How Dealing With Debt Collectors Works

Tips for Dealing with Debt Collectors

Many Americans are dealing with debt collection. The current credit crisis has been building for years. In 2004, consumer spending grew even as personal savings hit record lows.
Many Americans are dealing with debt collection. The current credit crisis has been building for years. In 2004, consumer spending grew even as personal savings hit record lows.
Tim Boyle/Getty Images

The best advice is simply to make every effort to pay your bills on time! But if it’s too late for that, here are some pointers.

Don't ignore the calls and letters. Ignoring collectors is not an effective forestalling tactic. It will only cause your credit rating to fall even more and may force the collector to employ more drastic means (such as lawsuits) to obtain payment from you. Even if you can't afford to make payments, it’s always better to be honest about your situation. Inability to make payments will not please collectors, but timeliness and honesty could persuade them to work out a payment plan that you can handle.

Learn the debt-collection process. In most cases, once your delinquent account has been turned over to a debt collector, it means that your debt has already been paid to your original creditor. The collection agency has purchased your debt from your creditor, probably at a reduced rate, and now owns your debt. Your original creditor has lost a little money, but not as much as they would have lost if you had defaulted entirely. The collection agency makes its profit when you eventually pay up.

Validate your debt. When you’re first contacted by a collection agency, make sure they’re legally authorized to collect your debt. Send them a letter requesting validation of your debt and confirmation that they’re authorized by your original creditor. If they fail to respond within 30 days, they’re in violation of the law. Requesting debt validation is sometimes little more than a stalling tactic, but it can often expose agencies that fail to live up to their legal obligations. It can also be a complicated procedure. DebtHelp offers some pointers.

Keep accurate records. This could provide some advantage in disputes over how much money you owe, as well as protect you in cases of identity theft. Pay only what your records say you owe. Never pay a disputed debt just to make collectors go away. Debt collectors are not infallible and sometimes encounter legal problems themselves when their own information is inaccurate. If you inform them that your records contradict theirs, or that you have been a victim of identity theft, they’re legally obligated to investigate such claims.

Write it down. Maintain an accurate record of the dates and times you receive calls from debt collectors, including instances when they leave a message on your voice mail. Note what was discussed during phone conversations. Be specific, especially if you feel you have been threatened or verbally abused. Deal with collectors via snail mail as much as possible, as this ensures an accurate record of all information exchanged. Send copies of your letters to both the collection agency and your original creditor, and request return receipts for everything sent.

Don't be afraid to complain. If you feel you have been the victim of abuse, or if the collector has violated the terms of the FDCPA, contact a consumer attorney, your state attorney general, a consumer-protection agency or the American Collectors Association. You can also contact the Federal Trade Commission or the Better Business Bureau, though these agencies often lack the resources to take legal action except in cases of extreme abuse.

Your situation may require additional means and methods to protect yourself. The not-for-profit Privacy Rights Clearinghouse offers an exhaustive list of tips. You can also access related HowStuffWorks articles below.

Related HowStuffWorks Articles

More Great Links


  • Credit Info Center.
  • Debt Validation: Pay Only What You Must.
  • The Fair Debt Collection Practices Act.
  • Federal Trade Commission: Fair Debt Collection.
  • Haley, Jen. “Rogue debt collectors -- how to fight them.” CNN:
  • Marshall, J. Christopher: Office of the U.S. Trustee Launches Civil Enforcement Initiative.
  • New York City Department of Consumer Affairs Debt Collection Guide.
  • Nolo.
  • Nolo.
  • Privacy Rights Clearinghouse.