Debt Collection Is Going Digital. Here’s What it Means for Debtors

Your next debt collector may never say a harassing thing to you at all. That debt collector might also not be human.

The next time you speak to a debt collector, you might find yourself negotiating with a computer. And you might actually prefer that.

Consumers buy toothpaste and bread without talking to a person. They get boarding passes for flights with a few swipes of a credit card or mobile phone. Why not pay off debt with a click or a text? After all, many consumers expect self-service now, and would rather perform these kinds of transactions without ever interacting with another human being.

Debt Collection Is Going Digital

In April, Experian announced a self-service platform named eResolve, which it says will let consumers negotiate and resolve past-due obligations without ever talking to a debt collector.

“The eResolve platform negotiates with the consumer on the client’s behalf and direction to resolve their obligation in a frictionless environment,” Paul DeSaulniers, senior director for risk scoring and trended data solutions at Experian, said in an email. ”eResolve is providing a way for the consumer to interact on their terms, at any time of the day or night using a digital channel that is more preferred over the traditional phone call and avoids aggressive collection tactics.”

A firm named TrueAccord attracted a lot of attention in 2014 promising to create a similar digital debt collection platform. CEO Ohed Samat says that since then, TrueAccord has generated plenty of success stories. He claims more than 60 clients with 1.4 million consumers are “on the platform.” There have been “hundreds of thousands” of resolutions — including consumers who could easily click and tell the firm they’d been victims of ID theft, or had filed bankruptcy, so collections efforts should stop.

Adios, Debt Collector Misbehavior?

It’s easy to see the potential advantages of digital collections. For starters, the obvious: Misbehaving debt collectors top most lists of consumer gripes, so getting rid of the “human element” can get rid of the illegal threats. After all, computers don’t get frustrated.

“Debt collection is a powder keg. There are explosive situations,” Samat said. “A computer doesn’t get tilted (frustrated). You can’t yell at computers and scare them.”

The old-fashioned method of debt collection resembles telemarketing, and when done badly, adds a layer of badgering that can violate the Fair Debt Collections Practices Act. While more phone calls don’t mean higher collection rates, they do mean greater risk for harassment allegations. Both Experian and TrueAccord claim their technologies work to optimize the timing and method of communication with customers to get the best results.

“Consumers desire a more seamless and convenient way to resolve their debts, without what is often felt as an uncomfortable exchange,” DeSaulniers said. “The process is about making the experience less threatening for consumers and gives them the flexibility to access their account at any time. Doing so increases the consistency and efficiency of the debt collection process.”

ACA International, a trade association that represents collection agencies, did not immediately respond to request for comment for this article.

Negotiations Are Straightforward

Negotiating debt with a computer is exactly what it sounds like.

“First, the lender or collection agency contacts the consumer to remind him of his debt owed. At the same time, a website link is provided to the consumer, who can negotiate the payment of his debt without human interaction,” DeSaulniers said, describing the process. “Next, the consumer logs on to the website to submit a reference number associated with their account and then explores repayment options. Here, the consumer may negotiate payment amounts, terms and dates within parameters set by the lender.”

For example: Debtors get an email with an offer such as making three payments with 0% interest, or 90 cents on the dollar if paid in full. Depending on what lenders say they’ll accept, a consumer who turns down that offer might get a subsequent pitch for an 80-cents-on-the-dollar settlement. (Do you know your state’s statute of limitations on debt collections? Check them out using our handy map on debt collection statutes of limitations by state.)

Samat says machine-based debt collection solves several problems. Chief among them: thorny regulatory issues. Computers don’t call or text at the wrong times. They don’t use forbidden language, such as threat of law enforcement.

“Because of our machine-based approach, almost every line of text we send (to consumers) is pre-written and preapproved. It’s much easier for us to be compliant,” he said. He claims TrueAccord gets 66 times fewer complaints than traditional collection agencies (the sample size is still small).

