50 Things Anyone Dealing With a Debt Collector Should Know

Because knowledge is a superpower if you get the call.

Getting a debt collection call is never fun. Even in a best-case scenario — it’s your debt and you can pay — that outstanding account can cause a headache or two. And if the debt’s contentious, not yours or just too darn high, the situation can become (or at least feel) a lot more dire. But knowledge is a superpower when it comes to dealing with a debt collector in any shape or form.

Here are 50 things anyone who’s gotten a debt collection call should know.

1. You Have Rights

Yes, a debt collector has every right to collect on a debt you legitimately owe, but there are rules and restrictions — formally known as the Fair Debt Collection Practices Act (FDCPA) — that govern how they can go about their business.

2. Old Debts Expire

Each state also has laws specifying how long collectors have to sue you over a debt. In most states, these time limits last for four to six years after the last payment made on the account. You can consult this chart to determine your state’s statutes of limitations (SOL) — and if you get a call about a very old debt, you should really consult this chart, because …

3. Zombie Debts Are Real …

Collection accounts get resold all the time, and it’s not uncommon for someone to get a call about a debt that’s outside the SOL or no longer owed. The latter is illegal, but the former may not be: The SOL applies to how long a collector has to sue you over a debt, but, in many cases, they can still try to get you to pay.

4. … & You Can Wind Up Reanimating Them

If the old account is legit, you can unwittingly restart the clock on the SOL by paying part of the debt or even agreeing over the phone that it’s yours. If you get a call about a debt, be sure to get all the details before saying you owe. That due diligence is doubly important because …

5. There Are a Lot of Scammers Out There

That’s not to say you’re talking to one, but you’ll want to stay on guard. “Ask the caller for their name, company, street address, telephone number and if your state licenses debt collectors, a professional license number,” writes the Consumer Financial Protection Bureau (CFPB), which has more tips for spotting a debt-collection scam on its website.

6. You’re Entitled to Written Verification

In fact, FDCPA requires a collector to send a statement outlining the specifics of the debt within five days of contacting you. That notice — which is basically step one in determining whether a debt’s legit — must include the amount of money you owe, the name of the original creditor and what actions to take if you believe the information is wrong.

7. You Can Dispute the Debt

Debt collectors must investigate a debt so long as you file a dispute in writing within 30 days of their initial contact — and they’re to cease contact until they verify (again in writing) that you owe the amount in question.

8. Collectors Can’t Just Inflate What You Owe

Regarding that amount: A debt collector can charge interest, but only up to the amount stipulated in your contract with the original creditor. Most states also cap the amount of interest and fees a debt collector can charge.

9. You Can Ask Them to Stop Calling 

Per FDCPA, a collector must cease contact if you send a letter requesting they do so. That letter won’t absolve you of a legitimate debt, but it can curb incessant and heated phones calls, which is important because …

10. Too Many Calls Are Illegal

Another facet of FDCPA: Collectors can’t call you too early in the morning (before 8 a.m.), too late at night (after 9 p.m.), too many times a day or at work once you tell them not to. They’re also not allowed to use abusive language — no cuss words or name-calling.

11. Collectors Can Contact Friends & Family 

But only to locate you. They can’t identify themselves as a debt collector, and there are limits on the number of times they can contact a third party.

12. You Can’t Inherit a Debt

Speaking of family, you can’t inherit a loved one’s debt after they die — unless, of course, you cosigned on the loan in question. Debts owed by the deceased are generally paid out of their estate, not by friends or family, so don’t panic if you’re an executor. You can learn more about dealing with a loved one’s debt after death here.

13. Ignoring a Debt Can Have Big Consequences

It can be tempting to cut off communication with debt collectors, particularly if they’re stepping out of line. But doing so won’t make that debt go away. And a debt collection account can just lead to a whole lot of phone calls. For one …

14. That Account Can Appear on Your Credit Report …

Debt collectors can report outstanding accounts to the consumer credit bureaus. You can check for one by pulling your free annual credit reports or viewing your free credit report summary on Credit.com.

15. … But Only if They’re Accurate

You can dispute an erroneous debt collection account or an error on a legitimate one, like an inaccurate balance or payment status, with the credit bureaus.

