How to Deal With Debt Collectors (When You Just Can’t Pay)

If you have a debt that’s gone unpaid for awhile, the original creditor might sell that debt to a collection agency. While your creditors might have had better things to do than bother you about your debt, debt collectors exist to chase down people who owe.

Debt collectors can be pretty persistent. After all, it’s their job to get you to pay up. If a debt collector has you on speed dial, knowing your rights and your options can help you cope.

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Know Your Rights

A debt collector might think it’s within their rights to make your life hell, but you have the federal law on your side. Specifically, the Fair Debt Collection Practices Act (FDCPA) protects you against abusive debt collectors. 

Notably, the FDCPA limits when and how a debt collector contacts you. Under FDCPA, a debt collector can’t call you up before 8 a.m. or after 9 p.m. unless you tell them it’s okay to do so.

Similarly, a debt collector can’t try to contact you at work unless you tell them that’s fine. 

The law prevents collectors from telling others about your debt, except for your spouse and your attorney (if you have one and have given the okay). That means a debt collector can’t threaten to tell your boss about your debt or threaten to tell your friends and neighbors. 

Thanks to FDCPA, a debt collector can’t curse at you or threaten violence against you, eit. Whenever they communicate with you, they need to identify themselves. The FDCPA also gives you the power to cease communication with a debt collector. If you don’t want the collector to contact you, you can tell them, and they’re legally obligated to stop.

Send them a cease and desist letter asking them to stop calling or contacting you. Use certified mail and request a return receipt so you can verify the agency got your letter. After getting the request, the debt collector can send you a confirmation.

After that, a collector can contact you only if it wants to take legal action against you. 

If a debt collector harasses you, threatens you, or continues to contact you after you’ve told them to stop, you can report them to your state attorney general’s office, the Federal Trade Commission and the Consumer Financial Protection Bureau.

What is Regulation F and Why is it Important?

Regulation F of the FDCPA controls how debt collectors can contact you and how frequently. The regulation was updated at the end of 2021, in an attempt to modernize the rule and bring it into the 21st century.

A notable update to the regulation is that debt collectors can now contact you via email, text message or social media. There are some caveats to how they contact you, though. 

For example, a debt collector can’t post on your public social media page when attempting to contact you. They need to send you a direct message. And, the message needs to give you the option of opting out of future communications. 

Regulation F had already limited the number of times a debt collector could call you daily. Under the rule, a collector can only call you seven times over seven days. The update counts calls that go to voicemail as phone calls.

Your debt has a shelf life, and once it reaches a certain age, it becomes time-barred. A creditor or collector can’t sue you for a time-barred debt, but some collectors will try to get you to pay up anyway.

You still technically owe the debt at this point, but making any sort of payment to it can reset the statute of limitations. If you have time-barred debts, you might be better off ignoring them or consulting with an attorney to learn more about your options. 

The statute of limitations on debt varies from state to state. Your state’s attorney general’s office can tell you what the rule is where you live. 

Your state might also forbid collectors from pursuing time-barred debts. If that’s the case in your state, you can report any collectors who continue to contact you after the statute of limitations has passed. 

Can a Debt Collector Sue You?

A debt collector can sue you if it hasn’t passed the statute of limitations and is a legitimate debt. When a debt collector first tries to collect the debt, they need to send you a validation letter that lists the original creditor and the amount of the debt. The letter should also tell you what you can do if you don’t think the debt is yours.

If the debt is yours and is still valid, and you don’t make arrangements to pay it off, the debt collector can start the court process. The first sign of a lawsuit from a debt collector is usually a letter telling you to appear in court. Though you cannot go to jail for failing to repay a loan, you could end up in court.

Although getting a court summons can be frightening, the best thing to do is not ignore it. If you try to pretend the lawsuit doesn’t exist and don’t show up in court, the judge is likely to rule in favor of the collector. 

When that happens, a default judgment gets placed on you. If you own property, the debt collector can place a lien on it. The court can also order wage garnishment.

You can challenge the lawsuit, particularly if you know the debt isn’t yours or if you’ve already paid it. You can also challenge the lawsuit if the debt is past the statute of limitations or if the collector is suing for the wrong amount. 

You can hire an attorney to represent you in court and to help you gather the documents you need to support your case. If you can’t afford an attorney, a legal aid program might be able to help you for free.

How to Stop a Debt Collector from Calling Work (or Home)

Debt collection calls can be annoying, even if the debt collector follows the law and doesn’t resort to harassing or abusing you. 

You have the right to enjoy peace and quiet at home and not be disturbed at work. Fortunately, the law is on your side, for the most part.

While debt collectors have the right to contact you a certain number of times per week and can now contact you via electronic means and over the phone, you always have the option of opting out and telling the debt collector to cease communication with you. 

