How To Deal With Debt Collectors

First, the bad news.

If you owe money, debt collectors are legally entitled to contact you about your outstanding debt.

The good news is debt collectors are not permitted to bully, harass, threaten or intimidate you. There are laws debt collectors must obey.

Many debt collectors would prefer you remain in the dark regarding proper debt collection practices because debt collection is largely about psychological manipulation. The less you know, the better for them.

But knowledge is power, and consumers have rights.

I’ve worked in this industry for nearly 20 years and today I’m sharing practical, accurate info on how to deal with debt collectors.

Today we’ll cover:

• FAQ: Debt Collection
• How To Deal With Debt Collectors

FAQ: Debt Collection

• Is there an actual law governing what debt collectors can/cannot do? Yes. It’s called the Fair Debt Collection Practices Act (FDCPA). Keep in mind, the FDCPA covers personal, family and household debts only (i.e. credit cards, auto loans, your mortgage, etc). The FDCPA does not cover business debts.
• What hours can debt collectors call? Debt collectors may only contact you between the hours of 8:00 AM and 9:00 PM in your local time zone. This is clearly spelled out in the FDCPA and it applies to both the original creditor as well as 3rd-party collection agencies.
• Can debt collectors call on Sunday? Yes, unfortunately. However, the FDCPA states debt collectors may not contact you on Sunday if you previously notified them that Sunday is not a good day for them to contact you.
• Can debt collectors call my cell phone? Yes and no. Technically, there’s nothing improper about a debt collector calling your cell phone. But the FDCPA says that debt collectors may not call you at an inconvenient place or time — like at your place of employment. So if they call you on your cell phone at your place of employment and you notify them you cannot receive private calls at work, they have to stop calling your cell phone. PRO TIP: Make sure to *document everything* just in case you need that info down the road.
• Can a debt collector email you? Maybe. The FDCPA is the federal law governing 3rd-part party debt collectors. When this law was enacted in 1978 we didn’t have email. So there really isn’t anything official stating whether or not debt collectors may contact you via email. There have been discussions in the U.S. Congress as recently as 2019 about reforming the FDCPA, but no new law has been enacted yet.
• Is it legal for debt collectors to call family members or relatives or neighbors? Yes, unfortunately, it is legal for debt collectors to call family members, friends and neighbors. But debt collectors are very limited as to what they can say. The FDCPA, sections 804 & 805, clearly states that a debt collector may contact a family member, friend or neighbor but only for the purpose of trying to locate you. That’s it.
  

  A debt collector may not disclose they are calling about an outstanding debt. They may state their name, but not that they are calling from a collection agency. They may only say they are calling from a collection agency if specifically asked.

  Here’s a slimy tactic used by some unethical debt collectors >> The debt collector knows full well how to get in touch with you, but they pretend they lost your contact info. So they call a relative or neighbor under the guise of “trying to locate you”. Your neighbor then approaches you, eyebrows raised, and hands you a note about some stranger trying to get in touch with you regarding “a private business matter”. Awkward, right? Even though the debt collector technically stays within the bounds of the law, they accomplish their objective of trying to embarrass/humiliate you.

  The good news is most debt collectors don’t stoop this low. Just be aware that it does happen on occasion.

• How do debt collectors get the phone numbers of family, friends and neighbors? Two ways:
  • The original credit card application. Years ago when you applied for that credit card, remember them asking for “alternate contacts” or “name of closest relative”? Now you know why.
  • The internet. It’s not rocket science. These days you can track down just about anyone with Google or Facebook. There are also special (and perfectly legal) databases debt collectors can subscribe to containing contact information over and above what’s publicly available online.
• Can debt collectors call me at work? Yes and no. A debt collector can call whatever telephone number(s) they have on file for you. If you previously provided a creditor with your work number, then you will probably eventually get a call from a debt collector at work.
  

