Understanding Debt Collection and Debt Collectors
Debt collectors can be intimidating. The world of credit and paying off debt can be unfamiliar for you. Debt collectors know this, and often use it to their advantage. They know the regulations in depth, where most other people merely have surface knowledge.
Many times they can make a business off of this gap in knowledge alone. It also enables some shady companies to abuse questionable practices to achieve their goals, i.e. to get you to pay them, and sometimes even if you don't legally owe them money.
Because of their in-depth knowledge, you aren’t going to be outsmarting or "pulling one over" on the debt collector or agency. However, what you can do is understand your legal rights when it comes to your debt. This may help you feel more secure when dealing with debt collectors, and may help you identify if they are bending (or breaking) the rules to get what they want. When a collection agency encounters an informed consumer, they might be less likely to aggressively pursue collection.
Understanding Your Debt Collection Rights
It is a good idea to read through the FDCPA and understand what your full rights are before dealing directly with collectors. Here we will highlight some of the most important rights for you to understand.
While these are a list of basic rights at the federal level, your rights may also change slightly based on which state you are in. Some states are more strict or lenient on collection agencies and the laws surrounding what they can and can't do.
You Have the Right to Not be Harassed
Harassment can be a real issue with debt collectors, especially if you don't know what to look out for.
Debt collectors don’t have to be polite when talking to you, and many will be as short and cold as possible with you to exert a more dominant or authoritative energy over the phone. This is just an act. If they do anything that is borderline threatening or harassing, they may be violating the FDCPA.
In general, the FDCPA places limits on how a collector can contact you or speak to you. This includes limitations such as:
They may only calling between the hours of 8 a.m. and 9 p.m.
They may not do anything that can be reasonably construed as harassment, such as calling repeatedly in a short period of time or calling and hanging up when the person answers.
They may not threaten you in any way. They cannot threaten you with arrest, harm, firing from your job, deportation, or any other form of shame or loss.
They may not swear, yell, or use crude language.
Who Can a Debt Collector Talk to?
Debt collectors are also limited in who they may contact about your debt. They may only speak to three people about your debt – you, your spouse, and your attorney.
If you do not have an attorney, then debt collectors may try calling other third parties to get information about how to contact you, such as your home address or phone number. However, if they are already contacting you, this information is irrelevant and these calls may be borderline harassment.
Can they Call You at Work?
If a debt collector is calling you at work, you have every right to tell them to stop. Let them know, very clearly, that personal calls are not allowed at work, as they must stop contacting you at work in that case. If you have more than one work number you may have to repeat this process each time.
Can they Come to Your Work?
In rare cases, a collector may decide to visit you at work. This is a potentially risky practice for them, as they are not allowed to reveal anything about your debt to anyone but you. Again, if you let them know that the visit is inappropriate and inconvenient, they are required to stop visiting you at work.
You Have the Right to Ask for Information about the Debt Collector/Agency
You also have the right to (and you should always do this) request information about the company and agent trying to collect on your debt. Any legitimate collectors will be happy and willing to give you the business and contact information.
Some shady collectors try to use scare tactics to quickly collect on a debt – in some cases a debt they do not technically own. Anyone who does not divulge information about the company and themselves may be hiding something. If you are in doubt, speak to your lawyer before continuing, or search for more information about the business on the internet.
You have the Right to the Written Notice of your Debt
You are also entitled to a written notice giving proof of your debt to the company.
The FDCPA gives you the right to have the full details of your debt within the first 5 days of the collector contacting you, and it is a good idea to ask for these details. This includes:
The amount of debt you owe
The name of the original creditor or company who you owed the debt
A statement that assumes the validity of the debt unless you dispute it within 30 days
The right to a copy of any validation or judgement about any debt disputed within that 30 days
If the debt was bought from another company or agency, the consumer can request the name and address of the previous debt owner within the first 30 days
Importantly, there is a 30 day cut off for many of these requests. It is important to request any and all information confirming the debt from the very beginning. This can help to ensure you are paying a legitimate debt.
Debt collectors can make mistakes. For instance, sometimes they are still trying to collect on an account that their company has already sold off. This is why it is important to double check your own records and request additional information before making any rushed decisions.
What can Debt Collectors do?
Debt collectors do have plenty of rights when it comes to your debt. They are allowed to contact you. They are allowed to ask you to pay your debt. They can also offer you payment plans or settlements in order to close accounts.
Collectors can also report unpaid debt that is less than 7 years old to the credit bureaus, meaning it will affect your credit score.
Debt collectors may also be able to sue you for the debt you owe, which could potentially result in garnished wages for you. This may be different depending on the statute of limitations in each state, and is definitely something to talk to your attorney about.
Most states have a statute of limitations between three to six years. Once this time is up, the agency may not sue you to get their debt.
Understand the Statute of Limitations before Making a Payment
Every debt has a statute of limitations associated with it. This is the maximum amount of time that a collector has to legally sue you for a debt. Once this statute of limitations has expired, you are effectively free from the debt. This time period can range from three to six years depending on what state you are in.
While you may have good intentions in trying to repair your credit, some debt collector’s intentions are not. Many debt collectors will ask for a small "good faith" payment or a small settlement for a fraction of what you actually owe. This may be a legitimate request. However, it may also be a trick to reset the statute of limitations (reviving your debt), and allowing them to sue you for the rest of the debt.
Even if it is legitimate, a settlement may not be the way to clear a debt. While a settlement may be an enticing way to end the headache of debt, understand that in many cases a settled debt looks worse on your credit report than a debt which was paid off in full.
Bottom Line: Things to be Aware of
While many credit collectors are legitimate and will work with you to reduce your debt, there are some potential red flags to be aware of.
Contact your lawyer if the collector is doing any of the following:
Demanding immediate payment
Asking for payment through less traceable methods such as gift cards or bitcoin
Refusing to answer questions about the company name or debt
Pressuring you by threatening harm, arrest, or other forms of shame
Asking for your personal financial or identity information
You can also issue the collector a formal letter to request them to stop contacting you – and they are required to comply.
Ask your lawyer about how to properly write the letter.
In every case, the most important thing you can do when a debt collector first calls is to ask for more information. Information about them, their company, and your debt can help you and your lawyer understand the legitimacy of their claim and figure out which direction to take