Under the law, debt collectors can’t call you at work unless you grant them explicit permission. If a collector calls you at work and you can’t receive personal calls there, tell them that. If they continue to call you, you can file a complaint with the Consumer Financial Protection Board (CFPB).

You can also ask a debt collector to stop calling you at home. The CFPB has letter templates you can use to tell the collector you don’t want them to call you. You can also send a letter directing the collector to your lawyer or to describe how you want them to contact you.

Be clear in your communications with the debt collector, and include the time and date of the most recent call and the debt’s account number. Also, provide the phone number and address you want them to stop contacting.

If you dispute the debt, mention that in the letter and request a debt validation letter. 

Note that if you legitimately owe the debt, telling the collector not to contact you doesn’t erase it or release you from the debt. The debt will still show up on your credit report, and you’ll still technically owe it.

What is a Debt Validation Letter?

While there are plenty of legitimate debt collectors, there are also plenty of scammers out there who try to chase down debts people don’t actually owe.

In some cases, wires get crossed and an old debt you that paid off or that’s time-barred ends up on a collector’s list. If you get a notice or phone call from a debt collector that seems fishy or that’s for a debt you’re not sure you’re responsible for, you have the right to request a debt validation letter

A debt validation letter needs to contain specific information.

READ MORE: How to write a debt validation letter

What if the Debt Collection Agency Refuses to Comply?

Consumer protection law protects you from unscrupulous debt collection companies and scammers. If you ask a debt collector to stop contacting you and they keep it up, you should file a complaint with the CFPB, the Federal Trade Commission (FTC) and your state’s attorney general’s office.

Keeping detailed records of your communications with a debt collection agency is a good idea. While you may need two-party consent to record phone calls, based on your state, you don’t need the agency’s consent to record the time and date of any calls you receive from the agency. 

You can use phone records to back up your claims. So, if you send a letter telling the agency not to contact you, then it starts calling you again a week later, you have the records to support your case. 

You can also take notes regarding what the collector said during the call. If a collector emails or DMs you, keep a copy of the message.

Also, keep copies of any letters you send to a collection agency and any complaints you file with an attorney general’s office, the CFPB or the FTC. 

If a collection agency continues to bother you and continues to violate consumer protection laws, you can sue them.

Check Your Credit Report

Check your credit reports if you get a call from a debt collector and aren’t completely certain the debt is legitimate. Each of the three major credit bureaus — Experian, Equifax and TransUnion — offers one free copy of your annual credit report at Review those to ensure the debt is legitimate and that there are no errors on your credit report. Contact one of the three credit bureaus immediately if you find a mistake.

Watch Out for Debt Collection Scams

We live in the age of scams, and plenty of people out there will try to intimidate you into paying a debt you don’t owe, all in the effort to make a buck. 

Fake debt collectors will do whatever they can to try and scare you into paying debt, even if it’s not a debt you owe or is a debt you paid long ago.

How do scammers get your details? Some fake collection agencies by lists of debtors’ names and accounts on the black market. They then contact the people on the lists, demanding payment. 

Since the lists are purchased illegally, the phony collectors usually don’t have the details about the original account owner or the original creditors. The scammer has no legal right to the debt, they’re just trying to make you think they do. 

You can spot a phony debt collector and a debt collection scam in a few ways. 

Consider it a big, bright red flag if the debt collector asks for personal information, such as your social security number or bank account information. Another red flag is if they threaten you with jail time. 

Your best option, in that case, is to hang up. Record the time and date of the call and make note of the number they called from, if possible. 

Another way to filter out legitimate lenders and debt collectors from scammers is to ask the person on the phone for their contact information, including a phone number and company name. Tell them you’ll call back, then do your research.

If the debt collector refuses to give you a name, that’s a red flag. 

When you get off the phone with the debt collector, pull up your credit file and look to see if the debt’s there. You can also contact the original creditor to see if it’s actually sold the debt. 

You can also submit a complaint to your state’s attorney general’s office and the FTC. The more scammers get reported, the better off everyone will be.

Check out this video to learn more about debt collection scams:

Other Options for Debt Relief

If you’re struggling to repay your debts, you have options.

File for Chapter 7 Bankruptcy

People often think of bankruptcy as a last resort, but if your debts are overwhelming and you can’t pay them back, it can be a way to press reset and get a new lease on your financial life.

Chapter 7 bankruptcy wipes out most types of unsecured debt, such as credit card debt and personal loans. To qualify for Chapter 7, you need to pass a means test, which examines your total debt, your assets and your income. Usually, your annual income needs to be less than half of your total debt.

The bankruptcy will stay on your credit report for ten years, making it challenging to get a new loan or credit during that time. But for many people who file bankruptcy, the option of wiping out unsecured debt is worth the hit their credit score takes.

