Content of the material
- What Is Collections?
- How Long Do Collection Accounts Stay On Your Report?
- What are my debt collection rights?
- Waiting for Them to Call You
- What Should I Do If I Have Debt in Collections?
- 1. Pay the Debt in Full
- 2. Negotiate the Debt
- 3. Dispute the Debt
- 4. Know Your Rights
- Talk to an Attorney
- What To Know About Debt Collection
- What to do after you make your last payment
- Raise Your FICO® Score Instantly with Experian Boost™
What Is Collections?
When a borrower fails to pay a debt on time, the creditor can turn it over to a debt collection agency, thereby putting the debt into “collections.” Typically, your creditor will try to collect from you for three to six months, and some are willing to work out a deal for you to pay off your debt. If you don’t pay, however, your creditor might opt to work with a debt collector.
Make Your Money Work for You
Your creditor can either assign a debt collector to collect the debt — and pay the collector a fraction of the proceeds — or simply sell the debt outright. In the latter case, the debt collector gets to keep whatever money is recovered.
Make Your Money Work for You
How Long Do Collection Accounts Stay On Your Report?
Paid or unpaid collection accounts can legally stay on your credit reports for up to seven years after the original account first became delinquent. Once the collection account reaches the seven-year mark, the credit reporting companies should automatically delete it from your credit reports.
If your collection account doesn’t fall off of your credit report after seven years, you can file a dispute with each credit bureau that lists it on your report.
What are my debt collection rights?
The Fair Debt Collection Practices Act is a federal law that limits what a debt collector can say and do. The law requires a debt collector to send you a written notice within five days of contacting you for the first time with the following information:
- How much money you owe on the debt
- The name of the collector
- Steps you can take if you don’t think the debt is yours
If you don’t think the debt is legitimate, you can dispute it within 30 days to the debt collector or with the company reporting the debt. If you dispute a debt, the collector must send written verification, such as a copy of a bill, before contacting you again to collect payment.
Here are a few more of your debt collection rights under the Fair Debt Collection Practices Act.
- Time and place — Debt collectors can’t contact you before 8 a.m. or after 9 p.m. unless you agree. They also can’t contact you at work if your employer doesn’t allow its employees to take personal calls.
- Harassment or abuse — Debt collectors can’t threaten you with physical violence, use obscene language or lie to you about how much you owe or your federal rights.
- Attorney representation — Normally, if you’re being represented by an attorney and the debt collector knows, they must communicate with your attorney and not you personally.
Your debt collector can’t discuss the details of your debt with anyone other than yourself, your spouse or your attorney. If they contact your friends, family or co-workers, it can only be to retrieve your contact information.
To learn more, read our full breakdown of your debt collection rights.
Waiting for Them to Call You
If you are unable to find the information yourself, sometimes the best thing to do is to wait for the collector to contact you by phone or letter. The agency that holds the debt eventually will get around to contacting you in order to get the money it is owed.
While awaiting the inevitable phone call, it's important to be aware of your rights. A collector who calls you must be willing to provide you with the name of the creditor and the amount owed, and inform you that you have the right to dispute the debt.
What Should I Do If I Have Debt in Collections?
1. Pay the Debt in Full
The most straightforward way to deal with debt in collections is to pay off what you owe. Make sure you’re paying the right party, however. If your debt has been sold, you can’t just pay the original creditor, because the collection agency owns the debt now. Know that paying off your debt might not affect your credit score. Your credit report will be updated to show that the collection account has been paid off, but the information will remain on your report for seven years after the original delinquency date.
Make Your Money Work for You
2. Negotiate the Debt
If you can’t pay back the debt in its entirety, you might be able to negotiate your debt by paying back a smaller amount in exchange for the creditor forgiving what remains. First, make sure you’re negotiating with the entity that owns your debt, whether that’s the collection agency or the original creditor. When negotiating, you can offer to make a lump sum payment or create a new payment plan with more flexibility. But, remember that the creditor doesn’t have to make a deal with you. If you do reach an agreement, make sure you get it in writing, so you have proof of the terms if the creditor ever comes back and says you still owe money.
3. Dispute the Debt
In some cases, the debt might legitimately not be yours, such as if you’ve had your identity stolen. If you receive a notice from a collection agency for a debt that isn’t yours, dispute it in writing within 30 days. Once the collection agency receives your dispute, it must cease contacting you until it has provided verification of the debt. You should also dispute the information with each of the credit bureaus and provide as much information as possible to show that you didn’t take out the original debt.
Make Your Money Work for You
Make Your Money Work for You
4. Know Your Rights
A collection agency must provide you with the following information within five days of contacting you:
- The creditor’s name
- The amount you owe
- Your right to dispute the debt and that the collector will assume it’s valid if you don’t appeal within 30 days
- Your right to receive verification from the debt collector if you dispute the debt
- Your right to request the name and address of the original creditor from the collector within 30 days
Debt collectors are prohibited from deceiving you when trying to collect a debt. For example, the debt collector can’t say you’ve committed a crime when you haven’t, falsely claim to work for the government, threaten to garnish your paycheck if it isn’t legally able to do so, or make other false threats.
Talk to an Attorney
If you need help dealing with an aggressive debt collector, figuring out what option is best for handling your debts, negotiating a settlement, or responding to a lawsuit for nonpayment of a debt, consider consulting with a lawyer. Once you’ve hired a lawyer, under the FDCPA, a collector must talk to your attorney only—not you—unless you give permission to contact you or your lawyer doesn’t respond to the collection agency’s communications.