Digital debt collection also fits into modern consumer behavior, Samat said. More than 60% of the interactions his firm has with debtors happen after hours, when it would be illegal to call.

“It’s people at 2 a.m., on their mobile phone, looking at their options,” he said.

Collection Efforts Tailored to Your Behaviors

But there’s more going on than just staying on the right side of the law. TrueAccord’s computers watch consumer behavior and learn when best to ping them for a resolution. If someone has spent several nights clicking through settlement options, perhaps that’s a good time to send a text, or even make a better settlement offer.

“People are different. Some need encouragement. Some need inspiration. Some need to be pointed to the facts,” he said. “We reach out in the right channel at the right time in the right language.”

Some of that language is funny – one note tells a debtor that a bill feels neglected and is “listening to breakup songs and eating ice cream” because it is unpaid. Per one consumer’s report, however, some were more sanctimonious, or even menacing.

“(It) feels like you’re taking advantage of (the debtor), and they ‘re kind of right,” says a consumer who posted a note quoting a TrueAccord email. “Let’s just take care of this balance now and be done with it. It’s not like we’re going to give up.”

When asked about the complaint, Samat said that if the cited email was really from TrueAccord, it was probably “very old and long decommissioned.”

“It did take us a while to find the right type of honest and clear communication that consumers respond well to,” he said. “And, of course, we have unfortunately seen cases where consumers confused us with other agencies.”

Dealing With Robot Debt Collectors 

Of course, even robot debt collectors have to obey federal law. Send a cease-and-desist letter, and the emails and texts must stop.

But digital debt collection might have a secret weapon: embarrassment – or rather, the lack of it.

“Consumers feel less judged,” when talking to a computer, Samat said. “Consumers in debt are afraid and overwhelmed. We speak to them in a tone they appreciate … we give them more flexible choices, so they feel like they aren’t being harassed.”

If you have debt that has gone to collections that you’ve either paid or should have aged off, you may want to check out some of our tips on ways to remove collection accounts from your credit reports. You may also want to see if the account if affecting your credit. You can view two of your scores for free on

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You May Be Able to Get Collection Accounts Off Your Credit Report Sooner Than You Think

A collection account can drag down your credit score for several years — but not always.

While shopping for a home to buy, Ryan discovered through his credit monitoring service that a collection account had hit his credit reports. His credit score dropped, and he was worried it could jeopardize this ability to get a mortgage. “I had no idea what it was,” he says. He wanted it off his credit.

After doing some research online, Ryan (he asked his last name not be used to protect his privacy) connected with Michael Bovee of Consumer Recovery Network, who helped him negotiate with the collection agency to resolve the account.

Bovee had good news for Ryan: The collection agency that had the account, Midland Funding, had recently made changes to their credit reporting policy. Because the account had been delinquent more than two years prior, if he resolved it he could get it removed from his credit reports and continue looking for a home to buy.

Collection Accounts Can Damage Your Credit for Years

One of the most frustrating things about collection accounts is that once they are on your credit reports, the damage is done. You can resolve them — settle them or pay in full — but they still can remain on your credit reports for many years, affecting your credit scores and flagging you as a higher risk to lenders. (You can see how much collection accounts are harming your credit by reviewing two of your credit scores for free on The scores are updated every 14 days.)

It can be a long time before you completely put them behind you. By law, collection accounts may be reported for seven years, plus 180 days from the date you first fell behind with the original creditor. So if you stopped paying a department store card in January 2015, for example, and it later wound up in collections, that collection account could be reported until June 2022. Ouch!

While the newest credit scoring models — FICO 9 and the latest version of VantageScore — ignore collection accounts with a zero balance when calculating credit scores, most lenders are using older credit scoring models that treat all collection accounts as negative, whether they are paid or not. That means consumers trying to get a mortgage, car loan, credit card, or auto insurance may wind up paying more because of a collection account that perhaps was resolved some time ago.

Worse, most consumers seem to believe that paying a collection account will help improve their credit scores and are often shocked to learn after that fact that it doesn’t.

