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(image: https://burst.shopifycdn.com/photos/classic-red-brick-home.jpg?width=746&format=pjpg&exif=0&iptc=0)How to Deal with Debt Collectors in just 3 Steps
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How to Handle Debt Collectors in 3 Easy Steps
Do not be rushed into making payments. Validate your debt and know your rights.
Written by Sean Pyles Senior Writer | Personal financial, credit, and personal finance Sean Pyles leads podcasting at NerdWallet as the host and producer of the NerdWallet's "Smart Money" podcast. In "Smart Money," Sean talks with Nerds from NerdWallet's NerdWallet Content team to answer listeners' questions about personal finance. With a focus on shrewd and actionable money advice, Sean provides real-world guidance to help people improve their financial lives. Beyond answering listeners' money questions on "Smart Money," Sean also interviews guests who are not part of NerdWallet and also creates special segments to explore topics such as the racial wealth gap and how to begin investing, and the history for student loans.
Before Sean was the host of podcasts at NerdWallet the company, he also wrote about topics that dealt with consumer debt. His writings have appeared on USA Today, The New York Times as well as other publications. When when he's not writing about personal finance, Sean can be found playing in his garden, taking walks, or taking his dog for long walks. Sean is located within Ocean Shores, Washington.
Updated Mar 17, 2023, 5:00 PM PDT
Edited by Kathy Hinson Lead Assigning Editor Personal finance, credit scoring, managing money and debt Kathy Hinson leads the Core Personal Finance team at NerdWallet. In the past, she worked for 18 years with The Oregonian in Portland in capacities such as chief of the copy desk and team leader for design and editing. Prior experience includes editing copy and news for a variety of Southern California newspapers, including the Los Angeles Times. She earned a bachelor's degree in mass communication and journalism at the University of Iowa.
Many or all of the products featured here are provided by our partners, who pay us. This affects the products we write about and where and how the product is featured on a page. But, it doesn't influence our evaluations. Our opinions are our own. Here's a list of and .
The debt collection agency is hounding you for payment on an outstanding consumer debt. tactics can be annoying at best -- and predatory, or even illegal, at worst.
It is essential to understand how to handle debt collectors --including understanding -- so you can assert your rights and select the best way to . Before you say anything or make any payments be sure to be sure to follow these steps:
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3 steps to deal with a debt collector
1. Don't give in to pressure to pay on first contact
Just as you wouldn't jump into a contract without fully understanding the terms, you shouldn't rush to make a payment when a debt collector contacts you. It is important to take the time to analyze your .
"A majority of people are ashamed of being in debt, and that's what debt collectors are after," says Ramon Khan who was a debt collector from Texas who works in the field of online marketing.
"They create this urgency and prey on those pain points to get you to make a payment. At the end of the day, if you have a debt of $50,000 or $100,000, they won't care that you're going to be able to pay the entire amount. If they can force you to pay some of it, that is a part of their limit of."
Don't make a payment, don't pledge to pay, and don't provide any information about your payment that the collector may make use of later. Ask for information on the debt and say you'll call back to discuss it later.
Making a single payment -as little as $5 or $10 -- is an acknowledgement of the debt, and could have severe consequences. If the debt is over the , for example, making a payment will reset the clock, which could cause a lawsuit, or .
Readers may also have questions.
Do you have the right to go to jail for not repaying the payday loan?
Inability to pay back the loan is not considered a criminal act. It is actually illegal to be the duty of a lender to threaten the borrower with arrest or jail. Nonetheless, some payday lenders have had success using bad check laws to file criminal complaints against borrowers, with judges wrongly rubber stamping the complaints.
How do I dispute a debt?
There are two options that you can make use of to dispute the amount of debt you owe: first, a the debt collector is required to send youa letter outlining the debt and your rights in disputing it; then, a debt verification letter. You can make a written request for more details and stop collection efforts temporarily.
What happens if you don't pay a debt collector?
Ignoring a over a delinquent debt can put your earnings, bank account or property at risk. Additionally, you may lose the ability to challenge that you owe the debt.
2. Find the information you need
If the creditor who originally sold the debt to a third party -- which might go on to resell the debt in the future or even resell it again -- recordkeeping often falls off the radar. Many sold debts have errors in the amount of debt or even who owes it.
Debt collection practices are among of the largest sources of complaints by consumers to the Consumer Financial Protection Bureau as the result. Around 70,000 complaints were filed in 2021 on the matter and the main reason was consumers being asked to pay off debts they didn't due [0] Consumer Financial Protection Bureau . . Accessed Apr 7, 2022.
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Request a from the collector of your debt if you don't receive one within 5 business days from the first time you contact. It should include details on the amount owed, the collection company and how to challenge the debt.
Make your own notes on the debt If it's yours including details about the creditor's original identity and record of your payments.
Keep accurate records of communications with the debt collector as well as any payments previously made. You may want to use certified mail for the best evidence.
Find your debt in a simple way
Sign up with NerdWallet to see your financial breakdown and future payments all in one spot.
3. Know your rights and how to make use of them
Your ally is. This law outlines your rights as a buyer and shields you from the shady collection practices. For instance:
Communication: You can specify how and when can contact you and request that they cease communication altogether. Debt collectors are forbidden from making use of profane language or threats to commit violence.
Honesty: Debt collectors cannot lie to you about whom they're from, the much money you owe or the legal consequences for not paying the debtfor instance threat of arrest.
Challenging the debt: You have a right to challenge the debt. If you contest this debt before 30 days of first contact, the collector cannot ask for money until you have made sure the issue is resolved. After 30 days you can still contest the debt, but the collector is able to request payment as the dispute is examined.
You could be protected if the protections under the FDCPA have been violated. Your state might offer further consumer protections. Consult with the legal aid office in your local area or the department of the state attorney general.
Know your state and federal protections in the debt collection process. Your state's as well as the federal government are good resources.
Whether it's sending a letter to debt collectors to inquire about more information regarding the debt or demanding that a debt collector end contact, be aware of how to assert your rights as a consumer do not be fearful to do so.
The author's bio: Sean Pyles is the director of production and host for NerdWallet's Smart Money podcast. His writing has been featured on The New York Times, USA Today and elsewhere.
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