When I was a debt collector, I was good at locating debtors. My best trick, sending a scrap of paper to their last known address, with nothing but our phone number on it, turned out to be illegal (I didn’t know that at the time). But in any case, I enjoyed the investigative aspects of the work.
On the other hand, I didn’t enjoy many other aspects of the process. For example, I hated trying to collect from a blind 86-year-old woman living in poverty who owed thousands of dollars on a loan she had been tricked into co-signing by her granddaughter. What could I tell her? Eat less and start sending those checks?
Some debts probably shouldn’t be paid. I know this from personal experience too. Half of all my many recent medical bills have had mistakes, and none of those errors are in my favor. I will not be paying the full amounts.
Whether you think some of your debts are invalid, or you just can’t afford to pay them, or you need time, or you just want the phone calls to stop, there is help. In fact, there are a number of things you need to know, things debt collectors don’t want you to know. Here are ten of them…
1. They Can’t Call You At Odd Hours
The Fair Debt Collection Practices Act says, “a debt collector may not communicate with a consumer in connection with the collection of any debt… at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer.” Although that language is vague, the law further specifies that debt collectors are not allowed to contact you before 8 in the morning or after 9 at night.
When I was a debt collector everyone had landlines (early 90s) so we knew the time where the debtor was by the area code. But now, for example, you might move from Maine to California and take your phone with you, along with your number, including the area code. So you might get a call at 8:00 am on the east coast (where your area code originated) when it’s 5:00 am where you live now.
Just let bill collectors know what time zone you live in and they should make a note of it so they can stop calling too early or too late.
If collection agents do continue to call you at too early (or too late), or if they violate any of the provisions of the Fair Debt Collection Practices Act, you should do one or all of the following:
- File a complaint with the FTC
- File a complaint with the Consumer Financial Protection Bureau
- File a complaint with your state attorney general’s office
2. You Can Dispute Any Debt
If you think you don’t owe the debt, or don’t owe all of it, dispute it. But get the address of the collection agency so you can do it right, which means in writing. Use a sample dispute letter to help you with the wording.
Once you formally dispute a debt, all collection activities must stop — they can’t even file a lawsuit at that point. The creditor has 30 days to verify the validity of the debt. It must also be noted on your credit report that the debt is disputed, which might help you if you’re applying for a loan.
Even if the debt is partially valid (maybe you owe something, but not as much as they say), if it isn’t validated on their end it may be dropped. For example, as a collector I routinely had to close accounts as “uncollectible” when I couldn’t get enough verification from our clients (the original creditors).
Correcting errors is nice, but in addition, if a creditor is just too lazy or inefficient to get around to verifying the debt, you may not have to pay any of it.
3. You Can Ask For A Payment Plan
As collectors, we always got a pat on the back from the boss for payment in full on an account, and of course that’s what we went for. But however the money was collected, the agency still got its 35%, so we were happy to take payments if that was the best a debtor could do.
Be sure you can make the payments you agree to, and ask the collection agency to send you the details of agreement by mail or email.
4. You Can Ask For A Settlement
We usually had to get settlements approved by our clients, but this too, was routine. For example, I took $3,000 as payment in full on a $7,000 debt for a car loan. The car had been repossessed, and the balance still owed after it was auctioned accumulated interest for over six years. Our client was happy to get anything, and so essentially forgave all of the interest.
The key to getting a settlement approved is to have a good story. If you’re considering filing for bankruptcy, for example, make that clear. Nothing makes a creditor more likely to settle than the prospect of otherwise getting nothing.
5. You Can’t Be Jailed For Debt – In Theory
Debtors prisons were abolished in 1833, so you generally don’t have to worry about going to jail for debts. The exception is if you’re sued over the debt and you don’t pay any associated fines and court fees (technically you then go to jail for contempt of court). This is a way to jail people for debt that has recently gained popularity with creditors.
The problem here is that you might be sued without knowing it. For example, if you’ve moved without properly changing your address, the court summons may be delivered to your last known address (this is acceptable “service” in some states), unknown to you. Then, when you don’t show up in court, a default judgement is entered. When you don’t pay any associated court fees or fines, a warrant for your arrest may be issued.
So, if you move, be sure to file a change-of-address with the post office, and don’t ignore a court summons just because you can’t pay the debt. You need to know where you’re at legally.
Since (theoretically anyhow), you can’t go to jail for debt, the law also says that debt collectors can’t threaten you with jail time. They also can’t make general threats or use abusive language. File a formal complaint if they do either.
6. They Can’t Tell People About Your Debt
Debt collectors can contact people in order to locate you, but cannot tell them that you owe money. They also cannot contact you about the debt using postcards, or envelopes that indicate they are related to debt collection, since those too would infringe on your privacy.
Again, if they violate these rules, file a complaint.
7. They Can’t Keep Contacting You Once You Have An Attorney
If you hire an attorney to help you with your debt matters, and collectors know this, they must deal directly with your attorney (unless he or she doesn’t respond within a reasonable time). If you do get a collection call, refer the caller to your attorney and make it clear that you are not to be called again.
8. You Can Send A Letter To Stop Them
If you send a letter to the collection agency telling them that you want to stop contacting you, they have to stop, with two exceptions:
- To notify you that they will no longer contact you
- To tell you that they’re taking specific action
An example of the latter is if they contact you one more time to say they’re suing you, assuming they’ve decided to do that (it’s illegal for them to threaten legal action if none is planned).
In other words, you still owe the debt, but your letter will at least stop the calls and notices.
9. They Can’t Harass You
The law says, “A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.” Some specifics are given. For example, they can’t advertise you debt for sale using your name in order to embarrass you. In general, they have to be polite.
If you are being harassed, you should immediately file a complaint.
10. You May Not Have To Pay Old Debts
Every state has laws about how long unpaid debts remain collectible. Check a state-by-state list of the statute of limitations for debts to see which laws apply to your debts. Often there are different statutes of limitations for different types of debt.
If the debt is past the statute of limitations, and you haven’t made any payments in all those years, you don’t have to pay. They can ask for the money, but they’re barred from suing you.
That second part, the lack of payments, is important. As explained by Nolo.com, if you make a payment on “time-barred” debts you may revive them, making it possible for creditors to sue you.
You also might restart the statute of limitations if you make a payment prior to it expiring.
For example, as a collector (on instructions from my boss) I once convinced a woman to send a $20 payment to show her “good faith” intention to pay a debt of thousands of dollars. We later negotiated a settlement for about half of what she owed.
In reality she was a month away from the statute of limitations expiration, at which point we could not collect the debt. It wasn’t even enough time to sue and get a court date. In other words, if she had simply waited, she would have been free to never pay — except she restarted the clock with that little payment.
You can bet that debt collectors don’t want you to know about that aspect of the law.
