How to deal with Collection Agencies, stop the
annoying calls and get deletions
by rebuildcreditscores
annoying calls and get deletions
by rebuildcreditscores
| Copyright RebuildCreditScores 2008. All Rights Reserved |
Technically the FDCPA does not apply to original creditors such as banks, department stores, and
other lenders who collect their own debts; however, no reputable lender is permitted to use such
practices. Below are tips to deal with collection agencies:
Know your rights
A collection agency cannot harass or humiliate debtors, talk to your relatives, employers, co-
workers or neighbors about your debt. It is illegal for debt collectors to threaten violence or harm to
you. They are not supposed to use obscene language or the telephone to hound you. Under no
circumstance can a debt collector threaten arrest. They cannot seize your property or garnish your
wages unless they file a lawsuit.
Respond promptly to collection agencies
Do not avoid calls and correspondence from collection agencies. Ignoring phone calls and
correspondence may result in a lawsuit being filed against you. Your first and last telephone call
should include the following:
Stop collection agencies from calling you with a simple written letter requesting no further contact
over the telephone. Make sure you send the letter via US Certified Mail with a Return Receipt as
your proof. Be aware that original creditors are not covered under the FDCPA, only collection
agencies; however, the Federal Trade Commission can file a lawsuit against creditors if they
partake in “unfair and deceptive practices.”
If you must file a suit against a collection agency the maximum fine under FDCPA is $1000.00. You
can file for damages related to “emotional distress” and are entitled to “attorney’s fees” if you retain
private counsel.
Familiarize yourself with the statutes
Do not be intimidated when dealing with collection agencies. You have rights under the law so be
prepared to use them if necessary. View the statutes: FDCPA. Pay special attention to Title VIII -
DEBT COLLECTION PRACTICES [Fair Debt Collection Practices Act] Section 805.
Written communication only
Only communicate with collection agencies via U.S. Mail. If you call a collection agency and dial *67
to block caller id you may be wasting your time because commercial (800) numbers utilize ANI
(Automatic Number Identification) which overrides the *67 Block. If you must call, use a pay phone.
Create a paper trail
Detail your correspondence with the collection agency. Start by creating file with the name and
address of the collection agency, a contact person and telephone number. Keep all
correspondence you send or receive along with the envelopes. All correspondence you send
should be sent certified, return receipt and keep the green cards the post office mails back to you.
Never disclose your financial information
When paying a debt with a collection agency make sure you do not use a personal check, debit
card or credit card. Use only money orders or cashier's checks, preferably not from your banking
institution. Collection agencies have been known to put unauthorized charges on your debit or
credit card and also put through ACH withdrawals from your checking account. Keep your financial
information private.
Review the amount requested by the collection agency
Most often, when a debt reaches a collection agency, the original creditor has already written the
amount owed off as a “bad debt”. The collection agency purchases that debt for pennies on the
dollar. Additionally, they tack on fees, costs and interests supposedly associated with collecting the
debt. The FDCPA prohibits a debt collector from charging any fees or charges which are not
specifically permitted by the laws of your state, or contained in the terms of your original agreement
with the creditor. These debts can be settled for pennies on the dollar, especially if the collection is
older.
The debt may be Uncollectible
Check your State's statute of limitations as the debt may be uncollectible. Your State’s statute of
limitations governs the amount of time a creditor or collection agency can sue you for a debt. After
the statute of limitations has run, the original creditor or the collection agency cannot sue you for
the debt. The debt becomes uncollectible. Be careful with old debt as an expired statute of
limitations in some states can be restarted by making a payment on an old debt or even
acknowledging you owe the debt. This does not mean a creditor or collector is prohibited from
attempting to collect the debt. It just means you cannot be sued or taken to court after the statute of
limitations has passed.
If you do decide to settle an old debt proceed with caution and try to settle the debt with the original
creditor in exchange for the debt reported "paid as agreed". Having the debt reported as "settled"
can hurt your credit score. If settling the account with the collection agency aim for a full "deletion"
of the account in exchange for payment. In all of your negotiations, never acknowledge that the
debt is yours.
See Statute of Limitations
Watch out for Zombie Debt
Zombie debt may include past debts that you owe, discharged debt, debt included in bankruptcy,
debt you may have never owed and even debts incurred due to identity theft. Zombie debt involves
collection agencies purchasing debts for pennies on the dollar that original creditors have long
since written off as bad debt. Watch a brief video from ABCNews regarding zombie debt. Find out
how to handle Zombie Debt
Deletions
If you pay a collection or settle a debt make sure you obtain a “deletion” and not a “paid collection”
entry. This also applies to paying a debt directly to the creditor. Your creditors have the power to
delete entries they put on your credit file. Never let them tell you they don't. Just like they put it on,
they can take it off. Some collection agencies even charge a “deletion fee” but it is well worth the
cost. A paid collection and an unpaid collection hold the same negative weight.
