How to Deal with Bill Collectors
by Chris Cooper
So youve screwed up. Youre drowning in debt.
Maybe the credit card was burning a hole in your pocket
and you just had to get the HDTV. Or maybe you or a family
member had a medical emergency while you we laid off.
It doesnt matter to your creditors; they lent you
the money and now they want it back.
The lender will try to work with you for a while and its
best to try to negotiate with them at this stage. If you
cant work something out or just dont pay,
they will send your file to either an in-house bill collector
or, more commonly to an outside agency.
Bill collectors are a tough bunch. They have heard all
the sob stories and arent interested in yours. They
mostly get paid on commission, so they just want to get
money out of you and move on.
There arent many laws to get you off the hook as
far as the debt goes (bankruptcy is your only choice).
But there are laws that prevent harassment and abuse by
bill collectors. Debt collectors tend to try to ignore
these laws, but if you know your rights and insist on
them, at the very least you might be able to collect damages
if the bill collector persists in ignoring them.
The major law protecting you is the Federal Fair Debt
Collection Practices Act. Some states have their own versions
of this law.
The law does not prevent a bill collector from contacting
you, but it must be at convenient times. Contact cant
be before 8 a.m. or after 9 p.m., unless you agree. A
debt collector also may not contact you at work if you
tell him that your employer disapproves of such contacts.
If you dont want to be harassed, get the name, address
and telephone number of the bill collector. Then send
a certified letter, return receipt requested telling the
collector to leave you alone. Once the collector receives
your letter, he can not contact you again, except to say
there will be no further contact or to notify you that
the bill collector or the creditor intends to take some
specific action against you, such as sue you or report
your delinquency to a credit bureau.
The bill collector can contact friends, relatives or neighbors,
but just to find out where you are. They are not supposed
to be spreading the word that youre past due on
Within five days of first contact, the collector must
send you a written notice telling you the amount of money
you owe; the name of the creditor to whom you owe the
money; and what action to take if you believe you do not
owe the money. You have 30 days to dispute the debt, in
writing (certified mail RRR again). The bill collector
is then not allowed any other contact with you until he
is able to send you proof of your debt.
According to the Federal Trade Commission (FTC) the agency
charged with enforcing the Fair Debt Collection Practices
Debt collectors may not:
Debt collectors may not use any false or misleading statements
when collecting a debt. For example, debt collectors may
- Use threats of violence or harm;
- Publish a list of consumers who refuse to pay their
debts (except to a credit bureau);
- Use obscene or profane language; or
- Repeatedly use the telephone to annoy someone.
Debt collectors also may not state that:
- Falsely imply that they are attorneys or government
- Falsely imply that you have committed a crime;
- Falsely represent that they operate or work for
a credit bureau;
- Misrepresent the amount of your debt;
- Indicate that papers being sent to you are legal
forms when they are not; or
- Indicate that papers being sent to you are not legal
forms when they are.
Debt collectors may not engage in unfair practices when
they try to collect a debt. For example, collectors may
- You will be arrested if you do not pay your debt;
- They will seize, garnish, attach, or sell your property
or wages, unless the collection agency or creditor
intends to do so, and it is legal to do so; or
- Actions, such as a lawsuit, will be taken against
you, when such action legally may not be taken, or
when they do not intend to take such action.
Debt collectors may not:
- Give false credit information about you to anyone,
including a credit bureau;
- Send you anything that looks like an official document
from a court or government agency when it is not;
use a false name.
However, as I said before, a lot of debt collectors will
ignore this law whenever they can. So it is very important
that you build a case against harassing debt collectors.
- Collect any amount greater than your debt, unless
your state law permits such a charge;
- Deposit a post-dated check prematurely;
- Use deception to make you accept collect calls or
pay for telegrams;
- Take or threaten to take your property unless this
can be done legally; or
- Contact you by postcard.
Send repeated certified letters outlining what they said
Tape the phone conversations. Tell the collector youre
doing so. If he continues to talk, hes considered
to have consented to the taping.
If you contest the debt, ask that you be sent proof of
it in writing. In many cases, neither the creditor nor
the collector can produce this.
Check your credit report and, if you see false entries,
contest them right away.
If you do owe the debt, negotiate calmly and in good faith.
Because it gives you more time to think, I would try to
carry out all negotiations in writing or hire an attorney
to do them for you. This will also give you a paper trail
if you have to proceed in court.
Do not be bullied into rushing into an agreement and do
not make any payments unless the agreement is in writing.
For example, if the bill collector agrees to take half
of the amount you owe as full payment and report the debt
paid to the credit bureaus, get it in writing. If the
collector wont send you a letter, send him a certified
letter accurately stating all the terms of your agreement.
It is not unknown for bill collectors to settle the case
with a debtor and then sell the rest of the debt to another
collection agency, which will try to collect the unpaid
balance. This is why it is very important to have a paper
If you have old debts that have apparently gone away,
beware of the "zombie" bill collectors. They
are buying unpaid debts for pennies per hundred of dollars
of debt and then trying to harass debtors to pay. Even
if they only get a few dollars, they make money.
The problem is that in many cases the statute of limitations
on collecting the debt is run. If you make a payment,
you can reopen the statute, the debt can be reported to
credit bureaus as freshly delinquent and you can open
yourself up to all sorts of problems. Sometimes even saying
the wrong thing to one of these guys can be considered
an acknowledgement of the debt, allowing them to reopen
the statute of limitations.
If you have any old unpaid debt become familiar with the
statute of limitations, generally 4 to 6 years, in the
state where you live now and, if applicable, in the states
you lived in when you ran up the debt.The best way to
handle a "zombie" bill collector is to refuse
to speak to him. Just hang up the phone.
The Fair Debt Collection Practices Act is rather vigorously
enforced by the FTC and state attorney generals. Make
complaints to both is you feel you being unfairly treated.
Also you have a private right of action against the debt
collectors. You can sue a bill collector in a state or
federal court within one year from the date the law was
violated. If you win, you may recover money for the damages
you suffered, plus an additional amount up to $1,000.
Court costs and attorney's fees also can be recovered.
If you need a lawyer referral, go to National Association
of Consumer Advocates website. http://www.naca.net
Also I would suggest you buy or borrow from the library
"Money Troubles: Legal Strategies to Cope With Your
Debts (Solve Your Money Troubles)" by Robin Leonard,
if you have a lot of debt. It best to know what youre
facing and how to handle yourself going in.
Remember, even if you can tame the bill collectors, your
debts do not go away. The next step will probably be lawsuits
and garnished wages. That is why the best course of action
is to negotiate with your creditors from the very beginning.
About the Author
Chris Cooper is a retired attorney who has spent several
periods of his life deep in debt. At http://www.credit-yourself.com
he tries to pass on some of the knowledge he picked up
in his journey to become debt free.