While the debt might be real, it could be for someone else who shares your name, or it might be from an act of identity theft.
- Make sure you can pay the way you choose. If the person on the phone claims that you can only pay through a wire transfer or a prepaid debit card, you might be dealing with a scammer. Even though debt collection isn’t the most ideal situation, most companies will work with you to get a debt paid through terms you’re comfortable with. You should also try negotiating — many debt collectors are willing to create a plan that helps you pay.
If you get a call from a debt collector, knowing the steps to take can help you deal with it. There are rules that debt collectors must follow to collect on old debt, so it’s important to know your rights in this situation. Don’t ignore debt collectors; get as much information as possible and get it in writing. Avoid giving personal details over the phone to avoid falling for debt collection scams or resetting the clock on old debt.