Your credit score will not improve once you pay a collection, especially if that collection is recent.
When you negotiate a deletion ALWAYS get it in writing BEFORE you pay the debt. This is your
proof and once you have a deletion letter you may submit a request for the item to be removed
from your credit report directly to the credit bureaus by faxing or mailing that letter. See Deletions
for more information and sample letter.
Request debt validation
According to the FDCPA you have the right to request a collection agency validate the debt they
are trying to collect. Essentially, the collection agency must show that you owe the "original creditor"
the debt, not the "collection agency" attempting to collect the debt. How to you know the debt is
yours.
Even if it is your debt do you really owe the collection agency who purchased the bad debt? Debt
validation forces debt collectors to prove you owe them. Many collection agencies purchase bad
debts without having access to the original contract between you and the original creditor. If they
cannot provide proof such as the original contract they cannot legally make you pay the debt.
The collection agency will have to delete any negative mark they may have entered on your credit
reports immediately and cease any further collection efforts. If they continue reporting the debt they
are in violation of the FCRA, and you can sue for $1,000 in damages for any violation of the Act.
Learn more about debt validation and how it can save you from a collection agency.
other lenders who collect their own debts; however, no reputable lender is permitted to use such
practices. Below are tips to deal with collection agencies:
Know your rights
A collection agency cannot harass or humiliate debtors, talk to your relatives, employers, co-
workers or neighbors about your debt. It is illegal for debt collectors to threaten violence or harm to
you. They are not supposed to use obscene language or the telephone to hound you. Under no
circumstance can a debt collector threaten arrest. They cannot seize your property or garnish your
wages unless they file a lawsuit.
Respond promptly to collection agencies
Do not avoid calls and correspondence from collection agencies. Ignoring phone calls and
correspondence may result in a lawsuit being filed against you. Your first and last telephone call
should include the following:
- Request the name of the representative calling you, their telephone number and the address
of the collection agency.
- Request the name of the original creditor, the amount the collector claims you owe and when
the account was placed for collection.
- Do not agree to pay anything for the debt over the telephone.
- Let them know any further response will be through U.S. Mail only.
Stop collection agencies from calling you with a simple written letter requesting no further contact
over the telephone. Make sure you send the letter via US Certified Mail with a Return Receipt as
your proof. Be aware that original creditors are not covered under the FDCPA, only collection
agencies; however, the Federal Trade Commission can file a lawsuit against creditors if they
partake in “unfair and deceptive practices.”
If you must file a suit against a collection agency the maximum fine under FDCPA is $1000.00. You
can file for damages related to “emotional distress” and are entitled to “attorney’s fees” if you retain
private counsel.
Familiarize yourself with the statutes
Do not be intimidated when dealing with collection agencies. You have rights under the law so be
prepared to use them if necessary. View the statutes: FDCPA. Pay special attention to Title VIII -
DEBT COLLECTION PRACTICES [Fair Debt Collection Practices Act] Section 805.
Written communication only
Only communicate with collection agencies via U.S. Mail. If you call a collection agency and dial *67
to block caller id you may be wasting your time because commercial (800) numbers utilize ANI
(Automatic Number Identification) which overrides the *67 Block. If you must call, use a pay phone.
Create a paper trail
Detail your correspondence with the collection agency. Start by creating file with the name and
address of the collection agency, a contact person and telephone number. Keep all
correspondence you send or receive along with the envelopes. All correspondence you send
should be sent certified, return receipt and keep the green cards the post office mails back to you.
Never disclose your financial information
When paying a debt with a collection agency make sure you do not use a personal check, debit
card or credit card. Use only money orders or cashier's checks, preferably not from your banking
institution. Collection agencies have been known to put unauthorized charges on your debit or
credit card and also put through ACH withdrawals from your checking account. Keep your financial
information private.
Review the amount requested by the collection agency
Most often, when a debt reaches a collection agency, the original creditor has already written the
amount owed off as a “bad debt”. The collection agency purchases that debt for pennies on the
dollar. Additionally, they tack on fees, costs and interests supposedly associated with collecting the
debt. The FDCPA prohibits a debt collector from charging any fees or charges which are not
specifically permitted by the laws of your state, or contained in the terms of your original agreement
with the creditor. These debts can be settled for pennies on the dollar, especially if the collection is
older.
The debt may be Uncollectible
Check your State's statute of limitations as the debt may be uncollectible. Your State’s statute of
limitations governs the amount of time a creditor or collection agency can sue you for a debt. After
the statute of limitations has run, the original creditor or the collection agency cannot sue you for
the debt. The debt becomes uncollectible. Be careful with old debt as an expired statute of
limitations in some states can be restarted by making a payment on an old debt or even
acknowledging you owe the debt. This does not mean a creditor or collector is prohibited from
attempting to collect the debt. It just means you cannot be sued or taken to court after the statute of
limitations has passed.
