What To Do When a Debt Collector Contacts You

Sometimes life makes it impossible to fulfill a financial obligation, we’ve all been there. You fall behind on payments, your debt is later sold to a collection agency who contacts you usually by telephone or mail. This debt is also reported to the credit bureaus and negatively affects your credit score. First, you should know there are laws in place that determine and regulate what debt collectors can and can’t do (Fair Debt Collection Practices Act - FDCPA), and how long they have to do it (statute of limitations). Learn about your legal rights.

So, what do you do when a collection agency contacts you about an old debt?

Dealing with collection agencies can be tricky. You want to be careful in your communication regarding debt any new activity on the account can restart the statute of limitations. When a collection agency contacts you about an old debt via telephone, my advice is to limit conversation. In your initial conversation NEVER verify any personal information via telephone, don’t admit to owing the debt, and don’t agree to any payment arrangements. Ask the debt collector for the amount of the debt and the name and address of the original creditor. You also want to get the name and contact information for the company attempting to collect the debt. It’s important to never share personal information, even if you believe you owe the debt.

**There are a lot of credit collection scams/scammers today so you always want to verify that you are communicating with the person or company that is authorized and within their legal right to collect this debt.

Pay it if you can.

If you owe the debt and are able and willing to pay it, you can make arrangements to satisfy the debt with the collector under whatever terms you can agree to, in exchange for a removal of the item or a positive history update on your credit report. An evaluation of your credit report will determine which option would be best for your desired outcome. Always get these terms in writing before signing or acknowledging any agreements.

You handle any mail correspondence the same way. Start by contacting the agency for necessary information if it is not included in the letter. Once you have the information, verify the debt on your end. That includes making sure that you owe the debt , and that the debt collection agency contacting you has the authority to collect this debt.

I’ve suggested what you can do if you owe the debt, how about what you can do if you don’t believe you owe the debt? What if you believe the amount is wrong? If they are suing you or threatening legal action, is it beyond the statute of limitations?

Disputing collections

If you don’t agree with the information that is being reported, you have 30 days to let the agency know that you dispute the validity of the debt. You do this in writing by sending a request for validation of the debt. A validation of debt, although all cases differ in nature, at a very minimum should include:

• itemized accounting of how the total amount of debt was calculated including fees and interest.

• Account statements from the original creditor.

• Payment history from the original creditor or a copy of the original signed contract between the original creditor and debtor.

It is highly unlikely that the debt collector has the proper documentation to validate the debt. It’s also very doubtful that they will contact the original creditor to obtain such validation. If they are not able to validate the information you can request that they have it removed from your credit report. You can also submit that information, or lack there of , to the credit bureaus and ask that the items in question be removed based on the collectors failure to provide validation of the debt.

Be prepared to seek legal help to enforce your rights!

If you are ever sued for collection of a debt, make sure that it is within the statute of limitations. The court won’t keep track of the statues on your debts and the creditors will hope you won’t either. It will always be your responsibility to prove the debt has exceeded the statute of limitations.

Don’t be intimidated or let a debt collector make you feel stressed or pressured about paying a debt you may or may not owe. You have legal rights! As I mentioned previously, you want to be careful when communicating with debt collectors. If you make a payment on an account, set up a payment arrangement, enter into any agreement, or conduct any other activity, the statute clock could start over. Keep in mind a statute of limitations doesn’t mean that you don’t owe a debt, or that a creditor or debt collector can’t pursue you in an attempt to collect. It simply means they can not take legal action against you for payment of the debt.

Credit can be hard to understand, sometimes it's best to hire or just consult with a credit specialist who can help you understand your credit situation and how you can build and improve to make it better. BRM Business Solutions offers credit repair, credit building, and credit education services! Schedule your FREE credit evaluation today!