How to Handle Bill Collectors
A phone call from a debt collection company can feel confusing, scary, and embarrassing. Many people are often so surprised and flustered, they say or do something that lands them in a worse position.
Whether or not you actually owe the debt, The Fair Debt Collection Practices Act (FDCPA) protects consumers from seedy bill collection practices. The rules are a little different for creditors who use in-house employees to collect debt and for federal and state government officers who collect debts for a government agency, but the information and steps below are still a good idea regardless of who is claiming that you owe them money.
How third-party debt collectors work
If a creditor (i.e. lender of money or credit, like a credit card company) or service company stops receiving payment from a customer for several months—or they believe they haven’t been paid—they will often sell the debt to a collections company. It’s important to know that many sold debts, especially if they changed hands several times between departments and companies, have errors about the money owed and who owes it. This is why you shouldn’t immediately assume they are correct about their claims.
Some companies have their own in-house departments that handle recouping the lost money. Third-party debt collectors aren’t hired by the creditor, so if you challenge the claim of missed payments, you may need to deal with both companies separately. Many debt collectors report to one of the credit reporting agencies, which is why if they believe you owe money, you’ll see it on your credit report and your credit score will take a hit. If they don’t report the debt, you may be able to settle the matter without the mark on your credit report.
Sometimes collectors will contact a consumer about old debts; however, each state has a statute of limitations on how long a consumer can be held accountable for a debt. Look into your state laws so you know what this limitation is.
A bill collector may contact you in person or by mail, telephone, telegram, or fax. They may not contact you before 8 a.m. or after 9 p.m., unless you explicitly agree to be contacted at those times. They may not contact you at work if you or your employer tell them the employer disapproves of such contacts. Usually collectors may not tell anyone other than you, your attorney, and your spouse about your debt.
If you have an attorney, the debt collector should contact them first. If you don’t have an attorney and the collector cannot reach you, they may reach out to other people, including your relatives, to discover your address, phone number, or employer.
When the call comes
If you end up on the phone with a debt collector, take a deep breath and keep calm. You are not obligated to pay the collector immediately, even if they sound hostile, make threats, or apply pressure, which they aren’t allowed to do. Even conceding a single payment of $5 is an acknowledgement of the debt and could reset the statute of limitations clock on an old debt and could lead to a lawsuit or wage garnishment
First: From the moment you answer their call, keep a record of all calls and messages from the collections agency. Note the day and time of all phone calls. Record them, if you can. Keep any voicemails. Write down the collection agency’s name and the amount they claim you owe and from what creditor. This information can be important if the collector employs illegal tactics to get payment from you.
Second: Ask for a written record of the debt and tell them you’ll only discuss it after you receive this notice. The collector must send you a written notice containing all details of the debt and what action to take if you believe you do not owe the money within five days of first contact.
Third: Don’t talk too much or reveal information regarding the claimed debt. If you admit to knowing about the debt or being able to pay it, you could reactivate the statute of limitations on an old debt.
Even if you do owe money, it is illegal for collectors to harass, threaten, or make you feel uncomfortable. If they do, they could be a scammer, or you might have grounds for a lawsuit against the company.
The following practices are illegal and should be a red flag that you might be dealing with a scammer:
- Threats of violence
- Obscene or profane language
- Threats to make your financial information public
- Calling repeatedly or continuously with intent to annoy, abuse, or harass
- Not sharing the caller's identity, or claiming a false identity like a government agent or law enforcement
- Not disclosing details about the debt owed
- Implying you have committed a crime and will go to jail
Scammers will often request odd forms of payment, including gift cards or cash mailed through the post. It’s always smart to double-check the collector’s identity by contacting the creditor who sold the debt. They can tell you who is authorized to collect the debt. If you can’t verify their identity and they exhibit suspicious behavior, submit a complaint with the Consumer Financial Protection Bureau (CFPB) or your local Attorney General’s office.
If you don’t owe
If you know or believe you don’t owe the money, you have a right to dispute the debt. Send a letter disputing the claim, ideally with supporting evidence, within 30 days of receiving written notice from the collector. Send the letter via certified mail so you can prove when they receive it. Keep a copy of your letter and all evidence. Once you have done this, the collector cannot contact you and ask for payment until the dispute is settled. If you miss the 30-day deadline, you can still dispute the debt with a letter and evidence, but the collector may be able to seek payment while the dispute is investigated.
If you do owe
If the debt collector is legitimate and you do owe the money, try to pay the debt as soon as possible. However, you may not need to pay all of it. Negotiate a lower amount or a payment plant. The older the debt, the better luck you’ll have negotiating down. Or ask for payment-for-deletion, where you promise to pay the full debt if the collector removes the collection account from your credit report. Whatever deal you come to, get it in writing before you pay a cent.
The best way to pay is using money orders or a prepaid card. This ensures security and accuracy. You do not need to give any personal financial information to the collector, that includes credit card and banking information.