Consumers are taking on an increasing amount of debt, and in some cases it's more than they can handle. The total consumer debt balance increased to $16.38 trillion in 2022, up from $15.31 trillion in 2021, according to credit reporting company Experian.
And as we recently found out, there are debt collection agencies that are more than happy to make sure consumers pay -- sometimes even if the debt has been discharged.
Because debt collectors can buy “bad debt” for pennies on the dollar, every dollar they can collect in return is pure gravy.
“We’ll hunt you down and make you pay…”
Out of the more than three million complaints the Consumer Financial Protection Bureau (CFPB) has received in the last five years, nearly 150,000 were about attempts to collect debt not owed either because the consumer didn’t owe anyone anything or the debt had been resolved by the court or paid off
When ConsumerAffairs lifted the rug on those grievances, there was some nasty stuff going on – being screamed at, leaving intimiating messages/robocalls threatening to sue someone, and calling the children of one consumer asking for banking information while she was in the hospital.
That’s some pretty heavy-handed stuff no matter who you are. The federal government’s Fair Debt Collection Practices Act and several states protect consumers from being harassed, but debt collectors sometimes don't mind their manners.
A debt collection pro shares their magic
ConsumerAffairs wanted to know if there’s anything someone in a debt collection situation could do, especially if they aren’t in default on a debt or they’re not even the exact person who owes the money.
We reached out to someone who has studied and dealt with unpleasant debt collectors on those two fronts. Megan Hanna, DBA, CFE, who’s worn hats as a finance expert, professor, and a former banker, gave us her best advice for consumers caught in those traps.
Offer proof. “You can start by talking to the debt collector about the situation and sharing details about when and how the debt was paid (or any other details about why it's not owed). You should follow up on this conversation by sending a written notification to the debt collector to formally dispute the debt,” Hanna said.
“Restate what you discussed in the phone conversation and include factual details, including such things as proof of payment or any correspondence you received from the original creditor or other parties about the debt.”
Go back to the original creditor and see if they can help. Another tact you can take is to contact the original creditor to talk about the situation. “Sometimes, the original creditor might not want to speak with you if they sold your debt to a debt collector. However, if you can provide proof that it was sold to the debt collector in error (e.g., a copy of a canceled check you sent to the original creditor, a payoff statement, or confirmation numbers from prior phone calls), they may realize they made an error and help you resolve the situation.”
She said that if you’re still not getting anywhere, you can ask to have your call escalated to a supervisor or manager or send a written dispute to the original creditor, just like you did with the debt collector. But, she warns that manners count. “Be calm and present factual information while being persistent when discussing the situation with the debt collector or creditor.”
If all else fails… “If you cannot resolve the situation with the debt collector or creditor, you can also file a complaint with the credit reporting agencies (if it's on your credit report), the CFPB, or both,” she suggested. When filing a complaint with those agencies, she said you should make sure you have all your facts – including supporting documentation – ready to present. “The more thorough you are in presenting your case, the easier it will be for everyone to look into the situation and, hopefully, help you resolve it.”
If you want to dig deeper into all the options you need to outsmart a sinister debt collector, just visit this special CFPB website. It lays out everything you need to know-- plus the agency offers a toll-free helpline if you want to speak to a real person.