An almost inevitable consequence of falling behind on debt repayments is that you’ll start being chased for the money you owe in a number of different ways, including non-stop calls from extremely persistent debt collectors. While it’s reasonable for a creditor to employ a debt collector to collect the money they’re owed, a lot of times these collectors go too far when it comes to what they say and request you do to comply with their payment requests.

It’s important to understand the rules of engagement between you, the collector, and creditor. You should know what to do when debt collection tactics push the boundaries and what rights you have to put an end to the harassment.

All reputable debt collection agencies need to abide by federal fair debt collection practices and should face penalties when they step over the line.

This guide takes a comprehensive look at how the debt collection process works and what’s considered fair practice. We break down the debt collection process and what to do when a debt collector oversteps the mark by harassing you at work, contacting your employer, or any number of unpleasant and stressful scenarios.

Also included is an overview of how to contend with a growing phenomenon known as identity fraud — when you’re chased for a debt that has been registered in your name but created by an imposter.

There are also some example letters that you can use when raising a dispute or complaint, plus some answers to commonly asked questions on this subject.

Understanding the debt collection process

If you’ve fallen behind with your credit card or loan payments and the creditor has not been able to obtain a satisfactory resolution after a few attempts to contact you they might resort to using an in-house or external debt collection agency. Many of the main lenders and card companies have a set procedure that they follow once an account becomes delinquent. The best scenario is to try and avoid that process.

Start by not ignoring the initial demands for settlement and contacting the company you owe money to in order to explain why you are behind with the payment. Try to come to an agreement on a suitable payment plan.

If you ignore their requests for payment and don’t make any contact with the lender or send the amount they are requesting, the inevitable consequence will be to treat your loan as a delinquent debt and start the debt collection process.

Be aware that the lender will notify the credit reporting agencies that you are in arrears with your account. This will then show up as negative information on your credit report, which will have an impact on your ability to get a loan in the near future. This can also affect your ability to rent an apartment, sign up for a cell phone plan, apply for utilities, and (in some cases) get a job.

Protecting your credit score as best as you can is always a sensible strategy as it gives you more options in terms of borrowing money at better rates, especially if you’re considering the idea of consolidation to clear your debts.

Check your credit score regularly to see what lenders are saying about you and keep an eye on your score. This can also help you identify any errors on your credit file at an early stage such as a delinquent debt notice that refers to an account you don’t recognize (which could be an early warning of identity fraud).

Your right to fair treatment

Being in debt and getting contacted by a debt collector doesn’t dilute your right to expect fair treatment from the person contacting you. They should fully respect your rights when it comes to privacy. There’s a fine line between firm-but-fair debt collection, and actions or tactics easily become unacceptable, or even illegal, in some circumstances.

There are federal laws that govern the conduct of debt collection agencies and anyone working for them. Sometimes collectors attempt to use loose interpretations of those laws, however, they are ultimately liable for their conduct. Remember, your rights to fair treatment and privacy should always be respected. If you understand the rules of engagement more fully, you can recognize when you are not being treated fairly and do something to resolve the situation in an acceptable and sensible way.

The Federal Trade Commission (FDCPA) publishes the Fair Debt Collection Practices Act. It’s actually quite a lengthy document so here are some key points to take on board initially.

  • Your creditor needs to send you notification that they intend to appoint a debt collector under some circumstances. Even so, there remain situations where they are not obliged to warn you beforehand of their actions. Sometimes they will warn you of actions in an attempt to get you to make an arrangement before your file is referred to a debt collector.
  • A debt collector may call you to discuss your debt but they must do so between the hours of 8 a.m and 9 p.m. They cannot call you repeatedly over a short period of time and they are not allowed to trick you into taking calls under false pretences, which means they have to tell you why they are trying to contact you and may not lie in an attempt to get you to come to the phone or respond to a message.
  • If you tell the debt collector that you’re not allowed to receive calls at your place of work they should respect that.
  • If the collection agency contacts you for the first time by phone they have to send you a written notice within five days of making that initial contact giving you details of who you owe the money to and how much they are claiming from you. There should also be details in the letter about how to dispute the claim if you don’t agree with the amount being demanded.