So when Encore Capital, which owns Midland Funding, Asset Acceptance and Atlantic Credit and Finance, quietly changed its credit reporting policy late last year, consumers who were the beneficiary of this new, more lenient policy may not have realized how fortunate they were to have these items removed from their credit reports, sometimes years before they would have been previously.

Specifically, these companies announced they would:

  • Stop reporting accounts that were more than two years old if the account was paid in full or paid for less than the full balance, and
  • Not report new accounts if payments are made within three months of the initial notice and are made on time thereafter until the account is paid in full or paid for less than the full balance.

According to one source familiar with this action, over 1 million of these derogatory accounts have already been removed from credit reports as a result of this change. There are at least 30 million Americans with accounts in collection, according to the FTC, but some estimates put that number as high as 77 million.

Changes on the Consumer’s Side

Bovee has been encouraging the industry to adopt new reporting policies for some time. “If the newer (credit scores) say paid collections don’t really matter, then keeping them on there is just punitive,” he says.

It’s not just consumers that can be hit by collection accounts. According to a National Federation of Independent Businesses survey in 2012, nearly half of small business owners use their personal credit in some way, shape or form to finance their company, so entrepreneurs with collections on their credit reports may struggle to get credit when their business needs it because of a mistake years prior. (You can check your business credit reports for collection accounts that may be hurting your business credit scores.)

Last year, Rep. Maxine Waters (D-Calif.) proposed a bill that would have reduced the time negative information stays on credit reports to four years and required that paid and settled debts be removed from credit reports within 45 days. However, that legislation stalled in Congress. (You can read more here about how to repair credit report issues and possibly improve your credit.)

Credit reporting is a voluntary system and no lender is required to report. But generally credit reporting agencies (and even some regulators) frown on removing accurate information early, as it may increase risk to lenders who are unaware of the consumer’s full credit history. So far, the change in collection account reporting by these major debt collectors hasn’t been met with public opposition from the bureaus.

Ryan appreciates this change. He knows that not all collection accounts are removed so quickly. “It’s very good to find out this will come off completely,” he says, “and makes you feel as if paying it off is well worth it.”

Bovee believes that other collection agencies are likely to follow suit in the not-too-distant future. After all, they want to get paid, and if consumers know that resolving their collection accounts will help get them removed faster, they are more likely to try to strike a deal.

“The cat’s out of the bag, and it needs to stay that way,” he says.

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How to Handle Debt & Maintain Your Mental Health

It’s no secret that most people feel lousy when they’re in financial trouble, and one of the biggest financial stressors seems to be debt.

It’s no secret that most people feel lousy when they’re in financial trouble, and one of the biggest financial stressors seems to be debt. When you’re in debt, simple tasks like going to your mailbox, where you anticipate finding an avalanche of bills or overdue notices, can bring on stress. If you relate to this feeling, you aren’t alone. According to a Time article, there are a plethora of Americans in an excessive amount of debt. In fact, the Federal Reserve reported at the end of 2015 that, on average, an American between the ages of 18 and 64 has $4,717 in credit card debt.

So aside from being a burden on our wallets, what does this debt do to us?

“Financial issues are a common source of stress,” Dr. Jay Winner, director of the Stress Reduction Program for Sansum Clinic in Santa Barbara, California, said. “Additionally, when someone has extensive debt, there is a tendency to work excessive hours. This deviation from a healthy work-life balance leaves people less resilient to other stressors in their lives.”

How Debt Stress Impacts You

Chronic stress is linked to a wide variety of mental health ailments. Dr. Robert Williams, a psychiatrist in Phoenix, explained that long-term stress physically affects the brain through the well-known “fight or flight” mechanism, which occurs during times of perceived danger, such as those experienced when a threat to financial well-being occurs. Williams explained that when the deep limbic system, or primitive brain, is less active, there is generally a positive, more hopeful state of mind. When it is heated up, or overactive from too much stimulation in the form of perceived threats, negativity can take over.