And if you have a lot of debts, you might want to consider filing for bankruptcy.
What To Know About Debt Collection
What types of debts are covered under the law?
Your credit card debt, auto loans, medical bills, student loans, mortgage, and other household debts are covered under the FDCPA. Business debts are not.
Can debt collectors contact me at any time or place?
No. Debt collectors can’t contact you before 8 a.m. or after 9 p.m., unless you agree to it. They also can’t contact you at work if you tell them you’re not allowed to get calls there.
How can a debt collector contact me?
Debt collectors can call you, or send letters, emails, or text messages to collect a debt.
How can I stop a debt collector from contacting me?
Mail a letter to the collection company and ask it to stop contacting you. Keep a copy for yourself. Consider sending the letter by certified mail and paying for a “return receipt.” That way, you’ll have a record the collector got it. Once the collection company gets your letter, it can only contact you to confirm it will stop contacting you in the future or to tell you it plans to take a specific action, like filing a lawsuit. If you’re represented by an attorney, tell the collector. The collector must communicate with your attorney, not you, unless the attorney fails to respond to the collector’s communications within a reasonable time.
Consider talking to the collector at least once, even if you don’t think you owe the debt or can’t repay it immediately. That way, you can get more information about the debt and confirm whether it’s really yours. To avoid debt collection scammers, be careful about sharing your personal or financial information, especially if you’re not already familiar with the collector. Not everyone who calls saying that you owe a debt is a real debt collector. Some are scammers who are just trying to take your money.
Can a debt collector contact anyone else about my debt?
A debt collector generally cannot discuss your debt with anyone but you or your spouse. If an attorney is representing you, and you’ve told the collector, the debt collector must contact the attorney. A collector can contact other people to find out your address, your home phone number, and where you work, but usually can’t contact them more than once, and cannot tell them you owe a debt.
What does the debt collector have to tell me about the debt?
A collector has to give you “validation information” about the debt, either during the collector’s first phone call with you or in writing within five days after first contacting you. The collector has to tell you four pieces of information
- how much money you owe
- the name of the creditor you owe it to
- how to get the name of the original creditor
- what to do if you don’t think it’s your debt
What if I don’t think I owe the debt?
If you don’t recognize a debt, send the debt collector a letter, and ask for verification of the debt. Once you get the validation information, if you don’t recognize a debt, or don’t think the debt is yours, send the debt collector a dispute letter saying you don’t owe some or all of the money, and ask for verification of the debt. Make sure to send the dispute letter within 30 days. Once the collection company receives the letter, it must stop trying to collect the debt until sending you written verification of the debt, like a copy of the original bill for the amount you owe. Consider sending your letter by certified mail and requesting a return receipt to show that the collector got it. Keep a copy of the letter for your records.
What are debt collectors not allowed to do?
Collectors can’t harass you. For example, collectors
- can’t threaten to hurt you
- may not use obscene or profane language
- can’t repeatedly use the phone to annoy or harass you
Collectors can’t lie. For example, collectors
- cannot tell you that you owe a different amount than what you actually owe
- may not pretend to be an attorney or from the government
- can’t tell you that you’ll be arrested, or claim they’ll take legal action against you if it’s not true
Collectors can’t treat you unfairly. For example, collectors
- may not try to collect interest, fees, or other charges on top of the amount you owe, unless the original contract or a law says they can
- can’t deposit a post-dated check early
- cannot publicly reveal your debts, including by sending postcards or putting information on envelopes
Can I control which debts my payments apply to?
Yes. If a debt collector is trying to collect more than one debt from you, the collector must apply any payment you make to the debt you choose. A debt collector can’t apply a payment to a debt you say you don’t owe.
What should I do if a debt collector sues me?
If a debt collection lawsuit is filed against you, you’ll want to respond by the date specified in the court papers. And you can respond either personally or through your attorney. That will preserve your rights. Don’t ignore the lawsuit. To learn more, read What To Do if a Debt Collector Sues You.
Can a debt collector take money from my paycheck?
Yes, but the collector must first sue you to get a court order — called a garnishment — that says it can take money from your paycheck to pay your debts. A collector also can seek a court order to take money from your bank account. Don’t ignore a lawsuit, or you could lose the chance to fight a court order.
Can my federal benefits be garnished?
If you have an unpaid debt, a creditor or the debt collector it hires may get a court order to try to take money from your bank account to pay the debt. The court order is called a garnishment.
Many federal benefits are generally exempt from garnishment, except to pay delinquent taxes, alimony, child support, or student loans. States have their own laws about which state benefits can be garnished.
Federal benefits that are generally exempt from garnishment (except to pay delinquent taxes, alimony, child support or student loans) include:
- Social Security benefits
- Supplemental Security Income benefits
- Veterans benefits
- Federal student aid
- Military annuities and survivors’ benefits
- Benefits from the Office of Personnel Management
- Railroad retirement benefits
- Federal emergency disaster assistance
What to do after you make your last payment
When you finish your payment plan or complete the lump sum, ask the collection agency for a letter of completion from a company signatory. Then check your credit reports to make sure that the account has been accurately updated — but note that changes may not be reflected for 30 days. Even after everything is updated correctly, keep your records in a safe place in case any issues arise later.
Raise Your FICO® Score Instantly with Experian Boost™
Experian can help raise your FICO® Score based on bill payment like your phone, utilities and popular streaming services. Results may vary. See site for more details.