If you’ve been getting calls or letters from someone asking you to pay a debt, then you’re one of the whopping one-third of Americans reportedly dealing with debt collectors. 1
Naturally, you may have questions you need answered before you take any further steps—for example, why are debt collectors calling you, what are your rights, and what should you do when a debt collector contacts you? We’ll take some of the stress away by telling you exactly what you need to know about debt collectors and what they do.
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Why are debt collectors calling me?
If you’re being contacted by debt collectors, it’s probably because you have an unpaid debt (or they at least think you do). Oftentimes, they’ll contact you to ask for payment, although they could also be trying to do the following:
- Remind you to pay your creditor so that your debt isn’t charged off
- Inform you that your debt has been charged off or sold
- Locate someone else who has an overdue debt
- Notify you of legal actions being taken against you
It’s also possible that the person calling you isn’t a real debt collector. To avoid being scammed, it’s important to verify any debts you’re contacted about before making payments or providing any personal information. You can do so by contacting your original creditor and reviewing your credit reports.
What are debt collectors allowed to do?
A debt collector’s primary aim is to get money from people who have overdue debts. They’ll usually contact you asking you for payment and also report your debt to one or more of the major credit reporting agencies (TransUnion, Equifax, and Experian).
Debt collectors may attempt to collect money from you in the following ways:
- Calling your personal and office telephones
- Sending you text messages
- Mailing you late-payment notices
- Contacting your family, friends, and neighbors to get your contact information
- Turning up at your front door
- Filing a lawsuit against you
However, all debt collectors must abide by the guidelines set out in the Fair Debt Collection Practices Act (FDCPA), which is a federal law designed to protect your rights and prevent debt collectors from engaging in abusive collection practices.
FDCPA restrictions on debt collectors
The FDCPA protects you from harassment from debt collectors by prohibiting them from doing the following: 2
- Calling you incessantly
- Calling you at an inconvenient time (by default, assumed to be before 8 am or after 9 pm, your time)
- Calling your workplace if you tell them you can’t receive calls at work
- Sending automated calls or prerecorded messages telling you to make payments
- Misrepresenting the amount you owe
- Revealing your debt to anyone but you, your spouse, or your parent (if you’re a minor)
Debt collectors can contact other people you know, but they can only do so once per person and only for the purpose of getting your contact information, and they aren’t allowed to share information about your debts.
Moreover, if you ask debt collectors to stop contacting you, they must comply. 2
4 tips for dealing with debt collectors
There are four things you need to do to successfully deal with debt collectors:
1. Know your rights
It’s important to familiarize yourself with the FDCPA so that you know when debt collectors are breaking the rules.
If you think that a debt collector is violating your rights, you can report them to:
Separately from the FDCPA, the Fair Credit Reporting Act (FCRA) is another federal law protecting consumers, and it limits how long debts in collection can be reported to the credit bureaus. If the debt collection agency is reporting an old debt as new on your credit report, they could be illegally re-aging the debt.
There’s also a limit on how long collectors can sue you over a debt (known as the statute of limitations), after which it becomes time-barred debt. The limit varies by state and is usually between 3 and 6 years, though it can reach up to 15 years. 4
Visit your attorney general’s website to find out what the statute of limitations is on debt in your state.
2. Be proactive
Monitor all three of your credit reports with the major credit bureaus (Experian, Equifax, and TransUnion). You can get free copies of your credit reports from AnnualCreditReport.com every year. Regularly checking your credit reports could alert you to overdue debts before they’re sent to collections.
You should also be proactive about making debt collectors fulfill their obligations. Debt collection agencies are required to send you a debt validation notice giving details of your debt within 5 days of first contacting you. 2
If you believe the collection account is a mistake or doesn’t belong to you, then dispute it by figuring out who your debt collector is and sending them a debt verification letter within 30 days of receiving their notice. If they can’t provide proof that the debt is yours, then they’ll have to stop trying to collect payments from you. 2
You can also dispute the account on your credit report by sending a credit dispute letter to the credit bureaus. If you’re successful, they’ll remove the collection account from your credit report. 5
3. Keep records
Document all of your communications with debt collectors, and make sure to keep copies of anything they send you. You may need these records if you have to dispute the debt or report an FDCPA violation, for example.
You should also save any voicemails you get from collectors. You can document your phone calls by taking notes that include the date, time, and basics of your conversation.
4. Decide how you will pay your debt
Once you’ve confirmed that your debt collector is legit and your collection account isn’t the result of a clerical error, fraud, or the collection agency confusing you with someone else, it’s usually best to get out of debt as quickly as possible. You may want to weigh your options more carefully if your debt is time-barred, but in most cases, paying the collection account will be your best option.
If you can’t afford to pay immediately, then don’t worry—there are several ways of dealing with debt collectors when you can’t pay.
In most cases, you have the following options for paying your way out of debt collections:
- Lump-sum payment
- Debt settlement (paying less than the full amount owed)
What happens if you ignore debt collectors?
Ignoring debt collectors is never a good idea because it may prompt them to file a lawsuit against you. If you lose the case or miss your court hearing, you could receive a court judgment, which would allow the debt collectors to garnish your wages or seize your assets.
Time-barred debt is a potential exception. However, if a debt collector tries to sue you over a time-barred debt, you should still attend the hearing and tell the judge that the debt is past the statute of limitations. If you ignore the summons, the judge might enter a default judgment against you without realizing.
As a rule, if a debt collector calls you, it’s always a serious problem that you need to address promptly. However, the way you should respond depends on your situation. Use the tips outlined above and take appropriate steps to navigate debt collection depending on whether you recognize the debt, how old it is, and whether you’re able to pay it.