How to Deal With Debt Collectors - Experian (2024)

Know Your Rights When Dealing With Debt Collectors

Consumer rights with respect to debt collection are spelled out in a law called the Fair Debt Collection Practices Act (FDCPA). This law governs the way collectors can behave when contacting you. Knowing its provisions, and letting a debt collector know you know them, may help head off unfair or deceptive tactics, and can also help you limit damage to your credit scores.

The FDCPA forbids debt collectors from:

• Making threats, using obscenities or lying to you (by saying they will sue you when they don't intend to, for example).
• Adding fees or interest to your debt unless doing so is stipulated in your original debt contract or permitted by state law.
• Depositing postdated checks before the date written on them.
• Taking your property or threatening to do so (unless it is collateral on a secured debt).

The FDCPA requires debt collection companies to:

• Notify you in writing (electronic or hard copy) within five days of their first conversation with you, furnishing details of the debt they are trying to collect and steps you can take to dispute that debt.
• Give you 30 days from receipt of their notification to request additional information about the debt or challenge the amount they are trying to collect.
• Refrain from reporting a collection account to the national credit bureaus (Experian, TransUnion and Equifax) during that 30-day notification period. They also cannot report a collection account that's in dispute. This is important, because unpaid collection accounts on your credit reports can have negative consequences for your credit score.

In November 2021, the Consumer Financial Protection Bureau (CFPB) added new rules to the FDCPA, limiting the manner and frequency with which debt collectors can communicate with you:

• They cannot call you more than seven times in a one-week period about any particular debt. If the same agent is trying to collect multiple debts, the rules apply to each debt separately.
• They cannot call you again for one week after having a conversation with you about a particular debt.
• Debt collectors can reach out to you on social media, but only through private messages. When doing so, they must identify themselves as debt collectors and all messages must give you the option to "opt out" from receiving additional communications from them on that platform.

The preceding contact limits apply to live communications from debt collection personnel. They do not extend to something called "limited content messages," which are automated voicemails, texts or emails that say the name of the debt collection company (without indicating they are debt collectors) and request a call back at a certain number.

6 Ways to Deal With Debt Collectors

No one wants to have debt collectors calling them all day long, but there are ways you can get them off your back.

1. Check Your Credit Report

If a creditor recently charged off one of your debts, the collection agency that took over the debt may not have reported it to the national credit bureaus.

If you check your credit reports and there's no entry for the debt, you may be able to pay the collection company before the account appears on your credit reports. If you recognize the debt, contact the collector and ask if you can arrange payment before they report to the credit bureaus. It's possible they'll have reported the debt already, and the credit bureaus won't have had time to update your credit reports to reflect it.

If the charge-off is for a non-debt account, such as an unpaid utility or medical bill, avoiding the entry on your credit report can prevent damage to your credit scores. If the charge-off is for a credit card or loan account, it's still beneficial to avoid having the collection account reported, but any missed or late payments that led up to the charge-off likely will have already hurt your scores. Entries for the missed payments will remain on your credit reports for seven years.

2. Make Sure the Debt Is Valid

Read the notification the debt collector provides carefully, and if you don't believe the debt is yours, if you question the amount the collection company seeks or if you've already paid the debt, you can ask the collector to provide evidence that you owe the money by sending a "debt validation letter."

Specify that you want proof that the debt is valid and within the statute of limitations for your state. If you send this request within 30 days of receiving the validation notice, the collector must cease collection actions until it sends you written verification, and should refrain from reporting the account to the national credit bureaus.

3. Know the Statute of Limitations

Debt collectors have a fixed number of years to take legal action against you, known as the statute of limitations. The length of time varies by state and type of debt, so find out what that period is for you by checking with your state attorney general's office.

If the clock has run out, you're shielded against a lawsuit. However, the statute of limitations has no bearing on the status of the debt on your credit reports: If the debt is reported to the credit bureaus, collection accounts will appear on your credit report for seven years from the date of the first missed payment that led to the charge-off.