Threats of legal action

A collection agency has the power to file a lawsuit to collect the debt but they have to be extremely careful in how they use that threat and not misrepresent the severity of the situation you’re currently in or what the legal options are.

A debt collector cannot threaten to sue you if they don’t have any intention of doing so. They also can’t make claims about garnishing your wages or seizing your property if these are not actual legal options available to them.

Debt collectors have to be truthful in their attempts to use the threat of legal action as leverage, so threatening to have you arrested if you don’t pay, for instance, is a prohibited form of behavior that definitely breaches your rights to fair treatment.

You do have the right to write to the debt collection agency and request that they don’t contact you by phone, at certain locations such as at work, or make any contact with you at all.

Although you are entitled to request that a debt collector ceases some or all contact, you should be aware that if you put a request in writing that you don’t want any more contact from them, they can respond one last time to inform you of the action it they intend to take in response to your request. This might include taking legal action if they have been asked not to contact you again but the debt hasn’t been resolved.

You have a right to privacy

Public embarrassment and the disclosure of your personal circumstances to others is one of the main fears felt by many in this situation and these are genuine concerns when being contacted by a debt collector. Your debt situation is a private matter and it needs to remain that way when a debt collector is trying to collect money from you.

There are rules in place to protect your privacy and debt collectors must adhere to them. The FDCPA clearly outlines acceptable practices when it comes to how debt collectors use your personal information and who they can disclose it to.

  • They are not permitted to exchange your debt information with other agencies and they are not allowed to call third parties and leave messages for you to call with details of what you owe or why they are calling you.
  • They are also required to use discretion when writing to you and that means not providing any information on the outside of the envelope that gives away the fact that it is from a debt collection agency.
  • A debt collector is not allowed to pass on any details of your account when contacting family members, friends or neighbors. They have to leave a name and number but only identify the name of their collection agency when asked and avoid giving any details to a third party that could cause you distress and embarrassment.
  • If you are co-signer or a spouse, this form of contact is often viewed as being the same as contacting the debtor directly under the current guidelines. However, if you believe that your privacy rights have been violated in any way or you feel that the debt collector is deliberately harassing you through other people who share your home with you, always complain to the appropriate government agency and seek legal advice to see what can be done to stop it happening straight away.

Not all debt collectors are covered by the same rules

You should also be aware that not all debt collection activities are subject to the FDCPA rules and notable exceptions are government agencies like the IRS.

Government employees who are employed specifically to collect debts as an official duty are not governed by the rules laid out by the Fair Debt Collection Practices Act but you should expect them to act responsibly and at least observe the spirit of the laws laid out by the FDCPA.

The same situation applies if you are being pursued for outstanding student loans but what you will often find is that government agencies are more inclined to adopt practices that go beyond the standard guidelines, so it is unlikely that they will often abuse their powers inappropriately or harass you unfairly in their attempts to get you to pay them.

If you are contacted by an attorney who is collecting consumer debts they must also comply with the FDCPA rules when they are sending out letters and making debt collection calls to you.

It should be noted that the status of attorneys acting as debt collectors can vary according to which state they practice in and you can contact your state Attorney General through the National Association of Attorney Generals (NAAG) and through their official NAAG website to clarify the laws for your particular state.

Improvements to the Act

If you are being pursued for a debt you are hardly alone in that situation as there is a growing number of delinquent non-tax debts being pursued by debt collectors acting for the U.S government.

The Debt Collection Improvement Act of 1996 was passed to provide better regulation of debt collection activities when government agencies are collecting debts owed to the United States.

This Act encompasses most of the principles of the FDCPA, such as not contacting the debtor at work or outside of acceptable hours, so you should find that if you owe the government money they will treat you fairly in their attempts to get you to pay.

