How to Deal with Debt Collectors

When you owe money that has gone unpaid and overdue for too long, creditors often assign your debt to a debt collector. Once that happens, debt collectors might contact you on a regular basis in an effort to get paid.

Dealing with debt collectors might be very stressful. Some debt collectors use intimidating tactics to try to get you to pay your debts when you can't afford to. Worse yet, you may get contacted by debt collectors for money you don't even owe.

Verify That You're Dealing With Legitimate Debt Collectors

You don't have to answer every call from a number you don't recognize. A call from an unfamiliar number doesn't require an answer right away, especially if you feel pressured or rushed. Legitimate debt collectors must send written information about your debt by law, so you have time to verify the details before you respond.

Once a debt collector contacts you about credit card debt or any other kind of debt, ask for the company name, mailing address, and phone number. Also ask for the debt collector's license number, and then check it against the National Multistate Licensing System.

Note that not all states require debt collectors to hold a license. State licensing rules vary, so check with your state's regulatory agency to confirm the requirements where you live.

Figure Out if You Really Owe the Money

Once you've verified that you're dealing with a legitimate debt collector, your next step is to make sure you really owe the money they say you do. By law, debt collectors must provide you with a debt validation letter (also called a debt validation notice) within five days of first contact. This letter shows certain information about your debt in writing:

• The original creditor you owe money to

• The amount of your debt

• The date you incurred the debt and amounts paid on it so far

• The account number associated with your debt, if applicable

Once you get this information, you have 30 days to dispute the debt in writing if you think the debt collector has made an error. The error could be that they have the amount of the debt wrong, or that you never owed the money in the first place. This written dispute request that you send back to a debt collector is called a debt verification letter. If you send it within 30 days of the initial debt validation letter, the debt collector must pause their collection activities until they respond to your questions and show that the debt is legit.

Know Your Rights as a Consumer

Debt collectors are allowed to try to pressure you to pay your debts, within reason. The Fair Debt Collection Practices Act (FDCPA) establishes certain guidelines for debt collectors to follow so they don't overstep. When you know your rights as a consumer, it's harder for a debt collector to overstep the boundaries.

For one thing, debt collectors aren't allowed to call you before 8:00 am or after 9:00 pm. They can't call you more than seven times within a seven-day period. They can't call you again within seven days after discussing your debt with you by telephone.

Debt collectors also can't:

• Contact you at work if you tell them you're not allowed to get calls there

• Contact you via email or text message if you tell them to stop

• Publicly post about your debt on social media

• Message you privately on social media if you tell them not to

• Threaten to hurt you if you don't pay

• Threaten you with jail time

• Use profane language when discussing your debt

• Lie about the debt you owe

• Say they're suing you if they really aren't planning to yet

• Pretend to be law enforcement or a government agency

Keep detailed records of communications with debt collectors. If a debt collector violates your rights, file a complaint with the Consumer Financial Protection Bureau (CFPB).

What Happens if You Ignore a Debt Collector

A legitimate debt doesn't go away just because you ignore the debt collector. A debt collector who doesn't hear from you might increase the number of contact attempts, or turn the account over to another collector or a law firm. In some cases, you could be sued for credit card debt or other debts. 

If a debt collector sues you and you don't respond to the court summons, the court could enter a default judgment against you. A judgment could lead to wage garnishment, a bank account levy, or a lien on property you own, depending on what state you live in.

When you respond to a debt collector, even just to dispute the debt or explain that you can't pay right now, you maintain some control. You also get a chance to negotiate or explore other options before the debt reaches a courtroom by staying engaged.

Know the Statute of Limitations on Your Debt

Every state sets a statute of limitations on debt, which is the window during which a creditor or debt collector could file a lawsuit to collect what you owe. 

Once the statute of limitations passes, the debt becomes time-barred. That doesn't mean the debt collector loses the right to contact you or ask for payment. It means the law no longer allows them to come after you for that debt through a lawsuit.

In some states, even a small payment on an old debt could restart the clock on the statute of limitations. Before you discuss or pay anything on a debt you haven't paid in years, confirm how the statute of limitations works in your state. In some cases, even just admitting that you owe the debt—without making any payments—could restart the clock again.

Try Negotiating if You Can't Pay Your Debts in Full

You might owe the debt in full and still be unable to pay it all at once. If that's the case, negotiate with your debt collectors.

A debt collector may be willing to accept a reduced payment if it means recouping money sooner rather than later. Get any agreement in writing so your debt collector can't accuse you of failing to fulfill your financial obligation in the future.

Protect Your Bank Account Details

Avoid giving a debt collector direct access to your bank account, and avoid sharing your full bank account or debit card number over the phone, even if the collector sounds legitimate. A collector with electronic access to your account could withdraw more than you agreed to, or withdraw funds on a date you didn't approve.

If you reach a settlement, pay with a method you control, like a cashier's check or a money order, rather than authorizing an automatic electronic withdrawal. Confirm the settlement terms in writing before you send any payment, and keep a copy for your records.

Seek Outside Help

If you're overwhelmed by the debt collection calls, or the debt collectors won’t negotiate with you directly, then it may be time to seek outside help. And you have a couple of options.

One option is to contact a professional debt settlement company and let them try to negotiate a settlement on your behalf. Another option is to contact an attorney to discuss your rights and options. An attorney might recommend bankruptcy if they don't think you're a candidate for debt settlement.

You Have Rights in Dealing With Debt Collectors

The right approach to debt collectors could make a stressful financial situation more manageable. You don't have to handle debt collectors alone if the situation feels overwhelming. 

There are resources you can turn to, like debt settlement professionals, who may be able to help you take control of your debt.