In addition to an overactive limbic system, Williams said some people are born with a thin cerebral cortex. Emotional stability is a manifestation of the cerebral cortex, and studies suggest a relationship between depression and a thinning cerebral cortex. Dr. Williams said the combination of an overactive limbic system and a thinning cerebral cortex could lead to severe depression. Long-term stress from things like too much debt can cause anxiety, restlessness, lack of motivation or focus, feelings of being overwhelmed, irritability or anger, sadness or depression, even thoughts of suicide.

Coping With Debt Stress

If you are stressed because of a financial situation, here are some suggestions from Dr. Winner that may help you cope.

  • Be mindful. Focus on doing one thing at a time with your full attention.
  • Learn a relaxation exercise. Learning to relax for a specified period of time will help you learn to relax through the day and reduce stress.
  • Do not resist the stress. There are not much in the way of health risks from short-term stress; so if you’re too stressed now, don’t stress about being stressed. Just learn some strategies so the stress does not become excessive in the long term.
  • Learn patience. This is important because the emotion most strongly associated with heart disease is anger and hostility.
  • Decrease the frustration of failure. Instead of thinking you are worthless when things go wrong, realize progress comes from learning from our mistakes. Ask, “What can I learn from this?”
  • Keep things in perspective. One way to keep things in perspective is to think of your health, family, friends etc.
  • Take care of yourself. Eat nutritiously and mindfully, enjoying the taste and aroma of your food. Get regular exercise.
  • Have some technology-free time. If you can spend some of that time out in nature, that’s all the better.
  • Talk with someone. If you’re overwhelmed by stress and basic techniques are not helping, discuss this with a physician or mental health professional.

Paying Off Your Debts

Getting out of debt is one sure-fire way to help reduce your stress levels. Of course this is easier said than done, so consider taking small steps toward this larger goal. To start, gather all the information about your debts, including who you owe what amounts to and any interest rates or fees that are applicable to each of the debts. From there, consider what options you have. Can you consolidate your debts? Move the debt to a balance transfer credit card and eliminate interest charges for a while? You may even decide to seek the advice of a professional debt counselor to help you find the right path.

Whatever you do, take a deep breath and keep moving forward. Not only will paying off these debts help your stress, but it will help improve your credit scores. (You can see how paying down your debts are affecting your credit by checking out two of your free credit scores, updated every 14 days, on

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1 in 4 Americans Feel Threatened When Contacted by a Debt Collector, Survey Says

A new survey found that more than a quarter of consumers who've interacted with debt collectors said they felt threatened by a debt collector.

More than a quarter (27%) of consumers who’ve interacted with debt collectors said they felt threatened by the most recent creditor or collector who contacted them, according to a new survey from the Consumer Finance Protection Bureau (CFPB).

That may not sound surprising, given debt collectors don’t have a reputation for being friendly, but it’s a noteworthy discovery. It’s illegal for debt collectors to harass or verbally abuse consumers.

Under the Fair Debt Collection Practices Act (FDCPA), a debt collector cannot “harass, oppress or abuse any person in connection with the collection of a debt.” That includes things like threatening to hurt or arrest you, using obscene or profane language or using repeated phone calls to annoy you. They’re also not allowed to lie to consumers. The CFPB’s survey results indicate those rules often aren’t being followed.

A bit more on that data: It’s based on survey responses from 2,132 consumers the bureau contacted between December 2014 and March 2015. Of those respondents, 32% (682 people) said they had been contacted by a creditor or debt collector about paying a debt within the last year. The results are weighed to represent “the broader population of consumers with credit records.”

It’s worth noting that consumers saying they felt threatened doesn’t mean the collector they talked to broke the law. Still, 27% is a high occurrence rate of potentially illegal behavior. Additionally, reports of threatening debt collectors wasn’t the only issue raised by survey respondents: About 40% of consumers who’d been contacted about debts in collection said they asked a collector or creditor to stop contacting them and, of those consumers, about 75% said the collector continued to contact them anyway. Legally, a debt collector must stop contacting a consumer if that consumer sent a written request to the collector to stop communicating with them, with a few exceptions.

