Do not pay debt collectors until you read this!
Hearing from a debt collector is stressful and often scary, too. It’s likely that when a collector gets in touch you will have a lot of questions. For example, do you really owe the money; what options do you have for paying the debt; what will happen if you don’t pay it?
Take a deep breath! You have legal rights and you shouldn’t feel pressured or intimidated into paying the debt on the spot.
Here are the five essential first steps you should take when you are contacted by a debt collector:
- Gather Information
- Research the Debt
- Check your Credit Reports
- Know your Rights
- Figure out how to Pay the Debt (or Not)
We understand that this list may seem a little overwhelming, but just take it step-by-step.
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If a third party debt collector (not the original creditor) is trying to collect a consumer debt from you, you have rights under the federal Fair Debt Collection Practices Act. If the collector violates your rights under that law, a consumer law attorney may be able to stop the debt collector at no cost to you, and you may also be entitled to monetary damages. Get your free case evaluation here.
Let’s go over each step in more detail.
1. Gather information
You need to know:
- The debt collector’s name and contact information
- The name of the original creditor for the debt the collector is trying to collect
- How much the debt collector says you owe
The first time you are contacted by a debt collector do not feel obligated to start making payments right away! In fact, agreeing to make payments before you have researched the debt may backfire. A far better option if you have not already done so, is to request that the debt collector send you a validation letter or notice. And once you receive such a letter or notice, you are well within your rights to tell the debt collector that you need some time to figure out how you are going to handle the debt.
Use our free Debt Collection Worksheet to record your information and to take notes.
2. Research the debt
You need to know:
- If the amount that the collector says you owe is correct
- Whether the debt is too old, i.e. outside the statute of limitations, or time-barred
- If the company trying to collect from you is a debt collection scammer
If the debt collector is trying to collect more than you actually owe, you may have a case against the debt collector and you should contact a consumer law attorney right away.
If a debt collector is trying to collect a time-barred debt, you may want to tell them to stop contacting you. Why? Because there may not be much the collector can do to collect from you at this point. Learn more about the statute of limitations here.
The last thing you want to do is pay a scammer!
Debt collection scams are common, and they are the worst because if you pay a a scammer, you’ll still owe the debt. Learn about how to spot a debt collection scam here.
3. Check your credit reports
You need to know:
- How your past due account appears on your consumer credit reports with each of the three major credit bureaus
- Whether the information related to the debt on your credit reports appears to be accurate
- Whether there are duplicate accounts for the same debt in the reports
If you believe that any of the information a debt collection agency is reporting is incorrect you can dispute it by letting the debt collector know you believe it’s inaccurate. Once you do, the collector is legally required to notify the credit bureau that you dispute the account.
This is important! If a debt collector does not report a disputed debt as disputed on one of your credit reports, you may have a legal case against the debt collector.
4. Know your rights
You need to know:
If the debt collector appears to be breaking the law in its attempt to collect from you.
You don’t have to be a legal expert! But it’s a good idea to understand the most common ways debt collectors break the law. You’ll find a list of the most common ways debt collectors break the law here. If in doubt, don’t hesitate to get a free case evaluation from a consumer law attorney.
5. Figure out how to pay the debt (or not)
You need to know:
- How you will pay off a legitimate collection account
- How to safely pay a debt collector
- When not to pay a debt collector
If it turns out that you do owe the debt, and it’s not outside the statute of limitations, you need to figure out how you will pay it.
You also want to make sure that you get a clear, written description of any payment plan you may negotiate with a debt collector. For example, the debt collector’s payment plan description should tell you: the amount of each payment you will owe; when each payment will be due; how much interest will be charged; how long it will take you to pay the debt in full; and what you should do if you can’t make a scheduled payment on time. And by the way, if you agree to a payment plan, be sure to keep track of all the payments you’ve made in case there are problems later.
If you can’t afford to pay the debt collector the full amount that you owe, you need to understand whether you can or should:
- Settle the debt for less than the full balance
- Tell the collector to stop contacting you, or
- Talk to a bankruptcy attorney
If you take the actions we’ve outlined here and read the related information on this site, there’s a good chance that you will be able to figure out a way to deal with debt collectors. Our goal is to give you the information you need to help put collection accounts behind you!