Understanding (And Defeating) Debt Collectors

Debt Collector & Debt Collections

                       “What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?” -Adam Smith

These days, debt collection often begins with an unknown call, followed by an unwanted voicemail. Many call receivers will likely panic or avoid the phone call. Unfortunately, these natural reactions will do you more harm than good. When the call arrives, be calm and remember that the caller is likely just performing a job.

If and when you get such a call, make sure you are dealing with a legitimate agency for a debt that you might actually owe someone. There are consistently aggressive scammers preying on the likelihood that you owe something common, such as a car payment or a student loan.

The biggest and best advice is to document everything.  “TAKE CAREFUL NOTES”, and document all that is said.

Once you find out that call may be legitimate, listen to what the caller has to say and then determine how you can best handle the situation.   Next, ask for their name, position, company name and contact information.  Never give out or verify any of your personal information, or admit to owing any debt.

This brief guide should provide the basic ethical decisions that you’ll need to make during phone calls but legal council may be needed if the collector is aggressive or takes legal action.

How To Determine If The Debt Is Real

First thing to know is how old and the amount of the debt.  Obviously, you’ll know if you truly owe for a debt you didn’t pay off.  For consumers who apply to payday loans or other online offers, it’s possible that you could later become a scammer’s target. If you’re talking to a fake debt collector, it’s likely they won’t mail a written confirmation and they could go as far to threaten a lawsuit or even jail time if payment isn’t made.

This, of course, is nonsense and illegal.

Never accept any debts, always ask for a written verification of the debt.   If they ask to verify your address, don’t.  Again, if they are legitimate, they have this information.

Any agency, by law, is required to send a document five days after an initial point of contact. Insist on this to make sure you’re dealing with a real debt collector.

Furthermore, you could also check with the state attorney’s office to make sure the debt collector is licensed to do business in your state. If not, it’s a possibility that you will have a scammer on your hands or someone that will drop an actual debt.

Always do your research to determine your state’s debt collection laws.

Find Out Exactly What They Want

 Obviously, the main goal of this call would be to have you immediately agree to send them money for the supposed debt they say you owe, along with any interest or additional fees.

They likely understand that the debt occurred because there was an outside issue affecting your personal finances and being able to pay the bill. In many cases, if the debt is truly legit, they will sometimes be willing or authorized to settle the debt for a much smaller portion of the full balance.  Sometimes they even say they act as credit counselors.

In addition, the debt collector could also accept some sort of payment plan or even a partial payment with a plan down the road. The length of time for the payment and the monthly amount will depend on the debt buyer.

Some debt buyers purchase your debts for pennies on the dollar in the hopes to make a profit. They will negotiate.  This can save you money also.

For partial payments, however, continue read below about “Good Faith Payments.”

Know Your Rights During The Debt Collection Process

                                  “Before borrowing money from a friend, decide which you need most.” -American Proverb

Under the Fair Debt Collection Practices Act (FDCPA), you will be protected from any debt collector who appears to be aggressive. The federal law applies to third-party collectors and every state has different laws as well.


Your state could offer more protection than another, for example.

Under The FDCPA, debt collectors:

  • Can’t tell others about your debt.
  • Can’t use, or threaten to use, violence.
  • Must verify the debt.
  • Stop calling you at work if you ask them to
  • Stop contacting you completely, if you ask them to…

In order to get a debt collector to stop calling, or “cease contact,” send a letter, certified and ask for them to stop. Technically they can’t contact you again unless they are initiating legal action.

Ideally, this isn’t the best plan of action, however, as it could provoke them to take you to court. It’s an ultimatum that you have to weigh out for your particular situation, i.e. – age and amount of debt.

What NOT To Do When A Debt Collector Calls

Do not give up any personal information like bank account numbers, social security numbers, or the value of any property that you own. Don’t verify your current address or any personal information.

The debt collector could use this information against you, despite any financial troubles you may have. An identity thief could also steal this information and take more than a collector.