If you do decide to settle an old debt proceed with caution and try to settle the debt with the original
creditor in exchange for the debt reported "paid as agreed". Having the debt reported as "settled"
can hurt your credit score. If settling the account with the collection agency aim for a full "deletion"
of the account in exchange for payment. In all of your negotiations, never acknowledge that the
debt is yours.
See Statute of Limitations
Watch out for Zombie Debt
Zombie debt may include past debts that you owe, discharged debt, debt included in bankruptcy,
debt you may have never owed and even debts incurred due to identity theft. Zombie debt involves
collection agencies purchasing debts for pennies on the dollar that original creditors have long
since written off as bad debt. Watch a brief video from ABCNews regarding zombie debt. Find out
how to handle Zombie Debt
Deletions
If you pay a collection or settle a debt make sure you obtain a “deletion” and not a “paid collection”
entry. This also applies to paying a debt directly to the creditor. Your creditors have the power to
delete entries they put on your credit file. Never let them tell you they don't. Just like they put it on,
they can take it off. Some collection agencies even charge a “deletion fee” but it is well worth the
cost. A paid collection and an unpaid collection hold the same negative weight.
Your credit score will not improve once you pay a collection, especially if that collection is recent.
When you negotiate a deletion ALWAYS get it in writing BEFORE you pay the debt. This is your
proof and once you have a deletion letter you may submit a request for the item to be removed
from your credit report directly to the credit bureaus by faxing or mailing that letter. See Deletions
for more information and sample letter.
Request debt validation
According to the FDCPA you have the right to request a collection agency validate the debt they
are trying to collect. Essentially, the collection agency must show that you owe the "original creditor"
the debt, not the "collection agency" attempting to collect the debt. How to you know the debt is
yours.
Even if it is your debt do you really owe the collection agency who purchased the bad debt? Debt
validation forces debt collectors to prove you owe them. Many collection agencies purchase bad
debts without having access to the original contract between you and the original creditor. If they
cannot provide proof such as the original contract they cannot legally make you pay the debt.
The collection agency will have to delete any negative mark they may have entered on your credit
reports immediately and cease any further collection efforts. If they continue reporting the debt they
are in violation of the FCRA, and you can sue for $1,000 in damages for any violation of the Act.
Learn more about debt validation and how it can save you from a collection agency.
- FDCPA Section 809. Validation of debts [15 USC 1692g]
(b) If the consumer notifies the debt collector in writing within the thirty-day period described
in subsection (a) that the debt, or any portion thereof, is disputed, or that the consumer
requests the name and address of the original creditor, the debt collector shall cease
collection of the debt, or any disputed portion thereof, until the debt collector obtains
verification of the debt or any copy of a judgment, or the name and address of the original
creditor, and a copy of such verification or judgment, or name and address of the original
creditor, is mailed to the consumer by the debt collector.
Dealing with collection agencies can be exasperating. Some debt collectors stoop to low tactics
and even lie to collect debts. The best approach in dealing with any collection agency is to stay
calm and know your rights.
and even lie to collect debts. The best approach in dealing with any collection agency is to stay
calm and know your rights.
Collection agencies are regulated by the Fair Debt
Collection Practices Act (FDCPA) of 1977.This act
puts regulations and limits on how a collection agency
may conduct itself and when collection agencies may
contact a debtor about past due accounts.
This Act promotes and protects the fair treatment of
consumers by prohibiting debt collectors from using
unfair, deceptive, or abusive practices.
The Federal Trade Commission (FTC) enforces this
Act which applies to professional debt collectors who
collect on loans they did not originate, including law
firms that act as deb collectors.
Collection Practices Act (FDCPA) of 1977.This act
puts regulations and limits on how a collection agency
may conduct itself and when collection agencies may
contact a debtor about past due accounts.
This Act promotes and protects the fair treatment of
consumers by prohibiting debt collectors from using
unfair, deceptive, or abusive practices.
The Federal Trade Commission (FTC) enforces this
Act which applies to professional debt collectors who
collect on loans they did not originate, including law
firms that act as deb collectors.
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More Resources
Disputing information on your credit files
Tips for Disputing Negative information in your Credit Files.
Debt Validation
How to halt the collection process by requesting a collection agency to validate
your debt.
Get Deletions
Request Deletions when paying a negative account because paid collections do
not change your credit scores.
Your States Statute of Limitations
Learn the amount of time a creditor can sue you for a debt according to your State.
Tips for Disputing Negative information in your Credit Files.
Debt Validation
How to halt the collection process by requesting a collection agency to validate
your debt.
Get Deletions
Request Deletions when paying a negative account because paid collections do
not change your credit scores.
Your States Statute of Limitations
Learn the amount of time a creditor can sue you for a debt according to your State.
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