Disputes and corresponding with a debt collector

If you’re being contacted by a debt collector there are several things you should do to protect yourself and to ensure that you can provide backup if you do end up filing a dispute or a complaint about the way you have been treated.

  • A good course of action would be to start a file as soon as you get a call or letter from a debt collection agency so that you can document every contact you have.
  • There are many reasons why you might want to complain to the debt collection agency such as the way they have behaved or acted when they made contact with you or a third party, or to raise a dispute about the extra charges that may have been applied to your balance as a result of their involvement.
  • Make sure you include all the salient facts and information in your correspondence to the debt collection agency or government department and maintain a businesslike tone and keep to the point as much as you can.
  • It is always a good idea to include a reasonable date that you would like a response by (allow a couple of weeks) and send your correspondence by certified mail or in a way that you have proof of postage and acknowledgment of receipt.
  • The collection agency is not entitled to continue with their debt recovery actions while their conduct or the dispute is under investigation and they should respond in writing with their findings before resuming any collection activity.
  • Always file a dispute if you genuinely consider that the debt is not due as this could help your case if the matter ends up going to court and you get sued, although not responding in this way doesn’t automatically mean that you are admitting liability for the debt.

Taking legal action

If you feel strongly that a debt collector has violated the state laws in their attempts to contact you and collect money from you there is always the option of suing them in a federal or state court.

There are a number of specialist private practice attorneys who offer to help consumers who have been subjected to violations of federal and state debt collection laws. You can search for one using the National Association of Consumer Advocates website (NACA) and pick an attorney who knows about debt collection practices specifically.

Remember that if you tape conversations to gather evidence of the harassment you are experiencing this evidence can be very useful, however, certain states might require you to obtain consent before taping the call, so check the Reporter’s Recording Guide to see what is required in your state.

Not your debt?

Identity theft is a growing issue and it can be even more distressing to be subjected to debt collection calls and letters for an amount that you don’t even owe or might not know anything about until you start getting chased.

You can get more detailed information about how to avoid identity theft and what to do if you are a victim from the FTC Consumer.gov website. There is also official recognition of the problem in the shape of a new law that was passed in 2004 known as the Fair and Accurate Credit Transactions Act (FACTA).

The United States of Justice has published a useful guide to Identity Fraud and their website provides access to the links you need for contacting the appropriate agencies and taking action to get the matter resolved.

You should contact one of the credit reporting agencies and ask them to put a fraud alert on your credit report as soon as you discover that you have become the victim of identity fraud.

Notify the debt collector that you have been the victim of the identity fraud and they are then obliged to contact the original lender to tell them about the fraud as well as provide you with further information on the debt if you request it from them.

Unpaid medical bills

One of the most common reasons for people filing for bankruptcy is medical bills that they are unable to pay and there is no doubt that these bills can quickly escalate out of control, which is why a percentage of debts get referred to debt collectors.

There were changes made to the medical privacy rules back in 2003 and HIPPA allows a health care provider to disclose personal information to a debt collection agency so that they can contact you about the debt, and they also allow for the debt to be reported to a credit reporting agency.

This means that the debt collection agency can legally obtain the following personal data about you and the unpaid medical bill:

  • Your full name and address
  • Date of birth
  • Social Security number
  • Plus details of your account number and payment history

The issue here is that the name if the health care provider could feasibly provide clues to your specific medical condition and this is why an amendment was introduced to ensure that certain personal details are excluded from the data provided to a debt collector if they could breach your right to privacy concerning your medical condition.

All of these laws and specific acts have been introduced in order to ensure that you get fair treatment and your privacy is respected when you are contacted by a debt collector.

Frequently asked questions

How should I respond when a debt collector contacts me?

When you first receive contact it is important that you confirm the identity of the debt collector and get their contact details as well as information about the debt to confirm that it corresponds with your knowledge of the situation. Don’t provide any personal details to the caller until you are satisfied with their identity and the purpose of their call.