If you ever find yourself dealing with a debt collector, it’s a good idea to take the time to familiarize yourself with your rights and the rules debt collectors have to follow when contacting you. You can report any issues you encounter to your state’s attorney general, the Federal Trade Commission or the CFPB, and you’ll want to keep an eye on your credit reports and scores to see how the collection account affects you. (You can get a free summary of your credit report, with updates every 14 days, on

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Can a Debt Collector Call Me During the Holidays?

It's totally legal for a debt collector to try to recoup an outstanding bill, so you'll want to keep this in mind if they call on holidays.

Getting a call from a debt collector looking to recoup on an old debt you owe is never exactly pleasant, and it’s probably the last thing you want to deal with during the most wonderful time of the year. After all, who wants to excuse themselves from Christmas dinner just so they can sort out that cable bill they forgot to pay in college?

Under the Fair Debt Collection Practices Act (FDCPA), it’s totally legal for a debt collector to try to recoup an outstanding bill you actually owe, but there are restrictions about how and when they can go about doing so. For instance, debt collectors can’t call you at times they know are inconvenient, like too early in the morning (before 8 a.m.) or too late at night (after 9 p.m.). They can’t call you at work if you ask them to stop, and they can’t call repeatedly throughout the day. But are holidays like Chanukah, Christmas and New Year fair game?

The short answer: Maybe.

“There isn’t an actual holiday carve out,” Troy Doucet, a consumer attorney in Columbus, Ohio, said in an email. However, you could argue that a call on, say, Christmas Eve is, in fact, a violation of the FDCPA.

“It would probably fall under the prohibition against calling at times known to be inconvenient,” Doucet said.

How Can I Keep Debt Collectors From Ruining My Holiday?

Keep in mind, if you’re on a debt collector’s radar and you really don’t want to deal with the account during the holiday season, you can request that they stop calling you. Under the FDCPA, a debt collector must cease contact with you if you send a written request to do so. However, it’s important to note that this request doesn’t absolve you of the debt — or the ramifications of letting a long-overdue bill you legitimately owe go unpaid. That account could still wind up on your credit report and do big damage to your credit score. And the collector could elect to seek a judgment against you to recoup the debt, which could result in garnishment that further hurts your credit. (You can see how any collection accounts are affecting your credit by viewing your two free credit scores, updated every 14 days, on

That’s why you may want to try to negotiate a payment plan with a collector. Doing so could preclude them from taking further adverse action against you. If you do work something out, be sure to ask the collector to put your agreement in writing. That’ll help ensure they stick to what was agreed.

Something else to note: If you have an unpaid bill that hasn’t gone to collections yet, like an old medical debt, you may want to touch base and see if you could work something out with the creditor. They may be more willing to waive some fees, lower an interest rate or take a large lump sum payment that’s less than what you actually owe just to get back some of the money you owe back. Many creditors or service providers wait at least 90 days before turning a debt over to collections. (There are more tips for negotiating with creditors and/or debt collectors here.)

Finally, if you truly don’t owe the debt or you think a debt collector has crossed a line, you can also consult a consumer attorney about whether you have a FDCPA claim and what your next steps should be. Remember, when it comes to debt collectors, it helps to know your rights. You can go here for a debt collections crash course.

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Help! A Payday Debt Collector Says I Owe them Money, But It’s Not On My Credit Report


Yes, there’s such a thing as phantom debt collectors. And, yes, you can get contacted about a payday loan debt you simply don’t owe. Just ask intrepid consumer reporter Bob Sullivan, who received his very own debt collection note after simply reaching out to a payday loan company (and alleged phantom debt collector) for a story.