Beyond giving away personal information, make sure to never lose your temper. Using profanity, screaming, or any other type of hostility will only hurt you.

If the call records are ever reviewed or used during court, you will appear to be the abusive one within the relationship. This means it reduces your chance to win.

What To Do When A Debt Collector Calls

In addition to being calm, there are several other things you can do in order to properly deal with a debt collector or collection agency. To start, you must actually keep a log and document everything.


After all, it’s likely they’re keeping their own log of calls and they’re probably even recording the phone calls (legally, they should tell you this).

Within your collections log, make sure to record the date and time that they call and the employee’s name and number that you speak with. Your log doesn’t have to be overly fancy; as a simple notepad should do.

This will help you keep up with who is calling you and from which agency they are with and so on.

Besides the call log, make sure the collector has your current address (if they are valid in their collection). A true collector is supposed to send letters to you so hiding your location isn’t helping anything.

In addition, without your current whereabouts, the collector may contact known associates, like friends or family, which could be embarrassing depending on the occasion, not to mention highly illegal.  But some debt buyers break the law continually, because people don’t educate themselves of their protection rights.

If you don’t think you owe the debt or you feel it to be illegitimate, simply tell the debt collector this during the call. Sometimes, if you are reasonable and you don’t believe that you owe the debt, the collector could voluntarily cease collection on the debt, as their time will be better spent with those who are preparing to pay.

Also, if you can’t pay the debt, tell the collector. If you tell the debt collector that you are unable to pay the debt due to financial reasons, they may go ahead and move on to other clients.

This could keep your file from being altered, which could hurt your credit for years to come.

How Do Debt Collections Alter Credit? 

Beyond having to deal with constant phone calls, emails, or letters, perhaps the worst thing that will happen is harm to your credit and change your credit score. Any unpaid debt could alter your credit score and that will hurt you when companies check your credit.

This could mean not getting a car loan, home equity loan or even being denied an apartment rental – always carefully consider the future impacts.

If a collection account affects your credit score, it could do some major damage. It’ll really depend on what else is on credit score, but even one bad mark can be poisonous to a good score.

Some consumers with stellar scores may even see a 50-100 point drop when a collection appears on their report.

Once this happens, the worsening news is that even paying or settling the debt may be too late once it hits your score. Some companies, such as an apartment complex, may check into the matter and if you can prove you did pay the debt, they may give you a second chance—but it’s a great deal of back and fourth either way.

When Will A Collection Come Off Your Report?

 Under the Fair Credit Reporting Act, it’s possible that collection accounts could live on your credit report for up to seven years.  Paying or settling has no real impact on the reporting period, unless that is part of your agreement with the settlement.


In addition, the state Statute of Limitations (more information below) has little to do with collection on the debt.

Another problem is that collection accounts could be sold or even resold over time. This could actually result in multiple negative entries even though there’s only one item to be reported.

Some collectors could even threaten to report the collection forever or over and over, but this kind of threat is illegal and should be reported to the FDCPA immediately.

                                                                  This is against your personal rights, and you are protected.

How To Pay Off A Debt

                                               “In God we trust; all others must pay cash.” -American Proverb

One option could be to consolidate a few credit cards.  However if you are able and ready to pay the debt, how you pay a collection agency is equally as important as how much you pay. It’s important to be cautious.

Some debt collectors will ask for a bank account access or they may only want a debit card. But if they take too much, this could be an even larger issue for you.

If a debt collector takes more than they are supposed to, it’s difficult to say whether or not you will ever see that money again. It’s best to use an online bill-pay service, money order, or a cashier’s check.

Whenever paying a large sum of money, always make sure to protect yourself rather than become too trusting of the other party.

What Is A Good Faith Payment?

Logistically, it would appear that a “Good Faith Payment” should be a good idea. This would be like paying a small amount towards the larger amount to show that you intend to pay off the debt.