How can I verify the debt collector is legitimate?

You can refuse to discuss the debt until you have received a written validation notice of their involvement. Also, be aware that scammers can pose as debt collectors to get personal data, so be wary of anyone who asks for sensitive financial information that does not seem relevant.

What constitutes harassment?

The FDCPA is very clear about what constitutes harassment. It can come in many different forms but some clear examples would be calling you repeatedly and contacting you outside of the permitted hours of 8 a.m and 9 p.m.

Other examples include when a collector uses threatening or obscene language or calls you at work when you have requested them not to.

You can submit a complaint online and write to the debt collection agency with full details of why you feel you are being treated unfairly.

How many times can a debt collector legitimately call me?

Federal law doesn’t actually specify a limit to the number of calls that can be considered acceptable but repeated calls that appear intentional to harass or coerce you into paying would not be considered acceptable.

Warning: You do have the right to tell the debt collector to stop calling you. However, you should be aware telling a debt collector to stop contacting you does not prevent them from using other legal ways to collect the debt from you if you owe it. This includes the option of filing a lawsuit against you or submitting a negative report to a consumer reporting company.

What can I do if I dispute the debt?

You must notify the debt collector within thirty days of their initial communication with you that you dispute the debt.

The debt collector has to suspend collection activity while it investigates your claim and provides the information requested to verify that the debt is due.

Warning: It is really important that you respond within the first thirty days of receiving the initial communication from a debt collector to dispute the debt. Although you can still dispute the claim after that time you can lose some valuable rights if you don’t meet that 30-day deadline.

Example Letters

Here are some basic templates you can adapt to deal with regular debt collection issues.

Please be aware that these sample letters do not constitute specific legal advice and remember to make sure you retains copies of all correspondence you send.

Requesting a debt collector to stop contacting you, and disputing the debt

Your name

Your return address

Date

Debt collector name

Debt collector Address]

Re: (Account number for the debt or any reference they quoted in their initial letter or call)

Dear (Debt collector name),

I am responding to your contact about a debt you are attempting to collect. You contacted me by (phone/mail), on [date]. You identified the debt as ( provide any information they gave you about the debt, such as the name of who you owe the money to).

Please stop all communication with me and with this address about this debt.

If you dispute the debt, include the following wording): Record that I dispute having any obligation for this debt. If you forward or return this debt to another company, please indicate to them that it is disputed. If you report it to a credit bureau (or have already done so), also report that the debt is disputed.

Thank you for your cooperation

Sincerely,

(Your name)

Telling a debt collector how to contact you

Remember, debt collectors are prohibited by federal law from contacting you about a debt at a time or place they know is inconvenient for you. They are not permitted to contact you at your place of employment if you let them know that your employer prohibits it.

Use this letter if you want to restrict how a debt collector can contact you.

Your name

Your return address

Date

Debt collector name

Debt collector Address]

Re: (Account number for the debt or any reference they quoted in their initial letter or call)

Dear (Debt collector name),

I am responding to your contact about collecting a debt.

You contacted me by (phone/mail), on (date) and identified the debt as (any information they gave you about the debt).

You can contact me about this debt, but only in the way I specify below. Don’t contact me about this debt in any other way, or at any other place or time. It is inconvenient to me to be contacted except as I authorize below.

You can only contact me at:

(Mailing address if you want to correspond by mail)

(Phone number and convenient times if you want to be contacted by phone)

(If you not allowed to take personal calls at work, include the following]

My employer prohibits me from receiving communications like this at work.

Thank you for your cooperation. Sincerely,

(Your name)

Summary

This guide is intended to help you understand your rights to fair treatment when coming into contact with a debt collector and know what to do when your privacy has not been respected or you have been harassed unduly.

The federal laws and guidelines are there to protect you and ensure that the process of negotiating a settlement of a debt is done in a fair and proper manner. Use the resources and options available to you to complain and put a stop to any debt collection practices you experience that cross the line.

Useful Resources