Be sure to talk to an attorney if you’re considering filing any type of bankruptcy.

Try DIY Debt Settlement

Sometimes, debt collectors and creditors just want to get paid. They might be willing to work with you and negotiate a settlement. In that case, you can pay less than the total amount owed. 

A DIY debt settlement is ideal for people who are good at bargaining. If you’re not up to haggling, this probably wouldn’t be your best option. Instead, consider hiring a debt settlement or debt consolidation company to negotiate on your behalf.

Before you try to settle your debt, write down everything you owe and the total amount of money you owe. This includes credit card bills, student loans, medical bills, and all of your other types of debt. Add up the full amount, then look at how much you’re supposed to pay toward debt monthly.

Use a budgeting app to crunch the numbers and get an idea of what kind of monthly payment you can afford based on your income and other expenses. Then, contact your creditors and ask them to work with you. See if they’ll negotiate a repayment plan or if they are willing to take a lump sum payment.

If you’d rather leave it up to a professional, click here to learn more.

Make Sure You’re Prepared

When you start the negotiation process, offer 10% to 40% of what you can actually afford to pay. You might not get what you want if you lead with your maximum.

Also, know when to walk away from the negotiation. If a creditor won’t budge or won’t go below a certain amount, step away. Negotiating an amount that’s above what you can afford doesn’t help you.

Call the Creditor or Agency Directly, or Just Answer Their Call

For best results, reach out to the creditor or debt collector directly. Record the time and dates of your calls and the names of the people you speak with. List and order the names if you talk to multiple people on the same call. 

Remember that the process could take several days and a few calls. Also, verify that the person accepting the settlement offer has the authority to do so.

If the Debt Collector Accepts Your Settlement Offer

Get everything in writing and don’t send any money or provide your bank information until you do so. Also, don’t send a blank check to the creditor. 

There is a chance that you’re talking to an unscrupulous company. If they get your bank details or a blank check, they can basically go into your account and drain it. 

Double-check the agency by looking to see if there are complaints against it with the CFPB or the FTC. A quick online search can tell you a lot.

Send a letter that details the agreement, the name of the person you spoke with and the date to the agency or creditor. Send it certified mail and keep your receipts. The creditor should send you a copy of the agreement that details the settlement terms.

Check your credit reports with the three credit bureaus after you’ve repaid the debt to ensure it’s been marked as paid as agreed or settled.

Try a Debt Management Plan

A debt management plan (DMP) is a structured debt repayment process. It’s not the same as settling your debt or consolidating your loans. Instead, when you sign up for a DMP, you work with a nonprofit credit counseling agency that negotiates with your creditors for you. 

The first step toward a DMP is to set up a consultation with a credit counselor.  They’ll look at your situation and work with your creditors to create a payoff plan. Usually, under a DMP, you end up paying off your debt in three to five years. 

The creditors agree to give you a lower interest rate, making the debt more affordable. Instead of paying the creditors directly, you pay the counseling agency. The agency then forwards the appropriate amount to each of your creditors.

When the debt is paid, it should show up in your credit report as paid in full.

Debt Consolidation Loan

Many financial institutions offer debt consolidation loans, which are larger loans that allow you to pay off your smaller loans and make one fixed monthly payment on the larger loan. This can be an affordable way to get your debts under control. There are even debt consolidation loan options for borrowers with bad credit.

Payday Alternative Loan

Another way to get debt relief is to trade one loan for another. If you have payday loans or other types of high-interest loans, a payday alternative loan (PAL) can be a more affordable option.

PALs are available through credit unions and have a maximum interest rate of 28%. The loan amount is usually small, but the repayment term is longer than for a payday loan, which can give you more breathing room.

The Bottom Line

Debt collectors can be annoying and in some cases, frightening. But consumer protection laws are on your side. You can take action if a collector is harassing you to get them to stop.

And, if you have debt you’re struggling to repay, you have plenty of options for getting help, from consolidating the debt to filing for bankruptcy.


What Happens If You Ignore a Debt Collector?

If you ignore a debt collector, they can sue you. If you refuse to appear in court, the judge can rule in the debt collector’s favor and garnish your wages.

What is Unsecured Debt?

Unsecured debt is debt that’s not backed up by collateral. Examples include personal loans and credit card debt.

Will Debt Collection Hurt My Credit Score?

Generally, when a debt moves into collections, the damage to your credit score has already been done. Creditors typically sell debts that are more than 120 days past due. By that point, the debt will have been on your credit report at each credit reporting agency, and your score will have already taken a hit.

How Can I Get Out of Paying Debt Collectors?

If a debt is in collections and is past the statute of limitations, you can ignore it. The debt will remain on your credit report as past due but will eventually fall off.

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