Money

Three Things to Know If a Debt Collector Calls You

April 1st 2017

By:
Danielle DeCourcey

Most people aim to pay their bills on time. But's let's just say ... you don't. 

Then you've got to deal with a debt collector. 

report by ACA International, the association of credit and collection professionals, said that in the third quarter of 2015 Americans had $672 billion of debt in some stage of delinquency, and in 2014 the Urban Institute found that roughly 77 million Americans, or 35 percent of adults with a credit file, have a debt in collections. 

Generally, a debt collector is a person or company, like lawyers or agencies, who collects debts for a creditor, according to Consumer Financial Protection Bureau. Creditors will forward a bill to a debt collector when you've missed several payments or haven't paid in several months, though time periods will vary.

So, what do you do if a debt collector comes calling?

Well, first of all don't freak out. There are best practices for dealing with debt collectors and there are rules about how they can contact you.  

1. Make sure this is a legitimate debt collector and that you actually owe the debt. 

saving-money

Debt collectors must provide a written notice with legally required information, according to the CFPB. If they contact you by phone first, do not give them any personal information and ask that they send you a notice in writing.

Debt collectors should also be able to provide the following information:

  • They should be able to tell you their identity, with a name, address, phone number, and the original creditor's information.
  • They should provide the dates the debt was created and what it was for, the original amount of the debt, and the interest and fees added onto it.  
  • They should be able to give you information confirming it's your debt and not someone else's debt. 

If you're looking to request information by mail, the CFPB provides sample letters that address "common problems that may come up with debt collectors." 

A sample letter for the CFBP.

If you don't believe you actually owe the debt you, you can send a letter disputing it within 30 days of receiving the validation notice. The debt collection company can't contact you again until it provides verification of the debt. 

2.  You can negotiate with the debt collector. 

The CFPB recommends that people come up with a plan and a realistic monthly payment amount before they negotiate with a debt collector, and it may be a good idea to enlist the help of an attorney or a credit counselor. However, beware of companies that say they can renegotiate the terms of your debt for a big fee, as there are risks associated with those companies. The CFPB says most debt settlement companies will tell debtors to stop paying a debt collector or creditor in order to force a negotiation. However, this approach will have a negative impact on your credit report and it could lead a creditor or debt collector to file a lawsuit against you. 

hands-holding-money

It's possible to negotiate with the creditor or collection agency to "cancel a delinquency," according to the National Consumer Law Center. That doesn't affect the amount owed but it helps keep late payments off your credit report. In some cases, a debt may be too old to continue to affect your credit report, and it may be possible to dismiss it in court if it's passed the statute of limitations in your state. However, the NCLC says that making even one payment on that debt could reset the clock and "re-age" it. 

"New activity on an old debt could re-age it and make it more collectable. You may be better off ignoring a call about an old debt," wrote the NCLC in the organization's book Surviving Debt

3. You can ask them to stop calling you.

The Fair Debt Collection Practices Act is a federal law that offers some protections from debt collector harassment. They're not supposed to call you before 8 a.m. or after 9 p.m. unless you give them permission, and they can't contact anyone else, like your boss, about your debt unless you or a court give them permission. However, attorneys and consumer reporting agencies are exempt from this regulation.  

If the debt collector is working for a third party collection agency and not the original creditor you owed money to, you can write a "cease" letter so that they stop calling you, However, this will not stop them from suing you or sending the debt to your credit report.

RELATED: These Student Debt Collectors Were Just Fired by the Federal Govt.