  However, certain states have laws prohibiting debt collectors from calling you at work. Therefore, if you notify a debt collector to not call you at work they usually back off and honor that request. The key is putting them on notice.

  Here’s how you do it:

  When a debt collector calls you at work, calmly and firmly tell them,”You have called my place of employment. My employer prohibits personal calls at work. I can be reprimanded or possibly lose my job for receiving personal calls at work. Therefore, please do not call me at this number again.”

  This usually works because most debt collectors don’t want to be sued for causing you to lose your job. But be prepared to provide the debt collector with an alternate phone number where they can contact you.

• I’m getting 4-6 calls per day from a debt collector. Is this legal? It’s not specifically written into law how many times a day a debt collector can call you, but the generally accepted legal precedent in the collection industry is that a debt collector may contact you up to once per day about a past due debt.
  

  A “contact” is usually defined as talking with you directly or leaving you a voicemail message.

  Where it gets a little murky is when a debt collector calls, but then hangs up without talking to you directly or leaving a message. Technically these don’t count as contacts.

  So that same debt collector calls back an hour later (and you know it’s them because of caller id), but again they don’t talk with you directly or leave a message. So, once again, no official “contact” was made.

  An hour later that same debt collector calls again — but doesn’t talk to you or leave a message.

  They accomplish their objective of being annoying, but since they’re not talking with you directly or leaving a message, it doesn’t count as a contact so they’re not breaking the law.

  If this happens, there’s not much you can do except ignore the calls.

• Can a debt collector garnish my wages? In most cases, no. In order to enforce a wage garnishment, a creditor has to sue you and obtain a judgment against you in Court. Without a judgment, a debt collector cannot garnish your wages. The exceptions are:
  • Child Support
  • Alimony
  • Back Taxes
  • Student Loans

  Some debt collectors threaten wage garnishment because (a) wage garnishment is terrifying to most people, and (b) debt collectors know most people don’t understand proper legal protocol. But if a debt collector is calling about a credit card debt and you haven’t been sued and they don’t have a judgment against you, they can’t garnish your wages. Period.

• Can a debt collector take my stimulus check? Possibly. As mentioned in the answer to the previous question, a debt collector can’t garnish your bank account without first suing you and being awarded a judgment in Court. But if a creditor has a judgment against you, then it would be possible for them to garnish your bank account and take your stimulus money.
  

  However, the CARES Act was designed to help people meet their basic living expenses during the coronavirus pandemic — not assist debt collectors. Therefore, certain states like New York, Oregon and Ohio have passed laws prohibiting debt collectors from seizing stimulus money from residents in their state.

• What are debt collectors prohibited from doing? Pursuant to federal law, debt collectors may not:
  • Harass you.
  • Threaten you with violence or harm.
  • Use obscene or profane language.
  • Misrepresent the amount you owe.
  • Lie about being attorneys or government representatives.
  • Falsely claim you’ll be arrested, or claim legal action will be taken against you if it’s not true.
  • Take (or threaten to take) your property unless it can be done legally.

  For more information, click here.

How To Deal With Debt Collectors

Here are some tips for dealing with debt collectors. Remember, I’ve worked in this industry for over a decade and these are things I actually recommend to clients because they work:

• Do NOT send a “cease & desist” letter. A cease & desist letter formally notifies a debt collector that you no longer wish to receive any further communication from them. However, unless you want to increase the odds of getting sued, I would not recommend sending a cease & desist letter. Cease & desist letters often trigger lawsuits. In addition, if your goal might be to eventually negotiate a settlement for less than full balance on an outstanding debt, you need to keep the lines of communication open.
• Keep your contact with debt collectors to a minimum.  There is no law (legal, moral or ethical) that says you must engage with debt collectors. Just because the phone rings or you get a threatening letter from a debt collector, it does not mean you have to respond. Yes, it might seem a little strange to not respond because the natural tendency of most decent people is to be courteous and polite. But debt collection is largely about psychological manipulation. So when you avoid debt collectors (until you’re ready to talk), you render them powerless.
• What to say to a debt collector on the phone. If you inadvertently pick up the phone and there is a debt collector on the line, there’s no need to panic.
  

