- 5 min read
- By law, debt collectors cannot contact you once you tell them to stop.
- Stopping all contact with a debt collector might not be a good idea.
- You can control how and when a debt collector contacts you.
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Debt collectors are individuals or companies that collect debts for others. Credit card companies and banks may sell your debt or turn over your account to a collection agency, which makes money if it manages to collect from you. Some of these collectors can be very aggressive. However, you do not have to put up with phone calls (including collection calls at work), emails, voice mails, text messages, or contact through social media. Here’s how to control when and how debt collectors communicate with you.
The Fair Debt Collection Practices Act (FDCPA): How Does it Protect You?
The FDCPA is a law that makes it illegal for debt collectors to threaten or harass you when attempting to collect on outstanding debt.
“This law limits communication between you and the collectors and forces collectors to prove that your debt is due,” notes George Kamel, a personal finance expert with Ramsey Solutions in Franklin, Tennessee. “It also stops collectors from using abusive language or behavior. For instance, they can’t harass you by calling you a billion times in a row to annoy you. They can’t use profane language or threaten to arrest you or take money out of your paycheck without permission from a judge.”
Among its numerous rules, the FDCPA prevents collectors from contacting you before 8 a.m. or after 9 p.m. unless you permit it. They’re also not allowed to contact you at work if you tell them you cannot receive calls there.
“A debt collector also cannot contact you if you send them a written request to stop contacting you, such as a cease-and-desist letter,” explains Ann Martin, director of operations for CreditDonkey in Pasadena, California.
Note that FDCPA rules only apply to third-party debt collectors and people who work for a debt collection agency. The law covers mortgage debt, credit card debt, student loan debt, medical bills owed, and other forms of household debt.
“Be aware that the FDCPA doesn’t stop debt collectors from asking for the debt you owe them – that’s totally legal. But it does keep them from doing some real shady stuff to get your money, like lying, threatening, or manipulating,” Kamel adds.
New FDCPA Rules
The FDCPA was updated on November 30, 2021, to include the Consumer Financial Protection Bureau’s (CFPB) new Debt Collection Rule, intended to clarify what is allowed and what your rights are. The new Debt Collection Rule involves five new significant changes. Now, debt collectors must:
1. Furnish certain information about your debt after first communicating with you or shortly thereafter. If the information is offered in writing or electronically, it’s referred to as a validation notice and will usually provide information such as the:
- debt collector’s name and mailing information
- name of the creditor to whom the debt is owed
- account number linked to the debt
- itemization of the current owed amount that includes interest, fees, payments, and credits
- current sum of the debt as of the provided validation notice date
- details about your debt collection rights, such as how you can dispute the debt.
2. Not phone you about a particular debt more than seven times within seven days or within seven days after participating in a phone call with you about a specific debt. These call frequency rules only pertain to calls placed by the collector directly to you and don’t apply to emails, text messages, or other types of media.
3. Take particular steps prior to reporting your debt to a credit reporting company. They are required to speak to you in person or via phone about the debt and snail mail a letter or submit an electronic communication about the debt and wait a reasonable period (commonly 14 days) in the event the message is returned as undeliverable. If they send you a validation notice, they’ve fulfilled their obligation to contact you and may begin reporting the debt to credit reporting companies, so long as they abide by other laws about credit reporting.
4. Follow particular rules if they contact you via social media. They must:
- keep the messages private, not allowing them to be seen by the general public or your contacts, friends, or followers
- identify themselves as a debt collector if they try to send you a private message requesting to add you as a friend or contact
- offer you a means to opt-out of their communications on that social media plan platform.
5. Follow new rules about “limited-content messages” (voicemails that a debt collector can leave for you). Now, limited-content messages have to include:
- a business name that does not indicate the caller is a debt collector
- telephone number(s) you can use to return the call
- a request that you reply
- the name(s) of those you can reply to.
They can also leave optional information including suggested times and dates for you to reply.
How to Write a Cease–and–Desist Letter
It’s important to learn how to stop a debt collector from contacting you. Probably the best strategy is mailing a cease-and-desist letter to a debt collector or collection agency, which should prevent them from contacting you by any means besides snail mail, according to Dean Kaplan, president of the Kaplan Group, a San Luis Obispo, California-based commercial debt collection agency.
“The law doesn’t require that any specific language be in the letter – simply that you want the debt collector to limit all communication to mail only at the address you specify,” he says.
Your letter should include:
- Your name and address and the date you intend to mail the letter.
- Detailed information about the alleged debt, including the amount they claim is owed, who it is owed to, and your account information.
- Information about when and how the collector first contacted you.
- A copy of anything you received in the mail or via electronic communications from the debt collector.
- A statement that you dispute the debt or that the debt is not yours, if applicable. If the debt is not yours, include evidence of that.
Click here for samples of cease-and-desist letters you can use or model from, provided by the CFPB.
How to Settle With a Debt Collector
It’s a good idea to settle your debt if at all possible and pay the debt collector or original creditor. That’s because, despite your cease-and-desist letter and other efforts to get collectors off your back, your original outstanding debt will not go away until it’s paid.
“Settling your debt will get it off your credit reports and make the problem disappear forever,” Kaplan says.
To settle your debt, contact the collector by phone and attempt to negotiate the total amount you will pay and the timing of payments. Kamel suggests the following steps:
- Confirm that the debt is yours and have the collector validate all of your information.
- Negotiate a payment plan if possible. “Let them know you can pay something each month and show them how,” Kamel says.
- Ask to settle the account. “Your request could mean a good portion of your debt is wiped out. If they bite, be ready to pay the agreed-upon amount right then,” he adds.
- As a last resort, pay it all off. If the collector won’t negotiate or lower your debt obligation, “you should pay the money in full if you have it,” per Kamel.
- Never allow the collector to access your bank account. “There’s no guarantee they won’t take more than what you agreed to,” he cautions.
“Once both parties arrive at a mutually agreeable solution, put it in writing and make sure the debt collection company signs it,” recommends Kaplan. “You want proof that the matter is fully resolved once your payments are made. Keep copies of all payments in case you are required at a later date to show evidence that you entered into an agreed-upon plan and fulfilled your obligation.”
Should You Pay the Original Creditor or the Collection Agency?
The biggest factor in determining whether to pay the collection agency or your original creditor (the source that originally loaned you the money or provided goods and services you owe money for) is time.
“If your debt has only recently gone to collections, you are more likely to be able to negotiate a deal with the original creditor,” Martin says. “If the debt is older, the debt collector is likely to be your best bet. Essentially, if the original creditor has fully closed your account with them, they are going to be much less willing to negotiate with you.”
If you have entered into a payment plan, it’s much easier to pay a collector/agency, as they know precisely when you paid, instead of contacting their client to determine if you made your payment on time, according to Kaplan.
Be sure the debt collector has provided you with documentation to support the amount owed.
“That’s an indication they are the legal representative of the original creditor. It’s typically okay to pay the money to the collection agency or debt collector in that situation,” explains Kaplan.
But if you are going to pay the debt off in full with one lump sum payment, “you may want your settlement agreement to indicate that you will pay the original creditor directly,” he adds.
Mortgages, credit cards, student loans, personal loans, and auto loans are common types of debts. According to the NY Federal Reserve total household debt as of Q3 2023 was $17.291 trillion. Housing debt totaled $12.489 trillion and non-housing debt was $4.802 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1,739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
Collection and delinquency rates vary by state. For example, in Vermont, 16% have student loan debt. Of those holding student loan debt, 5% are in default. Auto/retail loan delinquency rate is 2%.
To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.