How May A Debt Collector Contact You
A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8:00 a.m. or after 9:00 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.
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Send A Dispute Letter
Under the FDCPA, you have the right to dispute a debt within 30 days of receiving a debt collectors initial letter. If you send the debt collection agency a dispute letter and ask for the name and address of the original creditor, they are required to provide that information to you. They are not allowed to continue to try and collect the debt until they do so.
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My Debt Is Several Years Old Can Debt Collectors Still Collect
In most states, if the debt is yours, the amount is correct, and the debt collector is entitled to collect, the collector can continue to ask you to pay the debt. If you are sued, you may have a defense to the lawsuit due to the age of the debt.
In most states, the debt itself does not expire or disappear until you pay it. Under the Fair Credit Reporting Act, debts can appear on your credit report generally for seven years and in a few cases, longer than that.
Under state laws, if you are sued about a debt, and the debt is too old, you may have a defense to the lawsuit. These state laws are called “statutes of limitation.” Most statutes of limitations fall in the three-to-six year range, although in some jurisdictions they may extend for longer depending on the type of debt.
Statutes of limitation may vary depending on the:
- State where you live
- State law named in your credit agreement.
The statute of limitations may also be affected by terms in the contract with your creditor and, if you’ve moved, by laws in the state where you are sued. You may want to consult with a lawyer to learn how this period is calculated and when the period may have started with respect to your debt.
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Can You Have The Debt Deleted From Your Credit Report
If the collection appears on your credit report, it’s best for your credit score to have it removed. Some collectors will delete the collection in exchange for payment. Others are adamant about keeping the collection on your report. When you can convince the collector to remove the entry from your credit report, make sure you get the agreement in writing. That way, you can force the collector to hold up its end of the deal.
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What Debts Can Go To Collection
Any outstanding bill you havent paid can be sold or assigned to a debt collections agency.1 Here are the most common debts sent to collections:
- Mortgage payments
But dont worry, it shouldnt ever be a surprise. In most cases, you should expect a letter letting you know your bill is now in collections. But that doesnt make it any less scary.
Attain Stability In Your Finances
After experiencing what its like to work with a debt collection agency, you likely would be willing to go to great lengths to avoid having to do that again. The best advice for ensuring that you never require a collectors services ever again is to become fully stable in your finances.
Approach all debt with caution and keep your credit utilization rate under 30%. Have a large emergency fund so that you stop relying on a creditor to survive unexpected expenses. Stop living paycheck to paycheck by building your savings so even if you experience temporary job loss, you wont be in any financial danger. These goals will take time to reach, but true financial stability brings a peace of mind that is well worth the effort.
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Listen To All Those Old Voicemails
Voicemail can back up just like snail mail. Many people never actually check their voicemail, assuming those who need them will call them back or text them.
Legitimate creditors and collections agencies should leave a voicemail, including contact information. Theyll also usually show up on your caller ID.
Clear out your old voicemail, listening to each one and making notes about it. Compare that information with the notes you got from your mail and whats on your credit report to compile a master list of debt you might owe. Keep an ear open for potential debt collection scammers and do your research before following up with anyone.
Create A List Of All Of The Active Accounts
Keep in mind that your credit report will contain not just information about the open accounts but also accounts that have been paid in full, discharged, or charged off. You need to concentrate on your open accounts if you are willing to find out how much debt you have at the moment.
These are the accounts that lending companies may try to collect from you. The lender may have given up on trying to collect the debt if its charged off, but a collection agency can still plan to obtain the fund from you. In case the debt has been discharged, it is no longer collectible. So, you dont have to worry about getting it into the collections.
The lenders usually report on your account balance and payment history on a monthly basis. Even if the balance on your open credit card account is reported as $0, you should include it on your debt list.
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Should I Settle A Collection Or Pay In Full
Sarah Edwards | December 01, 2022
Summary: Ultimately, its better to pay off a debt in full than settle. This will look better on your credit report and help you avoid a lawsuit. If you cant afford to pay off your debt fully, debt settlement is still a good option. Use SoloSettle to settle your debt on your own and regain your financial footing.
Do you have an outstanding debt with a creditor that youre unsure how to handle? Sometimes, people fall behind on their regular payments due to job loss or other life situations, and theyre not sure how to resolve the problem. They may be in so much debt that their attempts to overcome it are futile.
When consumers stop making payments on their debt, their creditor will typically send their account to collections. Collections may be an in-house department with the original creditor or an outside debt collection service.
If your account is in collections, you may be unsure how to handle it. Should you pay the debt off entirely or attempt to settle it? Both options have specific benefits and drawbacks.
Make Sure That The Creditor Still Owns The Debt
Before you make settlement arrangements of any kind with your original creditor, take the time to verify that your original creditor still owns the debt. Your negotiation efforts will be wasted if your creditor has passed ownership of the debt on to a debt collector or debt collection agency. Once that happens, your original creditor no longer has an interest in the debt and will simply refer you to the collection agency. If you send a written notice to your creditor asking them whether they still own the debt, be sure to send it via certified mail so that you have proof that they received your request. The same goes for a dispute letter.
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Consider A Debt Management Plan
If you have the money to pay the debt and want to clear it up, you could talk with a not-for-profit credit counselling agency and arrange a debt management plan.
However, you must repay your debt in full, as this is a requirement with any payment plan through a credit counselling agency. A credit counsellor cannot settle your debt for less even if the collection agency is willing to accept less than the full amount.
A new note will be placed on your credit report when you enter into a debt management plan. This note will remain for two to three years from completion. However, some creditors continue to report your monthly payment made through a collection agency as regular transactions, refreshing the last activity date. So the debt can remain on your credit report for six years after you complete your debt management plan. Since a DMP can be anywhere from 1 year to 5 years, that one account could impact your credit history for a long time if you go through a credit counsellor.