However, a Good Faith Payment will actually “extend” the statute of limitations on the debt, which means it will stick with you longer.  In most cases, if your statute of limitations is 4 years, and after 3 years you make a partial payment, the statute of limitations restarts – adding 4 more years.

What Is The Statute Of Limitations? 

The Statute of Limitations begins when you first fall behind on a debt. The length of time that a debt can last will depend on your state, but the issue is not always clear-cut so you can check with the state attorney general’s office or legal aid to see what your Statute of Limitations may be.



This is always a good idea if legal action arises.  But remember… if you make “any” payment at all, this will re-start the statute of limitations – something to be very aware of!!

In many cases, the debt collector can still try to collect on a debt beyond the Statute of Limitations. In some states, it’s actually illegal to try and collect on a debt that is no longer valid.

That said, it’s still possible to be sued on an expired debt. In court, you can bring up the time-barred debt and in most cases, the case will be dismissed.

What Happens If I Get Sued?

 If you’re unable to pay off the debt and the debt collection agency takes you to court, then you do still have a chance to fight. NEVER EVER ignore a citation to appear in court.

It’s possible to setting in court or even fight the lawsuit, especially if the debt is old (in some cases may be past the statute of limitations) or unfamiliar. If the debt is enormous, speaking with an attorney about a type of bankruptcy is an option as well.

The only terrible decision you could make is to ignore the issue all together. The collector can then take you to court and get an automatic default judgment.

There are many companies that buy up old debts for pennies on the dollar and take individuals to court who they assume will not show up. In some cases, they can actually seize payment from your bank account.

Finding Help From Aggressive Debt Collectors

If the person contacting you seems aggressive, or if you believe them to be breaking the law, take detailed notes, keep your cool, end the call, and realize it’s best to contact a consumer law attorney. The attorney will stand up for you if the debt collector is breaking any state or federal laws.

In certain situations, the attorney may be willing to work for you for free. The agency would actually have to pay the attorney’s fees.   In other cases, they may work for no upfront money, and agree to take a certain percentage of the monies collected from the outcome.

Similarly, you could also contact the Consumer Financial Protection Bureau with a complaint against the debt collector. This organization regulates the entire collection industry.

Even if they can’t help you directly, they will file the complaint so others can detect a history of issues with a given company.

Conclusions And Where To Begin

                                                            “No man’s credit is as good as his money.” -E.W. Howe

 When the phone call comes, make sure to remain calm.  You’ll think clearer, as anger will help neither party resolve the issue.   Remember, they will be taking notes also.  Note any abusive language they use, or threats they imply.  These folks are well trained, you be trained in your rights also.

TAKE VERY GOOD NOTES, this can’t be stressed enough!

In order to determine if the debt is real, there are several questions you can ask, but make sure to find out exactly what they expect from you. You can always check with the state attorney’s office to confirm.

Be sure to get their name, document the time of call, the phone number of the caller, and the date.  These are your armor defenses.

Once you find out that the debt is real, see what they offer and what you can logistically do about the debt. If more information is needed, be honest with the collector of your situation; again remember to never give away any personal information including your current address.

If the collector seems aggressive, don’t lose your cool, but end the call quickly and look for outside council.  Be sure to document any way you feel they may be breaking any laws.

You must keep a call log and write down all information about the agents that are calling you. If you can pay the debt, it’s advisable to do so but make sure to use a cashier’s check or money order to confirm the amount.

Some scrupulous collectors have tried to gain access if they have your personal account information.

Finally, if you are unable to pay the debt, do not put down a good faith payment, but do try to figure out how you can square the debt.  This will likely have to involve legal counsel.

If things go to court, make sure you show up with all documentation.  If at all possible, be represented by an attorney.  In more cases than not, it’s possible to win in court. 

Disclaimer:  The contents of this website are provided for informational purposes only, and to not constitute legal advice. Prior to any action, you should retain professional legal counsel in your state or jurisdiction as applicable.


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