How to Deal with a Debt Collector: Your Consumer Rights

The effects of the Great Recession still linger in certain parts of the country, and in specific industries. But even before the financial crisis of 2008 shocked the economy, American wages had stalled. According to the Social Science Research Council, the typical American earned $2,200 less in 2010 than in 2000. For anyone who was already struggling, this loss in pay could be devastating.

While we all want to pay our bills on time, bad things do happen to good people. Without an emergency fund to fall back on, a job loss, a surprise medical bill, or an unexpected car repair can wreak havoc on our finances.

Unfortunately, neglecting to pay creditors on time will wreck your credit if you let it. You may also find yourself dealing with stern and persistent debt collectors, which only adds to the stress of a financial setback.

While you definitely need to deal with your debt and handle your own mistakes, you do have rights. Here are some tips on dealing with debt collectors, negotiating a settlement, and escaping the situation with your pride intact.

Knowing and Understanding Your Rights

When you’re being pursued by a debt collector, you might cringe each and every time the phone rings. While you don’t want to answer, it’s in your best interest to keep the lines of communication open between you and your creditor. The conversations are never easy, but it’s important to know you are protected from rude and unscrupulous collection agents by the Fair Debt Collection Practices Act (FDCPA). The Federal Trade Commission enforces the FDCPA and can prosecute illegal collection procedures in the U.S., which include:

  • You don’t have to accept phone calls prior to 8 a.m. or after 9 p.m., unless you agree. Debt collectors must refrain from calling you at inconvenient times or inappropriate places. They can be prohibited from calling you at work if you aren’t allowed to take calls on the job.
  • Debt collectors must discontinue contact with you if they are notified in writing. There are only two exceptions: to advise you that there will be no further contact, or to inform you of a pending action, such as the filing of a lawsuit. While further contact will end, you will still owe the debt.
  • Third parties cannot be contacted by debt collectors to discuss your debt — only to gain contact information. However, your attorney or spouse can be designated to discuss the situation on your behalf.
  • You cannot be threatened, harassed, or spoken to with profane or obscene language. Debt collectors also cannot lie or misrepresent themselves, the amount you owe, or who they work for.
  • You cannot be threatened with arrest or other unauthorized judgments. A debt collector may not make threats regarding the seizure of property, wage garnishments, or any other action that is not legally authorized.

Be Proactive When You Owe Money

If you truly owe the creditor who is contacting you, be proactive. Try to resolve the matter as quickly as possible if you are able. The sooner you respond, the sooner you can start working towards a resolution. Here are some proactive steps you can take:

  1. Report illegal activity. First, if any debt collector has infringed on your rights as stated above, report it to your state Attorney General’s office ( and the Federal Trade Commission ( While the federal rights outlined by the FDCPA prohibit the actions listed above, many states have their own debt collection laws that may vary. Your state Attorney General’s office can assist you. Note that these regulations cover the collection practices regarding personal debt, but not amounts owed in the operation of a business.
  2. Confirm the details of your debt. Check your personal records to confirm the amount being collected by the creditor is correct. If you doubt the information being provided by the debt collector, request verification of the debt in writing.
  3. Try to work out a settlement. Many times creditors will reduce the amount you owe – sometimes by as much as half or more – if you can show a hardship and offer a lump-sum payment. Determine how much you can afford, and offer a settlement that’s a little lower. Then negotiate the best deal you can, up to your budget limit.  Remember, the debt collector is nearly as motivated as you are to come to some kind of agreement: they don’t get paid if you don’t pay. If you do make a deal, be prepared for another bill at tax time. The amount written-off by the creditor may be reported as income to the IRS and subject to federal taxes.
  4. Be sure to get any agreement documented in writing before providing payment. For safety, as well as for creating a permanent record of the transaction, it’s best to issue the lump sum as a cashier’s check or electronic transfer, rather than a personal check.

Take Steps to Resolve the Issue if They’re Wrong

Perhaps this whole matter is an ugly misunderstanding. Maybe your records have been confused with another creditor – or it could even be a matter of identity theft. Whatever the reason, here’s what to do when you don’t owe the debt:

  • Don’t agree to anything unless you’re sure how much you owe. Don’t agree to pay the debt, not even a partial payment, and don’t acknowledge the amount owed until you are convinced it is yours – with written proof.
  • Ask for proof. If no proof of the debt is provided, instruct the debt collector in writing to discontinue all further contact and collection efforts.
  • Consider the timeline. If the matter is concerning an old debt, it may not be able to be collected due to time limitations. Statute of limitations vary from state to state, and for different kinds of debt. Most states impose a period of three to six years. You may want to get assistance from a legal aid lawyer, your attorney, or your State Attorney General’s Office.
  • Get a copy of your credit report. Check your credit report to make sure that there has been no negative impact to your credit rating.

The Bottom Line

Your debts aren’t going to go away any time soon. If you owe money and haven’t paid it back, the burden to resolve the issue falls on you.

Still, it’s important to know your rights and which consumer protections were created to protect you from unruly debt collectors. If they’re ruining your life with non-stop phone calls, you don’t have to tolerate the abuse.

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