You Can Ask The Collector To Verify The Debt
Soon after they first contact you, the debt collector is required to notify you of your right to dispute the validity of the debt. Then, you have 30 days to send a debt validation letter requesting proof that the debt is yours. After receiving your validation letter, the collector must stop collection activity until theyve sent you the proof.
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Debt Sold To A Debt Collector
The debt collector is now the creditor so must follow the CCCFA and responsible lending code, like the original lender did.
This means charging reasonable fees enough to cover costs, but not earn a profit. These fees need to be in the contract. If fees seem high, ask them to explain the amount.
If you have a problem with the fees, contact the debt collector first. If you cannot solve the issue, try their financial dispute resolution scheme.
How To Get Validation And Proof Of Debt
When you are contacted by a debt collector, they are required within five days to notify you in writing with whats called a validation notice, that you owe money and that you have the right to dispute the validity of the debt. You then have 30 days to send a debt validation letter, requesting proof that its your debt.
The 2021 Consumer Finance Protection Bureau Debt Collection Rule has made this easier for you, by requiring all debt collectors to provide a tear-off form with the validation notice that you can use to dispute the debt instead of writing a letter.
The validation notice is also required to include:
- Debt collectors name and mail address
- Original creditors name
- Account number associated with the debt
- Itemization of current amount of the debt
- Current amount of the debt as of when the validation notice is sent
- Information about your rights, including how to dispute the debt
If you dont dispute the debt within 30 days, the debt collector considers the debt valid. If you dispute it, the collector must stop collection activity after getting your letter or form until theyve sent the proof.
If the collection agency failed to validate the debt, it is not allowed to continue collecting the debt. It cant sue you or list the debt on your credit report.
Why request validation, even if youre ready to pay and you know its your debt?
Sad, but true.
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What Should I Do When A Debt Collector Makes Contact
Having a debt to pay because of financial hardship or overdue medical bills can be daunting. Some debt collectors like ERC may get you off guard, putting you in a state of panic. The last thing you want is to get into a heated argument and leave no room for negotiation. So, if you feel that this is not the right time to talk to the agent, you can politely ask that they call you at a later date. However, these simple steps will help you navigate the call if you are ready to talk.
The debt may not exist, or it may have passed the statute of limitations. Request that the debt collector sends you proof that the debt you owe exists before committing to pay.
Debt collectors can use the personal information you provide to coerce you into paying a debt or collecting the money from your accounts with little notice. Collectors can even garnish your stimulus check if you have credit card debt, unpaid private student loans, and medical debt.
Make sure to take notes on every phone call you receive from a debt collector. Important details include the date and time, the name of the caller, the name of the debt collection agency, the name of the creditor, and the amount you allegedly owe. These details can become part of your evidence should you face the debt collector in court.
Collection Agencies That Purchase Debt Might Not Have Good Information
Buying debts has become a massive business for collection agencies. Especially if your debt is old, youre likely to find yourself dealing with someone who has bought a bundle of debts for pennies on the dollar.
Because the collector might not have any of the original credit documents and only a screenshot with information about the debt, the information it has might very well be incorrect. The collector might even have bought the debt from another collector, not the original creditor, which increases the likelihood that the collector doesnt have accurate information about the debt.
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How To Report Violations
You can report an unethical debt collector or fake debt collection letters to your state attorney generals office, the Consumer Financial Protection Bureau and/or the Federal Trade Commission .
These agencies can intervene if debt collectors are being deceptive or violating your rights.
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Respond To Lawsuit Notices
Its important that you dont ignore an attempt to collect a debt. If debt collectors have trouble reaching you and settling the debt, they may legally be able to sue you.
Depending on the laws of your state, if you ignore a summons even if you believe the debt is too old the debt collector may get a judgment to go after your assets or garnish your wages.
If youre worried you wont be able to afford an attorney to fight a suit from a debt collector, the CFPB has resources on state legal aid offices.
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How Do Debts In Collections Affect Your Credit
Once the original creditor or debt collection agency reports the account in collections to a credit bureau, the account will typically be marked on your reports with a collection status. Unfortunately, accounts reported as being in collections can have a significant effect on your credit scores.
The actual number of points your scores drop may vary depending on the credit scoring model, but your payment history is typically considered a high-impact credit factor across different scoring models. Generally, the higher your starting score the more points you could lose.
Collections accounts wont disappear from your credit reports overnight. A collections account typically stays on your credit reports for up to seven years, plus 180 days from the date the account first became past due.
The good news is that the negative impact to your scores can decrease over time, until the account drops off or is removed from your reports. For more on this and what you can do to mitigate any negative effects read our article on how debts in collections affect your credit.
Create A Simple Spreadsheet
The first thing is a place to write down each bank, debt collector, and collection agency you owe money to, and how much you owed them on what date. Most people will use a simple spreadsheet for this. You can put the name of the creditor in column A, the date in column B, and the amount you owe in column C.
Itâs also a good idea to label the type of debt, so you can see at a glance which debts might be governed by different rules for collection purposes. Start by putting the original creditor or information about the debt in column D.
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Secured debts are debts that have something backing them up like your mortgage or car loan. These are debts where your property could be repossessed by a creditor if youâre unable to make your payments.
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Unsecured debts arenât backed up by property. Common unsecured debts include student loans, credit card debt, or medical bills.
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Priority debts include back taxes, child support payments, or spousal support . These debts are labeled as priority debts under the Bankruptcy Code. They canât be discharged in bankruptcy.
Youâll also want to create a column for the contact information for each creditor, including their mailing address and phone number.
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