Getting behind on bills is a scary position to be in. Dealing with debt collectors is never fun, but the good news is that even if you owe money to a creditor, you still have rights.
The Fair Debt Collection Practice Act (FDCPA)
It doesn’t matter if the collector works for a collection agency, a corporate collections department, a third party, or is an attorney. The Fair Debt Collection Practice Act covers personal debt such as medical bills, car loans, mortgages, and money owed on credit cards—but it doesn’t cover business debts.
When a debt collector starts the collections process, they need to know where you live, your phone number, and where you work, for instance. They might call a relative or a business, like a utility company, to get the scoop on you. An important rule that’s often violated is that debt collectors may not discuss your debt with anyone other than you, your spouse, or your attorney.
You may be surprised to know that a debt collector can’t just ring you up any time they feel like it. They can’t call you before 8:00 am or after 9:00 pm in your time zone. They can’t call you at work if you notify them that you’re not allowed to take calls there. And if you have an attorney who is representing you about your debt, a collector must speak to them, not to you.
How to Dispute a Debt with a Debt Collector
After a debt collector makes initial contact with you, they have to send you a written “validation notice” about your debt within five days. The notice should include the name of the creditor and the amount they believe you owe. If you don’t agree that you owe some or all of the debt, take these four steps to dispute it:
- Tell the collector over the phone that you believe there’s an error and ask them to stop contacting you.
- Send a letter to the collector, within 30 days after you receive their validation notice, stating that you believe they’re mistaken and to stop contacting you.
- Make a copy of the letter for your files.
- Send the original letter by certified mail and pay for a return receipt so you have proof that it was received.
After they receive your dispute letter, a collector can only contact you to confirm that they won’t be contacting you anymore, or to inform you about a legal action that they’re going to take.
If the debt collector sends you back a written verification of the debt, such as a copy of a credit card bill that you haven’t paid or a promissory note that you signed, then the process starts over and they can contact you again.
Debt collectors are prohibited from harassing you or lying to you.
The following are some examples of what’s not allowed:
- Calling you repeatedly
- Threatening to harm you or using profane language
- Publishing your name as someone who hasn’t paid a debt (except to a credit reporting agency)
- Misrepresenting their identity, company name, or the amount you owe
- Telling you that legal action will be taken against you if they don’t intend to do it or if doing so would be illegal
- Sending you anything that looks like an official government document if it isn’t
- Depositing a post-dated check early
- Mailing you a collection notice by postcard
You can report a debt collector who violates The Fair Debt Collection Practice Act to your state Attorney General’s office and to the Federal Trade Commission. You can also sue a debt collector within one year of a violation. If you win, they’re liable for damages that you can prove, such as lost wages. You could also be reimbursed for your attorney’s fees and court costs. However, winning a case against a collector who violated the law doesn’t erase your debt if you still owe it.
I certainly recommend that you pay all your bills on time. But if you can’t, try to get help before the collectors come calling by communicating directly and honestly with your creditors. They’re more likely to give you favorable treatment when you take the initiative to let them know you’re having a temporary financial setback but that you still plan to pay your debt.