Before paying a debt collector, know your rights

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In a Nutshell

Debt collectors aren’t allowed to harass you about an unpaid debt, but they may be able to sue you within a period prescribed by a statute of limitations. Before paying any debt collector, it’s important to know your legal rights.

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Debt collectors often operate at an advantage. You may be confused or stressed about what to do with unpaid debt, but for them it’s just another day at the office.

While you probably don’t stand a good chance of outsmarting a debt collector, you do have legal rights. Knowing those rights — and taking advantage of them, if need be — can help level the playing field and give you a sense of control over the situation.

So, what exactly are your debt collection rights?

“There are a lot of components, legally speaking,” says Dan Dwyer, attorney in the division of financial practices at the Federal Trade Commission. For one, your rights may vary depending on where you live. The Fair Debt Collection Practices Act, or FDCPA, affords you some crucial protections at the federal level, and most states have laws about debt collection practices.

On that note, let’s take a look at some of your most important debt collection rights. This article doesn’t include an exhaustive list of all your rights, and you shouldn’t hesitate to consult a legal professional if you need further clarification. But we can at least give you a good idea of what to look out for when a debt collector comes calling.

Remember: Paying off debt can be an important step in building credit — but only if the collector is legitimate, if the debt is yours and if you actually need to pay it off in the first place.

Things you should know about debt collection

You have the right to a written notice explaining the debt

One thing a debt collector may not mention when reaching out to you initially is that you have a right to proof of the debt.

What do we mean when we say “proof of the debt”? Well, the FDCPA gives consumers the right to have the following information in writing within five days of the initial communication from the debt collector, unless the information is contained in the initial communication or the consumer has paid the debt:

  • The amount of the debt.
  • The name of the creditor to whom the debt is owed (more on this in the next section).
  • A statement that, unless the consumer disputes the validity of the debt, or any portion thereof, within 30 days after receiving the notice, the debt will be assumed to be valid by the debt collector.
  • A statement that, if the consumer notifies the debt collector in writing within the 30-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer. The debt collector must mail a copy of this verification or judgment to the consumer.
  • A statement that, upon the consumer’s written request within the 30-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

Ahem. Please excuse the legal speak. The bottom line is you shouldn’t rush to pay debt collectors until you’re sure they — and the debt — are legit. This may take a bit of time, but you shouldn’t let a debt collector pressure you into making a hasty and uninformed decision.

“Consumers can say they don’t want to talk further until they receive a validation notice,” Dwyer says.

It’s important to mention here that, while they may seem like mighty machines of bureaucracy, collectors and collection agencies are humans too. Like all humans, they can make mistakes.

“A lot of consumers say they’ve been contacted about a debt they don’t believe they owe,” Dwyer says. If you find yourself in the same situation, double-check your records and ask for proof before plotting your next move.

You have the right to ask for the debt collector’s name

As noted above, debt collectors are also required to furnish the name of their company or agency.

Legitimate collectors should be perfectly willing to provide their business address and contact information. You can use this to learn whether the collector is legit or a scam artist looking to scare and collect, says Bruce McClary, spokesman for the National Foundation for Credit Counseling.

If a debt collector has given you his name but you’re still suspicious, listen to your gut. You may be able to find more information on the collector via your state’s attorney general’s office or consumer affairs office.

You have the right to not be harassed

When it comes to debt collection, being polite isn’t just a courtesy. You may not hear “please” and “thank you” from a debt collector, but you do have legal rights when it comes to outright harassment.

The FDCPA limits what debt collectors can do when attempting to collect debt. They’re generally not allowed to:

  • Call you before 8 a.m. or after 9 p.m.
  • Yell, swear or use crude language.
  • Threaten you — whether with arrest, bodily harm, firing, deportation, public shaming or anything else.
  • Do anything else that could reasonably be construed as harassment (such as phoning incessantly or making hang-up calls).

Who else can a debt collector contact?

Debt collectors are also limited in whom they can reach out to about the debt in question. According to Dwyer, they’re only allowed to discuss your debt with you, your spouse or your attorney. If you have an attorney representing you about the debt, the collector must contact the attorney rather than you directly.

“States may have additional restrictions and may not allow [debt collectors] to contact a spouse,” Dwyer says.

Can they reach out to anyone else? Potentially, but only in a very limited way.

If you don’t have an attorney, a collector may attempt to contact other people to determine your address, home phone number and place of employment. In these cases, collectors are generally only allowed to contact third parties once — and they can’t discuss your outstanding debt obligations with anyone other than you, your spouse or your attorney.