  First, politely but firmly take control of the conversation. Try not to let them badger you with a bunch of questions.

  Instead you want to go on the offensive and be the one asking the questions.

  1. Ask them for their name.

  2. Ask them what company they’re with.

  3. Ask them for their phone number.

  4. Ask them what they’re calling about.

  Insist that the debt collector provide you with all of this information before proceeding. Not only does this allow you to take control of the conversation, but you really do want to know who is calling you, don’t you?

  The debt collector may become argumentative and refuse to answer your questions until you answer their questions. They’re used to being the bully.

  But remember, they called you … and not the other way around. So it is entirely within your right to ask them to properly identify themselves as well as explain what they’re calling about.

  If the debt collector becomes verbally abusive or refuses to answer your questions, don’t be afraid to hang up the phone. Buh-bye.

• How to stop debt collectors from calling family members.
  1. Go right to the source. This is important. Call the debt collector back and tell them who you are. Remain calm and let them know you’re aware they called one of your family members. It takes a little courage to do this, but when you do you’ll feel so empowered because you let them know you’re not going to be intimidated.
  2. Be open and honest with them. Give them your phone number. Address this matter head on and let the debt collector know how they can get in touch with you directly. You have nothing to hide.
     

     You can further acknowledge to the debt collector that you owe the money and you’re not disputing it. Just explain that you’re going through a difficult time financially right now and you are currently unable to pay anything at the present time.

     If appropriate, mention that you’re trying to avoid bankruptcy, and you’re sorry about what happened. As soon as you have some funds to work with, you’ll call them back and try to get something worked out.

     You will be amazed at how much this disarms a debt collector because they are so used to people making excuses as to why they can’t pay.

  3. Give them specific instructions. Politely but firmly explain that you do not want them contacting anyone about this matter except you. Per the FDCPA, once a debt collector knows your phone number they are prohibited from contacting anyone but you. They may no longer contact family, friends or neighbors in an attempt to embarrass you.
• Document everything. If a debt collector continues to contact your family members, friends or neighbors even after you instructed them not to, keep a log of everything to potentially build a legal case against them.
• Should I attempt to “validate” my debt? If done correctly and in the appropriate situation, sure.
  

  The problem is some self-proclaimed financial “experts” recommend it in every situation, and a debt validation request is not the right solution for every situation.

  In case you’re not familiar, debt validation is a written request to a creditor or debt collector asking them to produce documentation to prove you owe the debt. The thinking is if they can’t produce the documentation, you’re in the clear.

  This tactic can work great if a debt collector is pursuing you for an old debt you might owe but the paperwork perhaps got lost in the shuffle after the debt changed hands multiple times.

  Debt validation is also appropriate if you’re being pursued for a debt you 100% know is not yours. Again, if they can’t produce proper documentation, they have to close their file and stop bugging you.

  Debt validation is a stupid tactic when used with the original creditor (i.e. Chase, Bank Of America, Citibank, etc.). Because 99.9% of the time they can produce the documentation. And now that you forced them to waste their time and jump through hoops, they’re probably not going to be in much of a mood to work with you in resolving your outstanding balance.

  For more information on debt validation, click here.

• How to stop debt collectors from calling once and for all. The cold, hard reality is that debt collectors will continue to contact you if you have legitimate outstanding debts. The only way to permanently stop debt collector calls is to bring resolution to your various past due accounts. The good news is you have options. The bad news is you don’t have unlimited options.

Conclusion

Sometimes bad things happen to good people.

But a temporary financial hardship doesn’t mean you have to tolerate abusive debt collectors.

Debt collectors have the right to pursue outstanding debts.

But you have rights, too.

NOTE: The information above does not constitute legal advice. It is for educational purposes only. If you require legal advice, you must consult with an attorney.