Debt collection is consistently one of the top financial issues people have questions about when they visit our website. We’ve provided short, easy-to-understand answers to some of our most-visited questions about debt collection. For the full answer, you can view the provided link. While every situation is unique, these answers may help you better understand how debt collection works or help you identify steps that you can take to address your own situation.
What should I do when a debt collector contacts me?
There are different ways to respond appropriately to debt collectors.
When contacted, find out:
- The identity of the debt collector, including name, address, and phone number
- The amount of the debt
- What the debt is for and when the debt was incurred
- The name of the original creditor
- Information about whether you or someone else may owe the debt
We also have sample lettersthat will help if you’re experiencing common problems that may come up with debt collection.
How can I verify whether or not a debt collector is legitimate?
Ask the caller for their name, company, street address, and telephone number. If your state licenses debt collectors, you can also ask for a professional license number. You can also refuse to discuss any debt until you get a written "validation notice." Do not give personal or financial information to the caller until you have confirmed it is a legitimate debt collector.
Keep an eye out for warning signs that could signal a debt collection scam.
What is the best way to negotiate a settlement with a debt collector?
To get ready to negotiate a settlement or repayment agreement with a debt collector, consider this three-step approach:
- Learnabout the debt
- Planfor making a realistic repayment or settlement
- Negotiatea realistic agreement with the debt collector
Be wary of companies that charge moneyin advance to settle your debts for you. Some debt settlement companies promise more than they deliver.
Learn more about negotiating a repayment agreementthat’s right for your situation.
What should I do if a creditor or debt collector sues me?
If you're sued by a debt collector, respond to the lawsuit. You can respond personally or through an attorney, but you must do so by the date specified in the court papers.
When you respond to, or “answer,” the lawsuit, the debt collectorwill have to prove to the court that the debt is valid and that you owe the debt.
If you ignore a court action, it's likely that a judgment will be entered against you for the amount the creditor or debt collector claims you owe. Often the court also will impose additional fees against you to cover collections costs, interest, and attorney fees.
Learn more about what can happen if you don’t respond to a debt collection lawsuit.
What is a statute of limitations on a debt?
A statute of limitations is the limited period of time creditors or debt collectors have to file a lawsuitto recover a past due debt.
Most statutes of limitations fall in the three- to six-year range, although in some cases they may vary due to:
- State laws
- What type of debt you have
- Whether the state law applicable is named in your credit agreement
Need help with something else?
If you are having an issue with debt collection, you can submit a complaint onlineor by calling (855) 411-CFPB (2372). We’ll work to get you a response from the company.
FAQs
The 7-in-7 rule explained
Collectors are permitted to place a call to the consumer about a particular debt seven (7) times within a period of seven (7) consecutive days, so long as no contact is made with the consumer in any of the attempts.
What is the CFPB final debt collection rule? ›
The final rule, among other things, clarifies the information that a debt collector must provide to a consumer at the outset of debt collection communications and provides a model notice containing such information, prohibits debt collectors from bringing or threatening to bring a legal action against a consumer to ...
What is the 11 word phrase to stop debt collectors? ›
If you are struggling with debt and debt collectors, Farmer & Morris Law, PLLC can help. As soon as you use the 11-word phrase “please cease and desist all calls and contact with me immediately” to stop the harassment, call us for a free consultation about what you can do to resolve your debt problems for good.
What happens if you never answer a debt collector? ›
If you receive a notice from a debt collector, it's important to respond as soon as possible—even if you do not owe the debt—because otherwise the collector may continue trying to collect the debt, report negative information to credit reporting companies, and even sue you.
What's the worst a debt collector can do? ›
Debt collectors are not permitted to try to publicly shame you into paying money that you may or may not owe. In fact, they're not even allowed to contact you by postcard. They cannot publish the names of people who owe money. They can't even discuss the matter with anyone other than you, your spouse, or your attorney.
How do you outsmart a debt collector? ›
You can outsmart debt collectors by following these tips:
- Keep a record of all communication with debt collectors.
- Send a Debt Validation Letter and force them to verify your debt.
- Write a cease and desist letter.
- Explain the debt is not legitimate.
- Review your credit reports.
- Explain that you cannot afford to pay.
Under the Debt Collection Rule, collectors are presumed to violate the law if they place a telephone call to you about a particular debt: More than seven times within a seven-day period, or. Within seven days after engaging in a phone conversation with you about a particular debt.
What is the CFPB 3 day rule? ›
Pre-consummation or account opening waiting period.
A creditor must furnish § 1026.32 disclosures at least three business days prior to consummation for a closed-end, high-cost mortgage and at least three business days prior to account opening for an open-end, high-cost mortgage.
How long before a debt becomes uncollectible? ›
Statute of limitations on debt for all states
| State | Written | Oral |
|---|
| Alaska | 6 years | 6 |
| Arizona | 5 years | 3 |
| Arkansas | 6 years | 3 |
| California | 4 years | 2 |
46 more rowsJul 19, 2023
A 609 Dispute Letter is often billed as a credit repair secret or legal loophole that forces the credit reporting agencies to remove certain negative information from your credit reports. And if you're willing, you can spend big bucks on templates for these magical dispute letters.
Don't provide personal or sensitive financial information
Never give out or confirm personal or sensitive financial information – such as your bank account, credit card, or full Social Security number – unless you know the company or person you are talking with is a real debt collector.
Why should you never pay a debt collector? ›
Firstly, your credit score will likely be negatively impacted as the debt remains unpaid and continues to be reported to credit bureaus. Persistent attempts to collect the debt may result in increased pressure from the collector, including frequent phone calls, letters, or even legal actions such as lawsuits.
What happens after 7 years of not paying debt? ›
The debt will likely fall off of your credit report after seven years. In some states, the statute of limitations could last longer, so make a note of the start date as soon as you can.
Will a debt collector sue me for $500? ›
Collection agencies usually won't sue you for a debt of less than $500. While every collection agency has a different policy regarding debt lawsuits, you should feel reasonably safe from a legal claim if you owe less than $500 on a debt. However, if you receive a court summons from a collection agency, don't ignore it.
What debt collectors don't want you to know? ›
Here, then, are ten of the best-kept collection secrets.
- The More You Pay, the More They Earn. ...
- Payment Deadlines Are Phony. ...
- They Don't Need a 'Financial Statement' ...
- The Threats Are Inflated. ...
- You Can Stop Their Calls. ...
- They Can Find Out How Much You Have in the Bank. ...
- If You're Out of State, They're Out of Luck.
A debt collector must stop all collection activity on a debt if you send them a written dispute about the debt, generally within 30 days after your initial communication with them. Collection activities can restart, though, after the debt collector sends verification responding to the dispute.
