Tips for Handling Debt Collectors
If you are behind on paying your bills, or if one of the individuals or businesses you do business with believes that you owe them money, you may be contacted by a debt collector. The call may come directly from the creditor you owe, but sometimes creditors, including credit card companies and mortgage lenders, send the debt to a third party debt collector for collection.
What should you do if you receive debt collection calls?
If you receive a call from a debt collector, use caution in your response. Don’t volunteer information, and ask the caller about your debt—who do you owe, how much is the debt, and who is trying to collect it?
The law requires that a debt collector send you written validation within five days of contacting you telling you how much you owe, the name of the creditor, and what you should do if you believe you don't owe the money. Request that the caller send you this information before taking any further action. Do not give the caller personal, financial, or other sensitive information unless you are certain you know who you are speaking with.
Recently, identity thieves and other scammers pose as debt collectors and use high-pressure tactics to get money from unsuspecting consumers or steal their identity and personal information. This makes written validation notices even more important. If you suspect a call is fake, contact the Federal Trade Commission and your state’s Attorney General's office.
Do your research
Once you have received the written validation notice, do your own research to ensure that the debt is legitimate. Check your credit report from each of the three credit bureaus to ensure that the information is accurate, and that any loans, accounts, or debts listed on the report actually belong to you. The Annual Credit Report website will provide one free copy from each service once a year. Take steps to correct any errors you find as soon as possible.
Don’t make any payments until you have completed your research and are sure that the debt not only belongs to you, but that it has not expired. If you make any payments at all, you may be considered to have acknowledged the debt, which can have serious, unintended consequences. For example, if the statute of limitations (the time for the creditor to be able to legally pursue you to recover the debt) has expired and you make a payment, you may inadvertently resuscitate the creditor’s legal ability to pursue you.
Dispute debt that isn’t yours
If you don't believe you owe the money, dispute the debt in writing. Within 30 days of receiving the validation notice, send the debt collector a written letter telling them you dispute the debt and you believe you do not owe the money. Send the letter by certified mail, and keep a copy of the return receipt in case you have to prove that you sent the letter and the debt collector received it.
Once you send the letter, the debt collector must stop contacting you unless they furnish you with written proof that you owe the debt (such as a copy of the bill). They can also contact you to tell you there will be no further contact or to let you know that they or the creditor intend on taking a specific action, like filing a lawsuit. Keep in mind that even if a debt collector is prohibited from contacting you, they may still be able to sue you to collect the debt.
Keep copies of any correspondence you send or receive related to any debts. Maintain voicemail messages you receive, and keep track of the dates and times of any telephone calls related to the debt.
Consequences for not paying a debt you owe
If you fail to pay a debt, a creditor or debt collector may be able to sue you to collect the money. If you receive a summons or other legal paperwork, contact an attorney immediately. If the creditor or debt collector wins the lawsuit (or if you fail to respond), the court will enter a judgment against you, which can include the amount that you owe, plus fees, costs, interest, etc. The judgment allows the creditor or debt collector to obtain an order directing third parties, such as your bank or employer, to pay money owed to you directly to your creditor. In the case of a bank, monies in your account can be turned over to satisfy the debt. In the case of your employer, your wages may be garnished—meaning your employer could withhold some of your compensation to pay the debt.
Don’t ignore your debts, even if you haven’t been contacted by a debt collector yet. Debts can be reported as delinquent to credit bureaus if they go unpaid for a period of time, usually 30 days or more. This can stay on your credit report for up to seven years, damaging your credit. Take steps to get current as quickly as you can.
If you are trying to collect a debt or someone is trying to collect a debt from you, find a bankruptcy lawyer to ensure that the steps being taken regarding the debt are legally appropriate.
Additional Resource: Is Bankruptcy the Right Option For Your Debt Management?
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