But if you have taken out a payday loan before and you’re genuinely confused about whether you completely addressed that debt, we have a bit of bad news: you can’t simply take the debt’s absence from your credit report as a sign you don’t have to pay.

For starters, payday lenders don’t typically report to major credit bureaus, like Experian, according to the bureau’s Director of Public Education, Rod Griffin.

In other words, there’s a chance the original loan never made it onto the traditional credit reports you can get for free each year via But that doesn’t mean you don’t owe the purported balance.

“Any debt you enter into contractually you are obligated to repay, even if it doesn’t appear in a credit report,” Griffin said, and ignoring a legitimate debt could have serious consequences.

“If you do not fulfill the terms of the contract, the payday lending company could send the unpaid amount to a collection agency, that could then report the debt to a credit reporting company,” he said. “Another possibility is that the payday lender could file a civil lawsuit to recover the debt. A judgment resulting from a civil lawsuit could also appear in a credit report.”

Something else to note: not all debt collectors report to the credit bureaus either. In fact, it’s not unheard of for some agencies to try to collect on the debt before taking that type of adverse action in an effort to get a debtor to pay. So, again, it’s totally possible for a legitimate debt collection account to simply not appear on your credit file as soon as you start getting calls.

So What’s a Confused Consumer to Do?

Whether you’re sure you owe or not, it’s important to ask whoever is contacting you for written verification of the debt they allege you owe. In fact, the Fair Debt Collection Practices Act (FDCPA) requires that collectors provide this notice listing the amount of money and the name of the original creditor within five days of contact. Tip-offs that you are dealing with a debt collection scammer include their refusal to provide this type or verification, threats of arrest and a request for payment via less traceable methods, like a wire transfer or prepaid card.

If you discover the debt is legitimate, it still pays to know your rights. Yes, collectors can try to get you to pay money you do owe, but there are restrictions on how they can go about this. For instance, they can’t call too early, too late, use abusive language or make dire threats. (You can learn more about your debt collection rights here.) You can always contact a consumer attorney if you think a debt collector may be stepping over the line.

Settling Debts

Remember, if you do, in fact, owe what they say, it may be a good idea to try to work out a payment plan before the collector pursues further action, like a lawsuit. 

Collection accounts that do appear on your credit report will affect your credit — and unpaid collections can do more damage than paid ones. (You can see how collection accounts may be affecting your credit by viewing your free credit scores, updated each month, on Tips for negotiating with collectors or creditors include explaining clearly what you can afford, taking written notes whenever you talk to a collector and getting written confirmation once you agree to a plan.

If a collection account that you don’t owe makes its way onto your credit report, you can dispute its appearance with the major reporting agencies. (Here’s a guide on how to do so.)

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Texas Man Pays $212 Speeding Ticket in Pennies


For many years, there have been efforts to get rid of the penny. The Penny Debate has its own Wikipedia page. The argument was a sub-plot in an episode of “The West Wing,” and there’s even an organization, Citizens to Retire the U.S. Penny, dedicated to eliminating the one-cent coin from our currency. Among its arguments: “The penny has outlived its usefulness.”

That, however, simply is not true. The penny is incredibly useful, in a way no other coin can claim to be: It allows you to meet a financial obligation while simultaneously insulting the person you’re paying. The penny is the middle finger of American currency.

Brett Sanders effectively waved that middle finger in the face of Frisco, Texas when he paid a $212 speeding ticket by dumping two buckets of pennies on a city worker’s desk. He filmed the whole production and posted it to YouTube, where it has been viewed nearly 2 million times since May 22.

The whole thing started when the police issued Sanders a ticket for driving 39 mph in a 30 mph zone, according to the video. He appealed the ticket and lost, resulting in the $212 bill (including the original ticket and court fees), CNN reported. It took city staffers about 3 hours to count the pennies using two coin-counting machines, after which they determined Sanders overpaid by $7.81, a city spokeswoman told CNN.

You can see the video below.

