When you get a call from a debt collector, it’s important that you respond in ways that will protect your legal rights.
The debt collection industry has long been plagued by bad behavior from collectors. Things got so bad that in 1978, the FDCPA (Fair Debt Collection Practices Act) was passed. This federal law is quite restrictive on debt collectors’ behavior but was a necessary measure because abuses by collectors were so common. Even now, it’s common for some debt collectors to violate the law. That’s why we urge everyone who is contacted by a debt collector to proceed very carefully.
Your response to a debt collector should be different based on who is calling. If you owe the debt, and you are contacted by the company you owe or their designated agent, (i.e. you have a delinquent loan and the original lender calls you), then the caller will not be bound by the FDCPA. They may, however, be bound by local and state laws that are similar to the federal Fair Debt Collection Practices Act. Original creditors have a right to collect debts they are owed. It’s a good idea to communicate and negotiate with them in good faith to try to work out a solution.
However, if the caller is a third party debt collector who has purchased a delinquent or charged off debt, you should be much more careful. Even if you think that the debt they are calling about is or was a legitimate debt that you may owe, you should still proceed carefully when dealing with this particular type of debt collector. The Federal Trade Commission calls this type of debt Zombie Debt.
Here’s are some tips when dealing with a debt collector’s call:
Keep a written log
Keep a notebook with you and write down who called you, what company they represent, and when they called. Gather info from them about where you can send them written correspondence, and write down what you discussed, including anything you requested from them. Do not overlook this step! It’s really important that you document every contact you have with a collector in the event you need to protect your legal rights.
Do not admit you owe the debt in any way
You won’t know if the debt is really yours until you get some validation from the collector. Therefore until you receive written evidence, you should not say anything that confirms the debt is yours, because you can’t be sure yet. If you say or do anything that confirms the debt is yours, you may be giving up some of your legal rights. If the debt has expired (because it is past the statute of limitations) you might be giving the collector the right to put it back on your credit report for years to come. And if the collector has added extra charges or fees to the amount owed, validating the debt could obligate you to repay the inflated amount. As we said, don’t confirm the debt is yours unless you have written evidence that the debt is legitimate, that you owe it, and the collector has a legitimate right to collect.
Don’t make any payments or promise to make any payments
Don’t talk about payments of any kind until you’ve validated the debt and fully confirmed this is something you have to pay. Any payment you send or offer to pay will confirm you owe the debt and legally allow the collector to report the delinquent debt to your credit reports. Most delinquent debts expire and must be legally removed from your credit report after 7 years. A collector can still try to get you to repay debts older than this, but they can’t use negative credit reporting as a collection tactic unless you re-affirm the debt by paying or promising to pay. If you do re-affirm, it may “restart the clock” on credit reporting, allowing another 7 years of negative debt information on your credit report
When a collector first contacts you, they are required by law to follow up with a written letter about the debt they are collecting. They must follow up within 5 days of the initial contact with you. This letter from the debt collector/agency should disclose that you have 30 days to request validation, which we recommend you do. See our article Always Start With a Debt Validation Letter for more. Validating a debt goes beyond the fact that you owe a debt—it also confirms the amount is correct, the age of the debt is correct, and that the collector has the legal right to collect the debt.
The validation goes beyond the initial demand letter. Anyone could send you a written notice that you owe them money. But to provide true validation, the collector must show documentation proving that you agreed to the debt. They must have an agreement with your signature on it, and information from the original creditor with whom you made that agreement.
This validation will protect you from collectors illegally re-aging a debt to make it seem more current than it is, or changing the amount you owe by adding on extra fees. As you can see, this validation process isn’t just about disputing the validity of a debt, it’s about ensuring that if you do pay off the debt, you will pay the correct party and all collection activity will cease.
Our free Consumer Guide to Good Credit has a sample debt validation letter for reference, but in general, the letter should include your contact information and a recounting of when and how the debt collector contacted you. Include any account numbers or info they provided in their follow-up letter. Send your validation letter by registered mail so you can get confirmation of delivery.
Many financial pundits say that requesting a validation letter can backfire on you, because it will cause the debt collector to single you out for a lawsuit or increased attention. We say the only time you shouldn’t request validation is if you know for 100% certain that the debt is valid, you owe it, and the collector has the legal right to collect. For more on this topic, see our article on Debt Validation: Does It Work.
If you’re unsure about whether to request debt validation, you can talk to a financial coach who will review the situation with you and answer any questions you have.
Don’t talk to the collector until you’ve done your research
The only thing you’ll want to confirm with the debt collector is your contact info and their contact info. Wait for them to send you a follow up letter and gather info about the company you’re dealing with. You’ll want to investigate the collector to make sure they are a legitimate collector and not a scam operator. Until you’re sure, don’t get into any lengthy discussions with them.
When you do talk to them, keep it businesslike
Once you’ve verified the debt is valid, you owe it, and the collector can legally collect it from you, you might start speaking with them about how you can resolve the debt. During these conversations, keep things impersonal. Do not let the collector drive the conversation to an emotional place—if they start to threaten or accuse you, shut down the conversation. Tell them you know your rights under the FDCPA, and you will not tolerate any abuse.
And be sure not to become abusive yourself. If you get heated and use strong language, it will weaken your case in the event of an FDCPA claim.
Don’t ever give them any of your financial information
Even if you agree to pay off a debt, buy a cashier’s check—do not write a personal check to a collector. Never provide them with any documents that disclose your bank account numbers.
Be honest, but careful
Don’t lie to a debt collector, but don’t volunteer any information about your situation. A collector will want to find out as much as they can about your finances, but you should not disclose anything of this nature.
If you don’t feel you owe the debt, tell them why you think this. Collectors might buy a debt you already paid off, or something that was the result of identity theft. It may appear to the collector that you legitimately owe the debt, but you should stand firm if the debt was created illegitimately.
If the debt is fully valid but you can’t afford to repay it, you can talk about this with the collector, and try to offer some kind of settlement. Find out more about Debt Settlement.
Be on the lookout for red flags
Some debt collection activity is fraudulent. That’s what all of these tips are about: separating fraudulent collection activity from legitimate attempts to collect a debt.
Scammers can be very sophisticated and make you think they are legitimate, so you must be careful and look out for red flags that suggest the collector is just trying to rip you off:
- They violate the FDCPA. Visit the Federal Trade Commission’s site to look over the protections the Fair Debt Collection Practices Act offers you. Scammers are more likely to violate these provisions than legitimate collectors. Never agree to work with any collector who willfully violates any part of this law.
- They demand payment on a very short timeline. If a collector demands payment by the end of the day, they’re more likely to be a scammer. It’s reasonable for any collector to have a deadline for repayment, but if the timeline is very short, you should be suspicious. There should always be time to follow up in writing before you have to hand over a payment.
- They can’t give you details about the debt. If a collector doesn’t seem to know where the debt originated, how much was really owed, or any of the other aspects of debt validation, then you should be suspicious. If a collector truly owns the debt or was assigned the debt by your creditor, they should be able to prove it in writing.
- They demand unusual payment methods. You should have multiple options for how you can repay a debt (and the only one you should use is a cashier’s check). If a collector wants you to send gift cards in the amount of the debt owed, you’re being scammed.
Get qualified legal advice if you get sued
Here are credit.org, we do not offer legal advice. If a collector sues you for repayment of an outstanding debt, get qualified legal advice from an attorney.