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What to know when the debt collector comes calling

If you're contacted over past-due bills, make sure the caller is legitimate, and understand your rights.

By Jan 20, 2014 1:56PM

This post comes from Gerri Detweiler at partner site on MSN MoneyYour first reaction when hearing from a bill collector may be panic or avoidance, or perhaps a combination. But those reactions won’t help the situation and could make it a lot worse.

A past due stamp on one of several monthly bills. © Christine Balderas/Getty Images

Most collectors are just doing their jobs, and some of them are so good at dealing with consumers that they get love letters from their clients! But even if you don’t get a warm and fuzzy feeling when you are talking with a collector, you don’t have to deal with abusive behavior. There are laws that protect you against that.

Here we have assembled some of our best advice from years of answering consumers’ questions about collection accounts.

Are you for real?

The first and most important step to take when contacted by a debt collector is to establish whether you are dealing with a legitimate agency trying to collect a debt you really owe. This can be more challenging than you may think. There are some very aggressive scammers out there and they’ll say just about anything to get you to pay them quickly. Consumers who applied for a payday loan online in the past are some of their favorite targets.

Two tip-offs that you are likely talking to a fake debt collector are that they won’t mail written confirmation of the debt or that they threaten dire consequences (jail, arrest, imminent lawsuit) if payment isn’t made immediately. Before you pay a debt collector, ask for written verification of the debt. Collection agencies, by law, must send this within five days of initially contacting you. Insisting on this is just one way to stop a scammer.

You can also call your state attorney general’s office to find out if debt collectors must be licensed to do business in your state, and if so, whether the one reaching out to you is licensed.

What do you want from me?

While collection agencies would prefer you immediately pay the entire debt -- including interest and fees -- they also know that most people are in collections because they are having a hard time paying all their bills. They may be willing to settle the debt for less than the full balance, accept a payment plan, or a combination of the two. How low they will go depends on a number of things, such as how old the debt is and whether you are dealing with a debt buyer who purchased the debt for pennies on the dollar. Knowing what kind of debt collector you are dealing with can be helpful in negotiating.

Know your rights

You have a strong federal law, the Fair Debt Collection Practices Act, to help protect you from very aggressive tactics. Currently, federal law applies only to third-party collectors, not to creditors trying to collect their own debts, though there is talk of expanding these protections to creditors as well. And state law may give you additional rights.

Under the FDCPA, collection agencies:

  • Can’t tell others about your debt. They can contact relatives, neighbors or your employer to try to locate you, but once they’ve found you those calls must stop. And they can’t discuss your debt with others.
  • Can’t use, or threaten to use, violence. They also can’t threaten to take action they can’t legally take, such as having you arrested for “check fraud” or thrown in jail because you can’t afford to pay.
  • Must verify the debt. If you ask dispute the debt they must verify it and provide certain information about what you owe.
  • Stop calling you at work if you ask them to. If you tell a collector your employer doesn’t allow those kinds of calls at your workplace, they must stop contacting you there.
  • Stop contacting you completely, if you ask them to. If you ask them to stop contacting you ("cease contact"), they cannot contact you again except to notify you if they take legal action against you. This isn’t always the best thing to do, because you may leave them with no other option, but it may be helpful in situations where the debt is too old or you have no way of paying it.

These are just a few of the protections you have under the FDCPA. Knowing your rights should give you some confidence when talking with these professionals.

It’s also a good idea to understand the statute of limitations that applies to your debt. These state laws give creditors and collectors a certain number of years to successfully sue. If they try to take you to court after that time period, that may be illegal. At a minimum, you can raise the statute of limitations as a defense in a collection lawsuit.

Paying, or even agreeing to pay, an old debt may start the clock ticking again on the statute of limitations, and for that reason consumers need to be very careful about how they handle old debts.

Collection accounts on credit reports

Almost as much as the phone calls and letters, what seems to bother consumers most is the fact that collection accounts harm their credit scores. The three most common questions we hear from consumers about this topic are:

  1. How much does a collection account affect my credit scores? The answer is "a lot," but how much depends on everything else in your credit reports. If you have a stellar credit history and suddenly a collection account appears on your reports, it can drop your credit scores significantly. Some consumers will see a drop of 50 to 100 points or more. The more recent the collection account, the greater the impact.
  2. Will paying or settling it help my credit scores? Probably not. In most credit-scoring models it doesn’t matter whether a collection account is paid or not. It’s negative no matter what. The exception is VantageScore 3.0, which ignores paid collections.
  3. When will it come off my credit reports? Under the Fair Credit Reporting Act, collection accounts may be reported for seven years and 180 days from the date you first fell behind with the original creditor. Whether you pay or settle it has no impact on the reporting period, nor does the state statute of limitations for collecting the debt.

In addition to those main issues, there are others that crop up. For example, collection accounts may be sold and resold, resulting in multiple negative entries for the same item. Or unscrupulous collectors may threaten that they will report a collection account "forever" if the debt isn’t paid, even though that threat is illegal.