Sanders isn’t the only one who has used thousands of little copper Lincolns to prove a point. Early last month, a Miami-area mayor paid a $4,000 ethics fine in pennies and nickels (though he was ordered to count the change himself), the Miami-Herald reported. And in 2011, police charged a Utah man with disorderly conduct after he attempted to pay a disputed medical bill of $25 entirely in pennies, Yahoo! News reported.

They may be annoying, but bills like a speeding ticket, fines for overdue library books or an unexpected medical expense can have a serious impact on your finances. If the bill is sent to a debt collector, it can damage your credit score for years (though some credit scoring models ignore medical bills sent to collections or paid collection accounts). That, in turn, can lead to paying higher interest rates on your credit accounts, which can add up to a lot on something like an auto loan or mortgage. (To see how your payment history is impacting your credit, you can check your two free credit scores, updated every month, on

You can avoid negative consequences like that by promptly paying debts. But as Sanders and others have shown, you don’t have to be happy about it. And there’s no better way to show your frustration than giving someone buckets of pennies, though there’s no federal law that stipulates a private business, person or organization must accept your method of payment. Rage on at your own risk, Americans.

More on Credit Reports & Credit Scores:

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Who Can a Debt Collector Call to Track You Down?


Can a debt collector contact family, friends, or co-workers in an attempt to find you?

Yes, yes, and yes. But she or he can’t say very much.

The Fair Debt Collection Practices Act offers consumers a wide set of protections about how collectors can go about their business. But it doesn’t prevent them from contacting whoever they want while looking for you.

There are very strict rules about what they can say, however. The law says collectors can only ask about a debtor’s “location information,” meaning their “place of abode and … telephone number at such place, or … place of employment.”

What Can a Collector Say? 

Critically, collectors are not allowed to share any information about the debt with these third parties. Collectors do have to identify their employer if asked, which probably tips off neighbors or relatives that the debtor has money trouble. But otherwise, collectors cannot reveal anything about the debt. Generally, they can’t even leave voicemails requesting callbacks.

The law also only gives collectors one bite of that apple. They can’t call friends, neighbors or co-workers more than once, unless they have some reason to believe there is new information to be gleaned.

Here’s what the law says:

“(A collector can not) communicate with any such person more than once unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information.”

A bunch of other rules further limit who debt collectors can contact and how. If a collector knows a debtor can’t take personal calls at work, the collector can’t call their workplace, for example.

And most importantly, once a debtor tells a collector to stop calling third parties, or stop calling the office, those calls must stop. Their only legitimate reason to contact a third party is if collectors have no way to contact the debtor, so a request to stop third parties eliminates the grounds for contacting them.

Also, if a debtor is being represented by an attorney, the collector must contact that attorney instead of the debtor or any third party.

While the law is pretty clear on what is and isn’t permitted, there are ample opportunities for abuse. Collectors who reach family members or friends may hint — or directly express — threats aimed at the debtor. They may even request or demand payment. Those activities are illegal, but it’s easy to see how they can happen.

“If you don’t want your friend to get in serious trouble with the law, make sure you deliver this message,” for example.

A Different Kind of Block Party 

Collectors who repeatedly use these tactics with multiple neighbors are conducting what’s known as a “block party.” It’s illegal, and victims can sue collectors for sizable damages when a block party is conducted. A similar tactic, when used to call a debtor’s workplace, is sometimes called an “office party.” That’s also illegal.

Third parties who believe they have been harassed – if stop contact requests aren’t honored, or if they are contacted at inconvenient times – can potentially have their own cause of action against collectors, in addition to potential legal action by the debtor.

The Federal Trade Commission makes the full text of the Fair Debt Collections Practices Act available in brochure form on its website.

Remember, a debt collection account can damage your credit. You can see how any of these accounts may be affecting your credit score by viewing your free credit report summary, updated each month, on

More on Managing Debt:

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7 Questions Every Debt Collector Should Be Able to Answer

A “debt collector” call can arrive at any time for just about anyone. Even if you’ve never missed a payment on a bill. There’s only one way to protect yourself: Know what questions to ask.