If collectors are already in touch with you, that means they know how to reach you. In this case, they’re generally not allowed to contact anyone else in your life except your spouse and your attorney (if applicable).

Can a debt collector call you at work?

If you’re receiving collection calls at work, you have a right to put an end to it.

Inform the caller that these calls are inconvenient or that your employer doesn’t allow you to receive calls while on the clock. If you clearly communicate that you are not allowed to receive calls at work, collectors must stop attempting to contact you there, Dwyer says.

Can a debt collector come to your workplace?

The FDCPA “doesn’t ban this outright,” says Dwyer, “but it’s risky because the collector can’t harass you or reveal your debts to … a coworker or a boss.” In any case, regulations surrounding this type of behavior could change, so consult with a legal professional if a debt collector insists on visiting you at work.

The good news? Just like with calls to work, if you inform the collector that [they are contacting you at an inconvenient time or place, they can’t do it anymore, Dwyer says.

What to watch out for

All of this isn’t to say that debt collectors are powerless. They can ask you to pay the debt, assuming they’re not violating the FDCPA. And they can (and sometimes do) offer payment plans or settlements in order to resolve accounts in collection.

If the debt is less than 7 years old, the debt collector can also report the debt to credit bureaus — meaning it will likely show up on your credit reports and factor into your credit scores. Even if you pay off that debt, it may stay on your credit reports for up to 7 years, though you can dispute it if it’s erroneous in any way.

Debt collectors may also be able to sue you to collect the debt, which could result in a wage garnishment. But there is a timeframe in which creditors are legally allowed to sue for uncollected debts. This time frame is prescribed by something known as the “statute of limitations.”

Understand the statute of limitations on your debt

Looking at the age of your debt can help you determine if you still have legal liability. Even if collectors threaten you, when the statute of limitations passes they can no longer sue you to collect, unless the debt is revived (see more on that below).

Each state has its own statute of limitations that determines how much time a debt collection agency has to take legal action, but for many states it ranges from three to six years.

If you have questions about whether you’re still liable for your debt, it can be helpful to consult with a credit counselor or legal professional. You may also want to review the rights afforded to you by the FDCPA.

Be careful before making a payment

The one thing you can do that might reset the statute of limitations? Making a payment on the debt.

Some debt collectors may ask for a “good faith” payment, or they may offer a settlement for a lesser amount. That could be legit. Or it could be their way of getting you to reset the clock on their ability to sue, warns McClary.

In some states, a partial payment could restart your period of legal liability. That’s why it’s generally a good idea to make sure you can pay off all your debt before committing to a repayment plan. It’s also a good idea to get that repayment plan in writing and review it for accuracy.

For more on what to look out for, read our article on how to make a payment to a debt collector or debt collection agency.

Sniff out potential scam artists

These shouldn’t surprise you based on what we went over above, but here are some signs of a potential scam:

  • Demanding immediate payment.
  • High-pressure tactics (such as threats of arrest, alerting authorities, physical harm or shaming).
  • Refusing to answer questions or supply the company name, address and phone number.
  • Asking for personal financial information (such as bank account or Social Security numbers).
  • Requiring less-traceable payment methods (such as gift cards, wire transfers or bitcoin).

Don’t ignore lawsuit notices on ‘old debt’

Some collectors may attempt to sue you to collect debt that’s time-barred, or past the statute of limitations.

That may seem silly, but ignore any such lawsuits at your own risk. If you don’t show up to tell the court that the debt is too old, the debt collector could get a judgment to go after your assets or wages.

“That’s why we always tell consumers, ‘Don’t ignore a lawsuit summons,’” Dwyer says.

You can tell the debt collector to drop dead

OK, we’re kidding! But not entirely.

You can ask the collector to stop contacting you, period. When you do it in writing — as you should — it’s often called a “drop-dead letter.” And collectors are required to comply. (The Consumer Financial Protection Bureau has a great sample letter on its site.)

Bottom line

No doubt about it: It’s jarring to get a call or letter from a debt collector.

But now isn’t the time to panic. So take a deep breath, collect the information you need and consider contacting a legal professional before proceeding with a debt repayment plan.

Whatever you do, don’t let a debt collector force you into making decisions based on fear or stress. Knowing your rights can be the first step toward making an informed decision — not just reacting to a voice on the phone or a scary letter in your mailbox.