You never want to have a collection show up on your credit report. Having this type of information on your report could impact your credit score, making it difficult for you to obtain new loans or lines of credit.
If one of your credit accounts becomes delinquent and winds up with a collection agency, you could start to receive intimidating phone calls from debt collectors. While you may be afraid to pick up the phone, ignoring the calls probably won’t stop the debt collector from calling or trying to collect the debt.
Remember: if debt collectors start calling, you do have the ability to stop them thanks to the Fair Debt Collection Practices Act. This legislation also makes it illegal for debt collectors to use abusive, unfair, or deceptive practices to collect from you.
What are my options if a debt collector contacts me?
The Federal Trade Commission (FTC), which enforces the debt collection legislation, advises that if a debt collector calls you, you should consider talking to the collector at least once—even if you can’t pay the debt off right away or believe it doesn’t belong to you.
After a debt collector contacts you for the first time, the collector is required to send you a written “validation notice” that discloses the name of the creditor to whom you are in debt and what protocol you should follow if you don’t think you owe the money. The debt collector must send you this information within five days of your initial communication.
If you don’t want to receive further communication from the debt collector, you must send a letter requesting that the contact stop.
“If you write them a letter and say, ‘Do not call me at work, do not call me at home, if you need to contact me, please send me a letter,’ they have to abide by that,” says Howard Dvorkin, founder of Consolidated Credit Counseling Services.
The Consumer Financial Protection Bureau (CFPB) has sample letters consumers can use to help draft written letters of their own, with templates for different circumstances, such as stopping the debt collector from future contact altogether or specifying under what terms the debt collector can contact you.
The CFPB urges consumers to respond to debt collectors in writing as soon as possible because, in some cases, you’ll only have 30 days after you are first contacted to request certain information.
For example, if you don’t think you owe the debt and have been contacted in error, you can send the collector a letter explaining the situation. That letter must be sent within 30 days of getting your validation notice. If you are disputing the collection, the CFPB also suggests mailing copies of any information that proves your case.
As with any important correspondence, send your letter and any additional information by certified mail with a return receipt. That way, you’ll have documentation showing the debt collector received your request. Remember to also make copies of the letter for your own records.
What happens after I send my letter to the debt collector?
Once the debt collector has received your letter, the collector can only initiate contact to inform you there will be no future contact or to tell you the creditor plans to take future action, such as filing a lawsuit.
If you’ve disputed the debt within the appropriate timeframe, the debt collector can only resume contacting you after your dispute has been investigated and the collector has verified the debt for you in writing.
While your letter can stop a debt collector from calling you, it will not absolve you of the debt, and the debt collector or creditor could still sue you in order to collect the money you owe. Ending communication with a debt collector will also not stop the collection from being reported to the credit reporting agencies and appearing on your credit report.
In general, an account in collections will begin to be reported 180 days from the start of the delinquency that led to the collection. It will remain on your credit report for seven years, and it could have a significant negative impact on your credit score.
“At the end of the day, pay something,” Dvorkin suggests, even if you can only make a partial payment towards the debt in collections.
“Don’t worry about a collector who says, ‘We won’t take your money because we want full payment.’ If you are going to present them with a check, they are going to cash it.”
What can I do if a debt collector violates my request?
According to the CFPB, if a debt collector keeps contacting you after having received your written notice, the collector could be breaking the law. The FTC recommends reporting debt collection issues not only to its office but also to the CFPB and your state’s attorney general’s office.
Ilyce Glink is the author of over a dozen books, including the bestselling 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In! Her nationally syndicated column, “Real Estate Matters,” appears in newspapers from coast-to-coast, and her Expert Real Estate Tips YouTube channel has nearly 4 million views. She is the managing editor of the Equifax Finance Blog, publisher of ThinkGlink.com, and owner of digital communications agency Think Glink Media. In addition to her WSB radio show and WGN radio contributions, she is also a frequent guest on National Public Radio. Ilyce is a frequent contributor to Yahoo and CBS News.
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