Debt collector telemarketing scams are incredibly persistent because they work. “Debt collectors” can sound scary, and when they catch consumers at the right time, they can quickly trick people into paying up before they realize what’s happened.

The IRS has issued near-continuous warnings about the taxman flavor of this scam for years.

“Taxpayers across the nation face a deluge of these aggressive phone scams,” IRS Commissioner John Koskinen said earlier this year.

These scams work because fake debt collectors have a huge advantage over other kinds of telemarketing scam callers: You really can’t just hang up on them. Even if you are sure you’ve paid all your bills and taxes on time, a call about a debt could be an important warning signal that your identity has been stolen or some other foul play is at work. So it’s unwise to simply hang up on a debt collector. You should stay on the line long enough to get answers to the questions posed below.

Of course, many fake debt collectors aren’t randomly dialing victims. They are working off lists that make it more likely they hit a decent “mark.” Online payday loan lead generators are known for selling consumers’ personal information to scammers, even if the consumers don’t ultimately take out loans. Why? People who look up payday lending information are much more likely to be in some kind of financial trouble, and ripe for the taking. Similarly, consumers with old debts that are no longer collectible (every state has a different statute of limitations on debt collection) often receive phone calls from collectors hoping they can talk consumers into paying up anyway.

Whatever the circumstance, here are the questions to ask anyone who calls claiming to be a debt collector. They’ll help you sniff out potential scammers.

Part 1: Establish Identity

1. Who are you? Who do you represent? What is your direct telephone number? What is the address?

If the caller is at all squeamish about sharing his or her name and full contact information, that’s the biggest red flag of all. Don’t continue any conversation with anyone who won’t answer these questions. Do repeat them several times, as any contact information you can get – even partial information – might be useful to you in any legal action later on (such as a Do Not Call lawsuit). You can learn more about your debt collection rights here.

2. What is your professional license information?

Many states require debt collectors to be licensed. This is the easiest way to verify a collector’s identity. Take the information provided, and double-check it with your state’s authorities online – don’t just take the caller’s word for it.

3. What is the name and address of the debtor you are trying to reach?

That might sound obvious, but it’s not always the case. A “cold call” scammer wouldn’t have this information, for example.

4. Can I call you back in a few minutes?

After you get this information, it’s probably a good idea to hang up and call back. This will verify that the contact information is accurate, and will often trip up scammers who are lying about their location – if the call is coming from overseas, for example, but spoofed to appear local. It also gives you a moment to stop and collect your thoughts.

Part 2: Establish the Financials

5. What is the amount of the alleged debt and who is the current creditor?

The current creditor should be the party calling. Be sure to ask for specifics, such as: What was the original amount, and what is the breakdown of other fees that have been added?

6. How can you seek verification and validation of the debt?

Debt collectors do not have to provide debt specifics during the initial call, though they often will. Collectors legally have five days from initial contact to supply it. This legal process, defined in the Fair Debt Collection Practices Act, is called “verification.” Simply asking, “How can I request written verification of this debt,” and getting the paperwork in hand, is good practice. (A sample debt verification letter is here). The process is also called “validation.” Any legitimate collector will not balk at requests for verification or validation.

7. How can I dispute the debt?

Disputing a debt initiates another legal process that requires collectors to produce additional documentation supporting its right to collect, such as paperwork from the original creditor. No one should ever pay a debt bill to a firm that can’t produce paperwork supporting it.

Remember, it’s a good idea to regularly check your credit for any errant or erroneous debt information. You can get your credit reports for free once a year at and you can find out how the information they contain affects your credit by checking your credit scores. (You can get your credit scores for free on, updated monthly.) If you discover your credit report contains erroneous information, dispute it, but give yourself plenty of time to get the item(s) corrected and the dispute resolved before you apply for a mortgage, car loan or credit card.

More on Credit Reports & Credit Scores:

Image: Steve Debenport

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