Of course, if you are dealing with collection accounts you will want to get your free credit reports to see what is being reported, and it’s a good idea to get a free credit score to find out how it is affecting your score.

The way to pay

If you owe the debt and are ready to pay, how you pay a collection agency can be just as important as how much. Be very cautious about providing a debt collector with direct access to your bank account, either through ACH (Automated Clearing House) debits or with your debit card. What happens if there is a problem and you either can’t make a payment or they take out too much? The money will be gone from your account. Good luck getting it back. Using your online bill-pay service, a cashier’s check or even a money order may be safer.

In addition, it’s crucial that you keep a record of all your payments since you won’t be receiving monthly statements. Keep that information indefinitely; you never know when an old debt can come back to haunt you.

If you are sued

If you can’t pay what you owe and the collector takes you to court, that doesn’t mean all is lost. You may be able to settle the debt or fight the lawsuit. Or if your debt is too large and there is no way you can pay it, filing for bankruptcy may help you get a fresh start.

The worst thing you can do is to simply ignore a notice indicating that you are being sued. The collector will then be able to go to court and get a default judgment against you. With that, it may have more options at its disposal, including wage garnishment and/or seizing payment from your bank account, depending on what’s allowed under your state’s laws.

Getting help

If you believe a debt collector may be breaking the law, you can seek help from a consumer law attorney. If the collector is violating state or federal laws, the attorney may be willing to help you for free, as the collection agency would have to pay the attorney’s fees.

Another option is to complain to the Consumer Financial Protection Bureau, which regulates the collection industry. It may be able to help you resolve the problem, but if not there will at least be a record of the type of problem you are experiencing. If the CFPB sees a pattern of complaints against a company, it can take action. In addition, the CFPB is asking for input from consumers on ways consumer protections should be strengthened.

More from

Jan 20, 2014 4:00PM
I had a persistent collector that kept coming to my home looking for the last owner. Told him many times they no longer own the home. I finally answered the door with a gun and he hasn't been back since.
Jan 20, 2014 3:12PM
Give them your Senator and Congressman number, if they want to be paid.
Jan 20, 2014 2:24PM
Don't EVER answer the phone and engage a collection agency in conversation. EVER. If you owe a debt and can afford to pay it, or at least pay on it, then do so. Honor your debts. If you can't pay, then it won't do you any good whatsoever to talk to a collection agency.
Jan 20, 2014 5:22PM
If paying an old debt won't help your credit score, what is the incentive to pay it?
Jan 20, 2014 5:36PM

So let me get this straight, whether I pay the debt off or not, it's GOING TO STAY ON MY CREDIT REPORT AS A NEGATIVE?

Then where's the incentive to PAY THE DEBT?

Especially if, you're having a hard time financially, or the debt wouldn't be at a collection agency in the first place.

God, what a PERVERSE incentive.

Pay the debt or not, and it's STILL a NEGATIVE report.

Then tell me this: What rational person would WANT to pay these debts?

Jan 20, 2014 6:01PM
The problem that I am having with debt collectors is that they constantly call my house asking for people that currently do not live in my home and never have. Apparently people that are dodging debt collectors give them fake phone numbers and one of them just happens to be my number.  I can't even begin to tell you how many times that I've tried to explain this to the collectors but they insist on calling. I don't even answer my phone anymore.
Jan 20, 2014 5:44PM

Hey you thumbs down people.

B Stacy had a LEGITIMATE question, what IS the incentive to pay?

are you thumbs downers sleazy debt collectors, or what?

Jan 20, 2014 5:04PM

Most people don't stop paying bills just because they get up one morning and say, I'm just not paying anymore. People stop paying bills when they get laid off, get injured, can't work, death of the bread winner, or a sickness that they have to stop working for.


Credit card companies DO NOT CARE, if you can't pay, They will NOT say, stop the interest on your card until things get better so that the balance will not increase. ALMOST every other bills, there is some agency some place that can help for at least 2 months. After that is things are still bad, then that is when people start to first juggle, then stop paying all together and usually end up in bankruptcy. If that is what one has to do to start over, and you have tried everything else to get square, so be it.


That is how it works, like it or not.

Jan 20, 2014 7:33PM
I have had some broad from India call and bug me about a bill, You can't understand a word this clown is saying and she says her name is Jane Smith...really Jane...Give me a break.  Sometimes I tell them my name is Peter Gozinya or ask them if they know Dick Shrunk...when they ask..Who's Dick Shrunk I say mine has....
Jan 20, 2014 4:40PM
Many collections agencies try to collect debts that are not legitimate debts.  Some of the companies for whom they proxy are, coincidentally, the same ones that people hate the most on another list.
Jan 20, 2014 6:24PM

I had a credit card problem years ago

got it all paid off and cut up all the cards

now 15 years after with no credit cards I have a 760 credit score and trying to buy a house

even thou I have a good credit score and pay all my bills the lone broker tells my I need more credit cards to show I do pay

now to top it off I cant get an interest free card unless have more cards and the card holders want yearly fees too.

