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How to Deal with Debt Collectors in 3 Steps
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How to Handle Debt Collectors in 3 Steps
Do not be rushed into making payments. Make sure you are aware of your debt and your rights.
By Sean Pyles Senior Writer | Personal finance and financial debt Sean Pyles leads podcasting at NerdWallet as the producer and host of the NerdWallet's "Smart Money" podcast. On "Smart Money" Sean talks with Nerds from NerdWallet's NerdWallet Content team to answer listeners' personal finance questions. With a particular focus on sensible and practical advice on money, Sean provides real-world guidance that can help consumers better the financial situation of their lives. In addition to answering listeners' financial concerns on "Smart Money" Sean also interviews guests who are not part of NerdWallet and produces special segments on topics like the racial wealth gap as well as how to get started investing and the background of college loans.
Before Sean was the host of podcasts at NerdWallet the company, he also wrote about topics that dealt with consumer debt. His writing has been featured throughout the media including USA Today, The New York Times as well as other publications. When he's not writing about personal finance, Sean can be found digging around the garden, taking walks, or taking his dog on long walks. He is based at Ocean Shores, Washington.
Last updated Mar 17th, 2023 at 5:00 PM PDT
Editor: Kathy Hinson Lead Assigning Editor Personal finances, credit scoring financial management and debt Kathy Hinson leads the Core Personal Finance team at NerdWallet. Prior to joining NerdWallet, she worked for 18 years at The Oregonian in Portland in capacities such as chief of the copy desk and team leader for design and editing. Her previous experience includes news and copy editing for several Southern California newspapers, including the Los Angeles Times. She graduated with a bachelor's in journalism and mass communications from the University of Iowa.
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A debt collector is trying to hound you, seeking payment on an outstanding consumer debt. The tactics are annoying at best, and criminal, or even illegal, in the worst case.
It is essential to understand how to handle debt collectors - including understandingto assert your rights and select the best way to . Before you speak to anyone or make any payment make sure you follow these steps:
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Three steps to handle a debt collector
1. Do not give into pressure to make a payment on the first call
Just as you wouldn't jump into an agreement without understanding its terms, don't rush to make a payment if the debt collector calls you. Make time to consider your .
"A lot of people are embarrassed of having debts and that's the reason debt collectors prey on," says Ramon Khan, a former debt collection agency from Texas who is now working in the field of online marketing.
"They create this urgency and prey on these pain points to force you to pay something. If, at the end of the day are owed the sum of $50,000, $100,000 or even more, they really don't think you'll pay all of it. If they can convince you to pay a portion of the amount, it contributes to their quota."
Don't pay, don't say to pay and don't divulge any information regarding payment to the collector could use in the future. Request information about the debt and promise to contact them to discuss the issue at a later time.
A single paymentas little as $5 or $10 -- is an acknowledgement of debt, which can result in serious consequences. If the debt is over the due date, for instance, making a payment will reset that clock and could lead to a lawsuit or .
Readers can also ask questions.
Do you have the right to go to jail for not repaying the payday loan?
Refusal to repay a loan is not a crime violation. In fact, it is to be the duty of a lender to threaten a borrower with arrest or jail. Nonetheless, some payday lenders have been successful in making use of bad-check laws to file criminal complaints against borrowers, with judges erroneously rubber-stamping the lawsuits.
How do I dispute the loan?
There are two options that you can make use of to dispute the debt first, the debt collector must send you, with a description of the debt as well as your rights around disputing the debt; and secondly, the debt verification letter. You can submit a written request to get more information and to temporarily stop collection efforts.
What happens if we don't cooperate with a debt collector?
The failure to pay a debt can put your earnings, bank account or property at risk. Additionally, you may lose the right to contest that you owe the debt.
2. Find the information you need
If the original creditor sells the debt to a third-party -- which might later resell the debt, and so on -- recordkeeping often falls to the side. Many sold debts are erroneous in the amount of debt or even the person who owes the debt.
Collection practices for debt are one of the biggest sources of consumer complaints with the Consumer Financial Protection Bureau as a result. More than 70,000 complaints were submitted in 2021 about the subject The main reason for this was consumers being asked to settle debts they did not owe (zero) Consumer Financial Protection Bureau . . Accessed Apr 7, 2022.
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You should request a copy from the collector of the debt if you do not receive one within 5 business days from the first time you contact. It should include details on the debt, the collection company and ways to challenge the debt.
Make your own notes on the debt in the event that it's yours including details about the creditor's original identity and payment history.
Keep accurate records of communications with the debt collector, as well as any previous payments. It is recommended to use certified mail for the most reliable evidence.
Find your debt in a simple method
Sign up to NerdWallet to see your financial breakdown and future payments all in one spot.
3. Be aware of your rights and how to use them
This is your friend. The law defines your rights as a buyer and shields you from the shady collection practices. For instance:
Communication: You can specify what and when you can contact you -- and that they cease communication altogether. Debt collectors are not allowed to making use of profane language or threats to commit violence.
Honesty: Debt collection agencies cannot lie to you regarding the identity of their representatives, how much money you owe or the legal consequences of not paying your debt -for example threats of arrest.
The debt is disputed The debtor has the right to contest the debt. If you contest this debt before 30 days of the first contact, the debt collector is not able to demand money until you have made sure the issue is settled. After 30 days, you are able to continue to challenge the debt but the collector can seek payment during the time the dispute is being examined.
You can if your protections under the FDCPA have been violated. Your state may offer additional consumer protections. Check with legal aid in your region or with your state attorney general's office.
Understand your federal and state safeguards during the collection process. The state's laws and your own are excellent resources.
If you're sending a letter to debt collectors to ask for more details about the debt or asking that a debt collector cease contact, you should know how to use your rights as a consumer do not be fearful to do so.
About the author: Sean Pyles is the executive producer and host for NerdWallet's Smart Money podcast. His work has appeared on The New York Times, USA Today and elsewhere.
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