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

If you have a debt that’s gone unpaid for a while, 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 is harassing you, knowing your rights and your options can help you cope.

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Key Points

  • Don’t panic. Tell the debt collector to mail you a debt validation letter
  • While you wait for the letter, check your credit reports and learn your rights
  • You can mail the debt collector and tell them to stop calling (but this must be done in writing. Telling them by phone won’t work)
  • Don’t agree to make any payments until you’ve confirmed that the debt is yours and the debt collector is legitimate

Request a Debt Validation Letter

When the debt collector calls, immediately request a debt validation letter.

This is a letter sent to you by the debt collector to “prove” that you owe them the money they say you owe. If you’ve had accounts sent to collections before, you’ve probably received these in the mail.

If you receive a phone call from someone claiming to be a debt collector but haven’t gotten a debt validation letter, request one (in writing.) Every debt collector is required by federal law to send a validation letter within five days of their first contact with you as a key first step in their collection efforts.

READ MORE: How to request a debt validation letter

Check Your Credit Report

While waiting for the letter, carefully review your credit reports, particularly if you aren’t entirely 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 Pull copies of all three and review every item to ensure the debt is legitimate.

Pay particular attention to unsecured debts. This includes credit card bills, student loans, medical bills and personal loans. Secured debts are unlikely to be sent to collections.

Contact one of the three credit bureaus immediately if you find a mistake.

Know Your Rights

As soon as you hear from a debt collector, it’s important that you learn your rights. 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 permit them.

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.

The Debt Collector Can 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 to 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.

Pro tip: 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 you fail to appear in court, the judge will likely rule in the collector’s favor. 

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 for the following reasons:

  • You know the debt isn’t yours
  • You’ve repaid it
  • The statute of limitations has expired
  • The collector is suing for the wrong amount

Pro tip: 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.

Debt collectors have the right to contact you a certain number of times per week and can also contact you via electronic means and over the phone.

However, you can opt out by sending the debt collector a written request telling them they must stop contacting you. The Consumer Financial Protectin Bureau (CFPB) provides letter templates 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.

READ MORE: Will this 11-word phrase stop debt collectors from calling?

Pro tip: 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. Pay extra for delivery confirmation so that you have evidence that the letter was received.

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 appear on your credit report, and you’ll still technically owe it.

Pro tip: Before you tell the debt collector to stop calling, it’s best to hear them out. Just because they can’t call you doesn’t mean they can’t take you to court.

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 depending 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. 

Pro tip: 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. 

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. 

You can take legal action if a collection agency continues to bother you and violate consumer protection laws.

Watch Out for Debt Collection Scams

We live in the age of scams, and plenty of people 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. 

Pro tip: 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. 

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

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

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.

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.

You can agree on a lump-sum payment or offer a payment plan. 

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.

Professional Debt Settlement

Talk with a debt settlement company if you aren’t a good negotiator. They will negotiate with your creditors and set up a repayment plan. You’ll pay a fee ranging from 15% to 27% of your total enrolled debt, but because you’re settling debts for a percentage of what you actually owe, you still end up paying less than the full amount of the debt.

READ MORE: Best debt settlement companies

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. 

Pro tip: Credit counselors work primarily with credit card debt, so this likely won’t be the best method if your debt involves medical bills or student loans.

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

Payday Alternative Loans (PALs) can be a more affordable and longer-term alternative to expensive payday loans. PALs are available through credit unions and have a maximum interest rate of 28%.

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’re struggling to repay debt, 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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