@^       @%^#$&^@&@

Jan 20, 2014 5:37PM
I had a very aggressive debt collector calling in a debt that I didn't owe.  They claimed I was a customer of this magazine company that I was never a customer of. When questioned they made up magazines that I was receiving.  When I explained this yet again, tere threats began.  When I sent letters to this company and the Better Business Bureau, I finally got the answer to the BBB that I am not a current t customer and that I was offered this magazine deal, but never took them up on it.  It's been about a year and a half, but I am sure I eill hear from them again.  
Jan 20, 2014 6:02PM
What do you do when they call your business and are looking for someone who never worked there and gave the number fraudulently?  I get about 30 calls a day for a man and woman that has given our business number to everyone they have ever done barrowed from.  I try to tell them that I don't know the people but they keep calling and a lot of them are foreigners that I can barely understand!!!! So irritating!!!!
Jan 20, 2014 6:12PM
I was getting calls from collection agencies and collection law firms looking for an ex spouse. This went on for 10 years after we split. The marriage was so short and we had no debt together, no bank accounts together, and owned no property together. This was terrible and they never asked about me but with help from a private investigator, my lawyers, and the police I was able to tell when these calls came to me that they were collection calls. Before anyone gets their panties in a wad, we were able to determine that my ex was deliberately committing fraud in applying for credit and based on a court incident where she committed a forgery on a financial document, she had no intention of ever paying anyone anything. Since she was considered an "artful dodger" or grifter  by legal standards, our plan of defense against these collection agencies was to provide as much information about her as possible. We found out where she lived, her parents address and phone number, all the names she uses illegally (to obtain credit), and eventually her place of employment. Once that information was given the calls waned off and eventually stopped as it was passed along to each service. Some agencies were more forthcoming and stated that her family wanted nothing to do with her and that she was so bold that she even stated on social media that she worked for the department of homeland security... under one of her false identities. Which explained an odd meeting with the IRS a few years ago. I don't like some of the methods that collection agencies use, but now I see why sometimes they are more aggressive. I was brought up to pay my bills, don't buy anything I can't afford, don't over extend myself on loans, and keep track of everything financial. It paid off with my dealings with the ex and her collection problems.
Jan 20, 2014 4:27PM
Just tell them when your Obama government bail out check arrives they can get in line, alphabetical order, for payment in kind.
Jan 20, 2014 5:41PM

Elmo Gagootz


It's about time these SLEAZY BOTTOM FEEDERS, who can NEVER seem to understand English, or the fact that the new phone number YOU have was NOT YOURS 5 years ago, get an answer that they deserve.

Jan 20, 2014 6:05PM
I had an experience with a credit company collection agency (not sure if it was someone who bought the debt out right or was hired to collect the account).  But they called on a debt for a credit card I never had, after some questioning it turns out a former employer had opened a card using me as the owner of the card but under the business name after, doing all of this after I had left.  This was six plus years after I had left when I got this call.  Luckily, the agent was very nice, marked the account as fraud and I never heard from them again (it didn't even land on my credit report).  So check your credit report and really question the person calling you, ask for things like the name on the debt/card, who was it issued to, who are other signers.
Jan 20, 2014 5:04PM
I had a 300.00 credit card which I didnt pay off and two years later I was summoned and had to pay M and P collections 1000.00 plus after court ordered it paid. I know I was in the wrong but it seemed so excessive and they would not lower the amount after the court ordered it. I guess being stupid like I was sometimes you pay so life goes on but bet you I dont ever let that happen again credit card companies are so ruthless but hey they didnt twist my arm to get the card but they sure send enough mail to get you interested live and learn.
Jan 20, 2014 6:02PM

If you are receiving Social Security of any kind, then this is untouchable to any debt collector. If they take you to court, answer the Summons and attach a copy of a letter you get from the Social Security Administration, making sure that your file number for them and your Social Security Number is blacked out.  Even if you only get SSI, these collectors can't touch it.  Here is help, and this is how I answered my last Summons (By the way, I won because of the SSA letter attached to Summons.) 

I don't know if this is my account or not. It appears that there is no account number associated with the Summons and all the attachments, thereof. This Court will find a copy of a letter sent to me from the Social Security Administration showing my disability.

Of course they will keep pursuing the case, but they still have to provide you with documents showing the account is yours. Answer everything that sent you via court clerk. Everything they sent also has to be according to you state's Civil Court Laws including filing. They also have to file the Summons in the County in which you now live. 

Jan 20, 2014 6:06PM
When and if a Debt Collector calls me, I always just give them my attorney's name and phone number and then I Gracefully tell them to "KISS" a part of my Anatomy that is not Pleasant, because I know I always pay my bills !!!
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