How to deal with debt collectors and stop harassing calls

If you're concerned about how to handle debt collectors, learn about your rights as a consumer in order to deal with harassing calls, collection letters, and illegal practices. Below are some tips on how to handle debt collectors in different cases.

If you've been making late payments or you haven't made any payments for many months, your creditor may send your account to collections. That is, your creditor may pass on your account to its in-house collection department or hire a third party collection agency (CA) to collect the debt from you. The creditor may even sell your account to third party debt collectors (junk debt buyers).

Who are debt collectors?

Debt collectors work for a collection agency. The collector will make efforts to collect payments from you. When your creditor hires a collector, the creditor retains the right to your account while the collector simply acts on their behalf. When a creditor sells your account to a third party debt collector, that collector then becomes the legal owner of your account. Sending your past due account out to a debt collector, or selling the account off to a debt buyer will usually happen when the creditors believe they cannot collect on the account. A credit card company, for example, will send your account out for collections, or sell it off to bad debt buyers once they perform whats called a "Charge Off".

When your account is placed with a collection agency, it may only be temporary. Your debt may get passed around to multiple debt collectors, and may be sold multiple times to different debt buyers who will begin collection efforts anew. That is why you may get calls from several different debt collectors. Each new collection agency you hear from through the mail or with constant phone calls tells you that your debt has moved further down the collection pipeline. The further down the debt collector pipeline your account moves, the increased likelihood you could experience harassing phone calls, collection abuse, and increased risk of being sued by your original creditor or a debt buyer. As your account moves through what are generally predictable stages of debt collection, you will typically have multiple opportunities to resolve the accounts, or manage the collection activity until you are in a position to put some of your financial struggles behind you.

• Stop avoiding debt collectors: If you don't answer collection calls, things may get worse. While most debt collectors are skilled at pushing your buttons to elicit some kind of payment, ignoring those collection calls also means you could be missing out on opportunities to settle or negotiate payments on the debt that can fit your budget. The longer the debt is ignored, the higher the risk your account is placed with a collection attorney. Attorney debt collectors are often authorized to take you to court as part of their collection efforts.
• Don't reveal much about your finances: Don't talk about your finances in detail. The collector is only interested in collecting payments from you. Any information you provide should be limited to the fact that you cannot afford your bills.
• Record your conversation: Keep a record of the bill collectors you've spoken to, the time, and a summary of your conversation. You can use such records as proof against bill collectors who violate well established state and federal collection laws. You can even tape the conversation (secret taping is allowed by 35 states and the District of Columbia). However, if secret taping isn't allowed in your state, get the collector's permission before you tape the conversation or keep a written log.
• Verify or validate the debt: When a collection agency claims you owe them a certain amount of money, you have the right to send a written request to the agency asking them to prove that you owe the debt. Just check out the debt validation letter to ask for validation of the debt in writing. Debt validation is essential because collectors often contact debtors for old accounts where the statute of limitations (SOL) has expired; for amounts that are over inflated; or for debts that may not even be valid.
• Ask for some time to pay off the account: If you owe the debt and you're unable to make payments, talk to the collection agent about your need for some more time so you can develop a plan to pay off the debt. You can try to settle or request a new payment schedule based on what you can afford. Check out how to settle your debts yourself.
  
  If you have multiple late bills, and depending on how many months past due your payments are, you could enroll in one of several types of debt consolidation program. By choosing to pay off bills either in a consolidation, credit counseling or debt settlement program, you can end harassing phone calls and position yourself to clear your debts with a manageable monthly payment. If a payday loan company has assigned or sold your account to the collection agency, then check out USA payday loan laws before enrolling into a debt relief program. Find out if the payday loan company is doing business as per the laws in your state. If the payday loan company does not have any license to lend money in your state, then you don’t have to pay any money to the debt collector or the lender.
• Use a Cease and Desist Letter: If you want to stop debt collector calls, you have the right to request that the collection agency stop contacting you. This can be done by sending them a Cease and Desist Letter. If you send this type of letter when you legitimately owe a debt that is not past the SOL in your state, you may be leaving the collector with only one remaining options to collect from you – sending your account to an attorney with authorization to sue you. A cease and desist letter should be used in limited circumstances..

Case 2: You've already paid off the account

If your account is paid off, here's how you should be dealing with debt collectors when they contact you for payments.

• Dispute the debt: You must dispute the debt within 30 days of the date the bill collector sent you a notice (with creditor's name) telling you how much you owe. Send this letter via certified mail with return receipt requested so that you'll know the CA has received it.
• Send in proof of your bill payment: You can attach proof of your bill payment (payment notice from creditor, payment arrangement letter from another CA, etc) with your dispute letter.
  
  A bill collector cannot renew collection activities unless he can show you proof you owe the debt. Once you provide collectors with enough proof that you've paid the bill, they'll stop their collection efforts. If they still harass you, just remind them that they're violating the FDCPA and contact a consumer attorney to help you. You should also file a complaint with the FTC (at "https://www.ftccomplaintassistant.gov/") and you're State Attorney General.

Case 3: Your debt is too old

If you receive collection calls on a debt that is past the SOL in your state (5 to 10 years old), don't worry! Old unpaid bills won't hurt you as much as the recent ones. If the collector contacts you after the SOL expires, they cannot legitimately take you to court under state or federal law. Your obligation to pay the debt remains, but the risk of a collector suing you in order to garnish wages, levy a bank account, or lien property is dramatically reduced on debts that have past the SOL. Be careful how you calculate the SOL in your state. Some state laws reset the SOL if you admit to a debt or begin making payments after default at some point.

When it comes to dealing with debt collectors and old accounts, it is better to not acknowledge the debt. Simply ask the collector to stop contacting you, stating that you're aware that the SOL has expired. Use the SOL Expiration sample letter to communicate with the collector.

Case 4: Your debt has been discharged in bankruptcy

If your debt has been discharged in Chapter 7 bankruptcy, try to dispute it on your own. Include a copy of your discharge order, which proves the account has been discharged. If the collector ignores your letter, file a complaint with the bankruptcy court for violation of the discharge order or you contact your bankruptcy attorney to assist you. You can also file complaints with the FTC, your attorney general, the CFPB.

Case 5: You actually don't owe the debt

Send the collector a validation letter via certified mail with a return receipt requested. Once the creditor receives the validation letter, they are obligated to reply to the letter and send you proof that you owe the debt or stop contacting you. If they fail to validate the debt, but continue to contact you, send them a Cease and Desist Letter. If they persist in contacting you after they have received the Cease and Desist Letter, seek out a consumer advocate attorney who specializes in collection laws and file a complaint with the Federal Trade Commission, the CFPB, and your state's Attorney General.

Dealing with creditors and debt collectors becomes easier when you're aware of their tactics, your state's collection laws, and your consumers rights. If you are serious about resolving collection accounts, you can start by signing up for a no-obligation counseling session with a legitimate debt relief company. They'll help you develop a plan to pay off your bills without having to worry about collection calls or harassment.