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How to Handle Debt Collectors in 3 Easy Steps
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How to Deal with Debt Collectors in 3 Easy Steps
Don't rush into paying. Validate your debt and know your rights.
By Sean Pyles Senior Writer | Personal finances and credit, and personal finance Sean Pyles leads podcasting at NerdWallet as the host and producer of NerdWallet's "Smart Money" podcast. On "Smart Money," Sean talks with Nerds from NerdWallet's NerdWallet Content team to answer listeners' questions about personal finance. With a focus on thoughtful and practical money tips, Sean provides real-world guidance to help people improve the financial situation of their lives. Beyond answering listeners' money concerns 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 gap in wealth, how to start investing and the background of college loans.
Before Sean took over podcasting at NerdWallet the company, he also wrote about topics concerning consumer debt. His writings have appeared on USA Today, The New York Times and elsewhere. When when he's not writing about personal finance, Sean can be found digging around his garden, going for runs and taking his dog for long walks. Sean is located at Ocean Shores, Washington.
Updated Mar 17, 2023, 5:00 PM PDT
Written by Kathy Hinson Lead Assigning Editor Personal finance, credit scoring, debt and money management Kathy Hinson leads the Core Personal Finance team at NerdWallet. Previously, she spent 18 years working at The Oregonian in Portland in roles including copy desk chief and team leader for design and editing. Her previous 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 from Iowa's University of Iowa.
A majority of the products we feature come from our partners, who pay us. This impacts the types of products we feature and the location and manner in which the product appears on the page. However, this does not affect our assessments. Our opinions are our own. Here is a list of and .
The debt collection agency is trying to hound you to pay an outstanding consumer debt. These tactics can be irritating at best -- and criminal, or even illegal, at worst.
It's crucial to know how to deal with debt collectors --including understanding -- so you can assert your rights and decide on the most appropriate method of handling them . Before you make any statements or make any payment be sure to follow these steps:
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Create an account to link your cards, loans and accounts to manage them all from one place.
3 steps for dealing with the debt collector
1. Don't give in to pressure to pay at first contact
As you wouldn't dive in to a deal without understanding the terms of the contract, don't be rushed to make a payment when a debt collector contacts you. It is important to take the time to analyze your .
"A lot people are embarrassed about being in debt and that's exactly what debt collectors prey on," says Ramon Khan who was a debt collector from Texas who is now working in the field of online marketing.
"They create this urgency and prey on those pain points to get you to pay something. In the final analysis, even if are owed $50,000 or $100,000, they really don't want to pay it all. If they can convince you to pay a portion of the amount, it works toward their limit of."
Don't make a payment, don't pledge to pay and don't give any payment information the collector could utilize in the future. Request information about the debt, and then say that you'll contact them to discuss the issue in the future.
Making one paymentas little as $5 or $10 -- is an acknowledgement of the debt, and could have severe repercussions. If the debt is past the date, for instance the payment could reset that clock and could lead to a lawsuit or .
Readers also ask
Can you go to jail for not repaying the payday loan?
Refusal to repay a loan is not a crime offense. It is actually illegal to be the duty of the lender to threaten a borrower with arrest or imprisonment. Nonetheless certain payday lenders have had success using bad check laws to file criminal complaints against borrowers, with judges mistakenly stamping the complaints.
How do I dispute the loan?
There are two options you can utilize to contest the amount of debt you owe first, the debt collector must provide you with a letter outlining the debt and your rights in disputing the debt; and secondly, you can request a letter of verification. You can make a written request to get more information and temporarily halt collection efforts.
What happens if we don't cooperate with a debt collector?
Ignoring a over a delinquent debt could put your salary, bank account or property at risk. Additionally, you may lose the ability to dispute the debt.
2. Find the information you need
When the original creditor sells a debt to a third party -- which might go on to resell the debt and on and so forth recording often falls off the radar. Many sold debts are erroneous regarding the amount due or who is owed it.
Debt collection practices are one of the largest sources of complaints from consumers with the Consumer Financial Protection Bureau as the result. About 70,000 complaints were filed in 2021 on the matter; the biggest reason was consumers being asked to settle debts they did not have to pay [0] Consumer Financial Protection Bureau . . Accessed April 7, 2022.
.
Ask for a letter from the debt collector if you don't receive one within five business days from the first time you contact. It should contain details about the amount owed, the collection company and the best way to contest the debt.
Gather your own records on the debt, if it's yours, including the information about the original creditor as well as your payment history.
Keep accurate records of communications with the debt collector, as well as any prior payments. You might want to consider using certified mail to ensure the highest quality of documentation.
Make sure you track your debt in an easy way
Sign up to NerdWallet to view your current payment schedule and breakdown of your debt all in one spot.
(image: https://i.ytimg.com/vi/pVCbIubacL0/hq720.jpg)3. Know your rights and know how to use them
Your ally is. This law provides you with rights as a buyer and shields you from predatory collection tactics. For instance:
Communication: You are able to specify how and when can contact you and request that they cease communication altogether. Debt collectors are not allowed to using profane language or threatening violence.
Honesty: Debt collectors are not able to mislead you about who they are, the much money you owe or the legal consequences of not paying the debtfor instance threats of arrest.
The debt is disputed You are entitled to dispute the debt. If you dispute your debt in the first 30 days of first contact, the collector will not be able to request payment until the dispute has been settled. After 30 days, you may continue to challenge the debt but the collector can seek payment while the dispute is being looked into.
You may be able to claim if your rights under the FDCPA have been violated. Your state may offer additional consumer protections. Consult with the legal aid office in your local area or the State Attorney General's Office.
Understand your federal and state safeguards during the collection process. Your state's as well as the federal government can be a good resource.
It's a matter of writing a letter to debt collectors to request more information on the debt or demanding that a debt collector cease contact, you should know how to assert your rights as a consumer and don't be afraid to assert them.
The author's bio: Sean Pyles is the host and executive producer on the NerdWallet's Smart Money podcast. His work has appeared in The New York Times, USA Today and elsewhere.
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