4. Consider Negotiating

If you're prepared to accept the debt an agent is trying to collect, but cannot afford to pay the full amount, consider asking the agency to accept a payment plan.

With this arrangement, you repay in installments instead of one lump sum. You also can ask for a settlement, under which they agree to accept less than the full amount you owe. If you're not comfortable hammering out such an agreement, it may be helpful to have an attorney act on your behalf. If you instruct a debt collector to communicate only with your lawyer, the law says they must comply.

5. Try to Make the Payments You Owe

If a debt collector is seeking a legitimate payment, paying it off—all at once or over time in installments—is generally your best option.

Collection entries stay on your credit reports for seven years, but the latest versions of some credit scoring systems ignore paid collection accounts, so scores calculated using them will not be hurt once you've paid the collection agent. FICO^® Score^☉ 8, currently the most widely used version of the FICO scoring system, and the one used to provide free credit scores from Experian, does not ignore paid collections, so scores generated by that system will suffer if collections appear on your credit report. (The newer FICO^® Score 9 does ignore paid collection accounts.)

6. Send a Cease and Desist Letter

A cease and desist letter is a formal way of telling a debt collector to stop contacting you. Under the FDCPA, debt collectors must obey cease and desist letters under either of these circ*mstances:

• The statute of limitations on the debt has run out. Inability to sue you to collect a debt won't necessarily stop a collector from trying to reach you, but a cease and desist letter can stop their calls, emails and letters.
• You have no current or future assets, so even if you lose a lawsuit, you won't have the means to make any court-ordered payments. This is what some lawyers call being "judgment proof." If you're not sure that describes you, check with an attorney.

If a cease and desist letter makes sense for you, write it, make a copy and send the letter by certified mail with a return receipt requested. Upon receipt, the collector may either notify you that they received the letter and will cease communications or inform you that they will file a lawsuit (which is why you must be sure that the debt is past its statute of limitations or that losing a lawsuit cannot affect you.)

Signs of Debt-Collection Scams

Anytime you receive an unexpected communication from a debt collector, consider the possibility that they are not who they claim to be. Criminals will impersonate just about any authority figure imaginable to try to trick you out of money or personal information, so make sure you verify the identity of any bill collector before you make any payments to them.

The following may be indications you're dealing with a phony debt collector:

• Refusal to provide information: A debt collector must share the name of the creditor and the amount you owe and inform you that if you dispute the debt the debt collector will have to verify the debt.
• Pressure to pay by money transfer or prepaid card: These payment methods are difficult to trace and popular with criminals.
• False threats of jail time or claims to be a government official: If you owe criminal fines or restitution, failure to pay could lead to your arrest, but debt collectors aren't empowered to do that.
• Threats to tell your family, friends or employer: Legitimate debt collectors are allowed to ask others about your whereabouts, but they cannot legally disclose your debts, especially as an intimidation tactic.
• Requests for personal financial information: If someone claiming to be a debt collector asks for your bank account numbers or Social Security number, there's a good chance they are running a scam. As a general rule, you should never disclose personal financial information to someone contacting you on the phone and out of the blue. When in doubt, ask for callback information, including the company name, address and contact person. Run a search to verify the information and/or call the organization back using a phone number or email address you've looked up yourself. Legitimate businesses, including collections companies, will understand your need for caution, but scammers will pressure you to stay on the call. If that happens, hang up.

Options if a Debt Collector Acts Improperly

If a debt collector is violating rules about contacting you, you can file a complaint against them with the CFPB.

If you suspect you're the target of a debt collection scam, you can file a complaint with the Federal Trade Commission or contact your state attorney general's office.

The Bottom Line

Debt collectors have well-earned reputations for relentlessness, and their communications, even within the reasonable limits set under the FDCPA, can bring anxiety and distress. Ignoring them won't make them go away.

To keep on top of any debt collectors that may be heading your way, regularly check your credit report and dispute any inaccurate information you may find. For a more hands-off approach, you can sign up for credit monitoring—free from Experian—and be notified of any changes to your credit report.