16. Resale of the Debt Won’t Restart the Reporting Clock

If your debt changes hands, as collection accounts often do, that sale does not restart the seven-year credit reporting window. If the new collector re-ages the account, you can dispute the date with the credit bureaus. And if the same account is being reported by multiple collection agencies, that’s a violation of the Fair Credit Reporting Act (FCRA), and you can dispute the accounts listed by the agencies that no longer own the debt, too.

17. You’ll Soon Get Extra Time to Settle Medical Debts

Thanks to a settlement brokered by state attorney generals back in 2015, the credit bureaus will soon wait 180 days from the time a medical debt was first reported before adding it to your credit file, giving you more time to address bills with your insurance and health care providers. (The settlement gave the bureaus a little over three years to implement these changes.)

18. Not All Collectors Report Right Away

Some collectors will hold off on notifying the bureaus so they can use credit reporting as leverage to get you to pay. This practice is important to note, because it means …

19. You Can Owe a Debt That’s Not on Your Credit Report

Checking your credit can help you verify a debt or track down a debt collector you’re looking to pay, but don’t take an account’s absence as absolute proof you don’t actually owe. The collector just may not have reported it to the bureaus yet.

20. Many Collectors Are Willing to Negotiate 

Collectors often buy debts for pennies on the dollar, so they don’t need to recoup the full amount to turn a profit — and yes, that means one may be willing to let you settle for less. You can find tips for negotiating with collectors (and creditors) here.

21. It’s Important to Get an Agreement in Writing

If your negotiation tactics work, be sure to get the terms the collector is agreeing to in writing — particularly if they involve skipping further adverse action against you.

22. A Collection Account Will Hurt Your Credit Score …

If it hits your report, a single collection account can cause your credit score to drop 50 to 75 points or more. The better your score, the harder the fall.

23. … For Quite Some Time …

Collection accounts, paid or unpaid, can be reported to the credit bureaus for seven years, plus 180 days from the date the original account went delinquent, though its effect on your score will lessen over time. (We’ve got more on how long stuff stays on your credit report here.)

24. … Even if You Pay …

You read that right: Paying a collection account won’t guarantee removal from your credit reports. In fact, thanks to their contracts with the credit bureaus, most collection agencies will continue to report the account for that full seven-year timeframe — though there are signs that’s changing.

25. … But There Are Reasons to Settle

If the account is sticking around, make sure it’s at least (correctly) reported as paid. Paid collections carry less weight than unpaid ones, and some newer credit scoring models even ignore them entirely. Beyond that, settling a debt can stop a collector from taking further action against you. Don’t panic, though …

26. The Debt Itself Won’t Land You in Jail

You can’t be arrested just because you owe someone money, so if a debt collector keeps talking jail time, they’re seriously out of line.

27. No Threats Allowed

In fact, they’re illegal. FDCPA prohibits dire threats of arrest, violence or even a lawsuit if the collector doesn’t intend to file one. Having said that …

28. You Can Be Sued

So long as the statute of limitations in your state haven’t expired and you legitimately owe, though there’s no guarantee a collector won’t try to get a court ruling on a debt you’re contesting or otherwise unable to pay.

29. Small Payments Won’t You Spare You

A debt collector can still move to sue you for the outstanding balance so long as it’s legit and within the SOL. That’s why, as we mentioned earlier, it’s important to get a payment agreement in writing. A signed agreement not to sue could hold up in court, but even if you have one don’t ignore a court summons.

30. Skipping a Court Date Can Cost You

Failure to appear in court could result in a warrant for your arrest, which is why confusion persists as to whether an unpaid debt can land you in prison. It’s more likely your absence will net a default judgment for the collector, which can lead to garnishment.

31. Garnishment Lets a Collector Seize Funds …

Usually they’ll garnish your paycheck or levy your bank account. In most cases, however, the collector can’t do this without a court order. (The exceptions are back taxes, outstanding federal student loans and unpaid child support.)

32. There Are Limits to How Much They Can Take

Garnishment caps are established by federal law and state law, meaning they can vary, depending on where you live. Some states don’t allow garnishment on certain types of debt at all. You can consult a local consumer attorney or call your state Attorney General’s office to get an idea of the laws in your area.

33. Certain Assets Are Safe From Garnishment

Those assets include Social Security, disability and retirement accounts, though things get tricky once those funds hit your bank account, and there are exceptions here, too, that usually involve unpaid federal debts.

