How To Respond When A Debt Collector Calls
1. Keep Your Cool
Two types of debt collectors work in this business today: Ones who work for companies that require the collector to follow a strict script that complies with the law; and collectors who are encouraged to use any means possible to collect the amount due. You will know which type of collector you're dealing with right away. Aggressive debt collectors do not always follow the law, and may:
- Raise their voice when speaking to you
- Call you rude names or use profanity
- Threaten you with legal action, such as sending a process server to give you a summons
- Threaten to call the sheriff to arrest you or seize your property
Aggressive collection agents will use intimidation as a means to frighten you to pay all or part of the debt immediately, whether you are legally obligated to pay the debt or not. For example, an unscrupulous collection agent may call the parent of a consumer and claim if the debt is not paid immediately, the collector will have the debtor arrested. See the "Debt Collector Tricks & Techniques At A Glance" table below to learn what debt collectors are and are not permitted to say and do when collecting a debt.
Don’t let an aggressive debt collector frighten you into paying a debt you may not owe. If you feel frightened by a caller, hang up, learn your state’s collection laws, and take step No. 2.
2. Get Information About The Collector
If you want to stop a debt collector in their tracks, you first must learn a few facts. Ask the debt collector for the following information:
- His or her name. It’s probably a fake name, but no one else at that employer will use the same stage name.
- His or her employer’s name.
- The debt collector’s address.
- Any facts you can gather about the debt, including:
- Amount due
- Name of the original creditor
- Original account number
- Present account number
- Date of first delinquency on the account
- The debt collector’s telephone number and extension
An unscrupulous debt collector will try to avoid giving you this information. He or she knows why you are asking for this, and may become more agitated and threatening to try to make you back down. Be persistent. After all, you have what they want — your money.
3. Validate the Debt
Debt collectors must follow federal rules found in the Fair Debt Collection Practices Act (FDCPA). You have the right to ask the debt collector to validate the debt. When a consumer requests a debt validation, the collection agent must ask the original creditor to verify the amount of the balance due, and state that you are the person who owes the debt. If the original creditor cannot validate the debt, then the debt collector must stop collecting the debt and remove the account from your credit report.
Congress was vague when it wrote the FDCPA, so different federal courts follow slightly different standards for what needs to be included in a debt validation. See the Bills.com debt validation article to understand what steps you need to take to validate a debt. You have a limited period of time to validate a debt, so work quickly and don’t delay asking for a debt validation.
4. Learn the Account’s Statute of Limitations
Learning if your account's statute of limitations clock has run out is an important fact for you to learn. In all but two states, a debt collector is allowed to collect a debt after the statute of limitations clock runs out. Also, it is legal in all but two states for a debt collector to file a lawsuit against the consumer after the statute of limitations clock runs out. An expired statute of limitations gives the consumer a defense they can raise when answering the lawsuit that says, in effect, "Even if everything the debt collector says here is true, the court must dismiss this lawsuit because this debt is too old."
The tricky thing about a statute of limitations defense is the consumer must raise the defense on their own — the court won’t do it on the consumer's behalf.
Learn your state’s statute of limitations for consumer debt. If your debt is older than your state’s statute of limitations, use this to your advantage when speaking to the debt collector. Explain whether the debt is yours or not, you have no intention of paying it. Tell the debt collector you will raise the statute of limitations defense should the debt collector file a lawsuit against you.
An aggressive debt collector will attempt argue the statute of limitations does not apply to your debt, or will try to change the subject. If the debt is older than your state’s statute of limitations, go to step No. 5 below. Read the Bills.com statute of limitations article to learn when a statute of limitation starts, which statute of limitations applies to you, and what can reset a statute of limitations clock.
5. Send a C&D if the Account is Old
Want to stop receiving a debt collector's telephone calls or letters? Under the FDCPA, if a consumer sends a debt collector a cease-communications notice, the debt collector must stop all communications with the consumer. The only exceptions to the rule are that the debt collector is allowed to acknowledge the notice, and may contact the consumer if the debt collector files a lawsuit against the consumer.
Use a cease communications notice when the statute of limitations clock has run out on your debt. Why? Some collection agencies move a collection account with a cease-communications notice to their legal departments because debt collectors are no longer able to call or write the consumer. Collectors’ only options are to file a lawsuit against the consumers or sell the collection accounts to a different collection agency. An honest lawyer will notice the statute of limitations clock has run out, and advise the debt collector to abandon any hope of ever collecting anything on this account.
6. Don’t Ignore A Lawsuit
Some brazen debt collection lawyers file lawsuits on debts where the statute of limitations clock has run out. They do so knowing a consumer can defeat the lawsuit easily by filing an answer with the court that raises the statute of limitations defense. These unscrupulous lawyers file these types of lawsuits because many consumers do not know their rights, and the debt collectors win by default.
Consult with a lawyer if a debt collector sends you a summons. Never ignore a lawsuit!
7. Negotiate a Settlement
If the debt collector validates the debt, and your state’s statute of limitations has not run out, and you believe you have a legal obligation to pay the debt, then you have two options:
- Negotiate a settlement — a deal — with the debt collector
- Try to ignore the debt collector
See the Bills.com debt settlement advice article to learn how to negotiate a deal with a debt collector for less than the full balance due. Debt collectors buy collection accounts for about 5 to 8 cents on the dollar, so you should be able to settle your debt for much less than the balance due.
According to collection agency industry data, the older the account the less likely it is for debt collectors to collect on a debt successfully. If your debt is old, especially if it is older than your state’s statute of limitations, then you may be able to avoid paying the debt by simply saying no to the debt collector long enough. However, as mentioned in Step No. 6, consult with a lawyer if you receive a summons.
|Debt Collector Tricks & Techniques At A Glance|
|Debt Collector Action||What’s Legal||What’s Illegal*|
|Threaten violence||None||Any intimidation including profanity or threats of physical harm to you, your family, or property|
|Threaten legal actions||If accurate, collector may inform consumer of planned legal action||A collector may not threaten legal action if none is planned. (This is common, unfortunately)|
|Call neighbors & friends||One call to friends, neighbors, family members learn the contact information of consumer||Repeated calls to the same friends, neighbors, or family members, or disclosure of any information regarding the debt|
|Call your employer||Contact consumer if allowed, or contact employer once to learn consumer's contact information||Repeated calls to consumer at work if consumer tells debt collector not to call|
|Fail to identify themselves as a debt collector||Identifying themselves as a collection agent and stating the "mini-Miranda" warning **||Failing to identify themselves as a collector. Or stating falsely they are a police officer, sheriff, or lawyer|
|Encourage you to pay a small amount||Legal||Paying any amount, no matter how small the amount, resets your state’s statute of limitations clock to zero. Encouraging you to pay a small amount is not illegal.|
|Empty your bank account||Cashing a check you write, or making an ACH withdrawal in the amount you authorize||Issuing an unauthorized check drawn on your account, or making repeated ACH withdrawals exceeding the amount you authorize|
| * Read the Bills.com Fair Debt Collection Practices Act article to learn what is not permitted under federal law. |
** Telephoning collector must tell you, “This is an attempt to collect a debt and any information obtained will be used for that purpose.” Failure to do so may result in fines and cancelling the debt.
Many consumers negotiate with debt collectors on the telephone. You are not obligated to do so, and can negotiate using e-mail, fax, or paper mail. If you reach a tentative settlement agreement with debt collector, make sure you spell-out these eight terms and conditions in your settlement letter.