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How to handle bill collectors

You have rights if a collector comes calling

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Dealing with bill collectors can be a stressful experience. Whether it's a phone call, a letter, or a knock on your door, being confronted about your unpaid debts can feel overwhelming. But it's important to remember that you have rights as a consumer, and there are steps you can take to handle bill collectors in a way that is both effective and respectful.

In this article, we'll provide a step-by-step guide for dealing with bill collectors that will help you feel more empowered and in control of your financial situation.

Key insights

  • When a bill collector calls, verify that the debt is actually yours before agreeing to pay.
  • If a collector is contacting you for a debt that isn’t yours, you can dispute it.
  • For debt that is yours, you can try to negotiate with collections, or you can hire a third-party debt settlement company to try to reduce your balance.
  • To protect yourself from potential abuse and harassment, familiarize yourself with the Fair Debt Collection Practices Act.

1. Verify the debt

If a debt collector contacts you requesting payment, don’t automatically assume the debt is yours. Jay Fleischman, a lawyer who represents consumers with debt problems, said if you’re contacted by a debt collector, you should “immediately request validation of the debt to verify that the debt is actually yours.”

Don’t provide the caller with any personal financial information like your bank account, credit card or Social Security number unless you’re sure the call is legitimate.

Any debt collector that contacts you is required by law to provide certain information about the debt, including the name of the creditor and the amount you owe. The collector should also inform you that you’re allowed to dispute the debt and that if you don’t dispute the debt within 30 days, the collector will assume the debt is valid.

It’s your right to ask the collector for:

  • Their name
  • Their company
  • The company’s street address
  • The company’s phone number
  • A professional license number (in states that license debt collectors)

You can refuse to discuss any debt until you receive a written validation.

There are debt collection scammers who will try to get you to pay debts you don’t owe. These scammers use tactics such as falsely threatening you with jail time or threatening to tell your friends or coworkers about your debt. If you suspect you’ve received a scam call, you can submit a complaint to the Federal Trade Commission.

2. Keep records

When the debt collector sends a written validation notice, make sure you keep this information. Fleischman recommended that you “protect yourself by communicating in writing and keeping copies of all correspondence.”

Keep track of all of the collection calls you receive. Record the date and time you receive the call as well as the name of the caller. This can help you determine if there are any inconsistencies in what the collectors say. Also track if the caller is abusive or says anything threatening.

The point of keeping a record is to ensure you have all of the facts available should you have to take action against the debt collection company.

3. Know your rights

The Fair Debt Collection Practices Act (FDCPA) outlines what a collections company is allowed to do to get a debt paid back. The goal of the FDCPA is to eliminate abusive debt collection practices and protect consumers.

The FDCPA specifically outlines what a debt collector can and cannot do. Some examples include:

  • How they communicate with you: A debt collector can’t call you before 8 a.m. or after 9 p.m.. They also can’t call you over and over (more than seven times in a seven-day period) in an attempt to annoy you
  • What is considered harassment or abuse: The collections caller can’t threaten any violence or use obscene or profane language.
  • Rules around false or misleading representations: The collections caller can’t falsely represent themself as an attorney or say they’re communicating on behalf of an attorney.
  • What is considered an unfair practice: The collector cannot collect any money (e.g., interest or other fees) that isn’t authorized in the debt agreement.

Fleischman recommended consulting with an attorney who focuses on debt collection defense to help you understand your rights under federal and state laws. “An attorney can also help you fight back against debt collection harassment,” he said.

4. Dispute any erroneous debts

If you don’t think the debt is yours, send a written request to the collector within 30 days to dispute it. The collector must then provide you with verification of the debt. You can also send a written request to the debt collector to ask for more information about the debt.

Make sure the letter is dated and keep a copy. The Consumer Financial Protection Bureau (CFPB) recommends sending your letter by certified mail. You can also request a return receipt to show that the collector received it. Or, if you want to go more old-school, you can fax the letter and save a copy of the fax confirmation. The CFPB provides sample letters you can use to respond to the debt collector.

Once you dispute the debt, the collector can’t contact you until they provide verification of the debt in writing. The collector might do this by sending a copy of the original bill that they claim you owe.

If you are having trouble with a debt collector, you can submit a complaint to the CFPB online or call the CFPB.

» MORE: Good debt vs. bad debt

5. Settle or negotiate

If the debt is legitimately yours, simply ignoring the collector's phone calls won’t make it go away. In fact, this can make the situation worse.

If you no longer want to receive collector phone calls, you can request in writing that they stop.

For debt that is several years old, look up the statute of limitation for filing a lawsuit to collect a debt. The statute of limitations can vary based on the type of debt, the state you live in and the state specified in your contract. Once the statute of limitations has passed, the bill collector can continue to call you, but they can’t legally sue you.

If you can’t pay back the full debt, you can try settling. Debt settlement is the process of negotiating with your creditors to lower your balance or reduce your monthly payments. You can hire a third-party debt settlement company, or you can try to negotiate on your own.

But know that your creditors are not obligated to negotiate. It is entirely their choice. Plus, it’s not always a positive if they agree to a debt settlement proposal because you’ll likely have to pay the proposed amount as a lump sum.

Some debt settlement companies will charge you a fee regardless of whether they’re successful. In this case, you could end up worse off than when you started. Not only are you on the hook for the total balance of your debt payment, but now you can add fees on top of it.

If the debt settlement company is successful in lowering your debt, it will typically charge a fee between 15% and 25%. This is in addition to the lump sum settlement amount you have to pay.

» MORE: Debt relief programs and solutions

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    What happens if you ignore a bill collector?

    Ignoring a bill collector may drive them to use other strategies to collect the debt, including filing a lawsuit against you. If you can’t settle your debt, you might want to reach out to an attorney for advice on what to do.

    Can bill collectors call you at work?

    The Fair Debt Collection Practices Act states that a collector can’t call you at work if the debt collector knows your employer prohibits you from receiving these kinds of calls. Otherwise, the bill collector can call you at work.

    Can bill collectors call you on the weekend?

    A debt collector can call you on the weekend. They’re not allowed to contact you before 8 a.m. or after 9 p.m., though.

    Are bill collectors allowed to come to your house?

    While it’s unlikely to happen, there is nothing preventing a bill collector from going to your house. Most bill collectors will call you or send a letter instead of coming to your home.

    How do you spot a bill collection scam?

    To spot a scam collection call, ask the caller to provide verification information such as the name of the creditor and the amount you owe. If they refuse to provide this information, it could be a scam. Also be on the lookout for high-pressure tactics, threatening jail time, or requesting sensitive financial information, as all of these are signs of a scam.

    Bottom line

    If a bill collector calls, you really don’t need to panic. There are steps you can take to get through the collections process. Knowing your rights as outlined in the Fair Debt Collection Practices Act can help ensure you get the information you need while avoiding any harassment or abuse.

    Fleischman recommends acting quickly when addressing past-due debt in order to “protect your financial future and avoid negative consequences.” Trying to ignore your situation will not make it go away. The risks of ignoring debts include “damage to your credit, legal action, harassment, loss of assets and ongoing stress,” he warned.

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