34. A Judgment Isn’t Always Final

In certain circumstances — say you weren’t properly served papers notifying you of the lawsuit — you can ask the court to re-open a judgment or formally file an appeal.

35. It Can Also Be Settled

Since it can be difficult to collect on a judgment, especially if your wages or assets can’t be garnished, a collector may be willing to accept a lump sum payment to put the debt to bed. Again, just make sure you get an agreement in writing before forking over any funds.

36. A Judgment Can Blemish Your Credit …

Technically, unpaid judgments can remain on your credit reports for seven years or the governing statute of limitations, whichever is longer. Once paid, a judgment must be removed seven years after the date it was entered by the court.

37.  … But It’s Getting Harder 

Starting July 1, the credit bureaus won’t list a judgment on your credit report unless it includes, at a minimum, your name, address, Social Security number and/or date of birth. Plus, judgments will be removed if public records aren’t checked for updates at least every 90 days.

38. Judgments Can Involve Interest

But, again, only at the rate specified in the contract you signed with the creditor. There are state-level caps and restrictions at play here as well.

39. Judgments Can Expire

The collector has a set time in which they can collect on a judgment. This SOL varies by state but is often 10 to 20 years long, and in most states it can be renewed. That’s why …

40. Judgments Are Best Avoided

It can be tempting to try to ride out your state’s SOL, but unless you’re very near or past that due date, it’s not really worth chancing a lawsuit, judgment and subsequent garnishment (with interest!), not to mention the big damage an unpaid account can do to your credit. If you do have a judgment against you, you may want to consider settling.

41. You Can Sue a Debt Collector …

Not simply as a means to get out of a debt you do owe, but if a collector is in clear violation of FDCPA, you can file a claim against them so long as it’s within one year of the date the law was violated. You’ll need proof that the collector broke the law, though, so it’s important to catalog your communications with a debt collector — even before things potentially take a turn for the worst.

42. … Even if They Have the Wrong Number

A collector shouldn’t be bothering you about a debt you don’t actually owe, so if they continue to harass you after you’ve made it clear you’re not the person they’re looking for, that’s grounds for a lawsuit.

43. Robocalls to Your Cell Are a Big No-No …  

Thanks to the Telephone Consumer Protection Act (TCPA), those are illegal. Per TCPA, companies, not just collection agencies, can’t call you on your cellphone using an automated telephone system or pre-recorded message without your consent. 

44. … Unless They’re on Behalf of Uncle Sam

One big exception to the rule: Debt collectors working on behalf of the federal government can autodial you, but they’re currently limited to three robocalls a month, unless you give them permission to call more.

45. Hiring a Lawyer May Not Cost You …

Attorneys specializing in debt collection cases typically offer a free consultation — and many will often represent you for free if they think a collector has broken the law. (They’ll collect their fees from the plaintiff.)

46. … & Should Cease Communications

In general, a debt collector can’t contact you if you tell them you have an attorney and that attorney is handling your debts.

47. You Can Report Rule-Breakers …

Debt collection agencies fall under the purview of the CFPB, so if you’re dealing with a debt collector who’s way over the FDCPA line, you can file a compliant with the bureau.

48. … & Scammers, Too

If they’re trying to scam you, there’s a good chance they’re trying to scam others, too. That’s why it’s important to file a complaint with the Federal Trade Commission and your state Attorney General’s office so they can investigate the callers.

49. Bankruptcy Is an Option

Collectors can’t try to recoup a debt discharged in bankruptcy, but that doesn’t mean you should rush to file. For starters, not all debts are dischargeable. Plus …

50. It’ll Wreck Your Credit

Bankruptcy is a major credit score killer. It can cause your score to drop as much as 200-plus points when it hits your file. And you’ll be stuck with the big, old blemish for quite some time. Some bankruptcies can stay on your credit for up to 10 years and can affect your ability to get a loan that entire time. If you’re considering bankruptcy, be sure to consult with a consumer attorney.

Remember, there are ways to keep a debt from going to collections. If you fall behind on your payments, contact your creditor immediately to see if you can work out a payment plan or refinance. And keep an eye on your mail: Sometimes bills, particularly medical debts, go to collections simply because you don’t know you owe.

Want to make sure you don’t go in the red? We’ve got 50 ways to stay out of debt right here

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Who Can a Debt Collector Call to Track You Down?

people-a-debt-collector-can-call

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 Credit.com.

More on Managing Debt:

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