Creditors And Collectors" width="100%" height="145px" />Mark Henricks has written on mortgages, real estate and investing for many leading publications. He works from Austin, Texas, where he engages in songwriting, wilderness backpacking, whitewater kayaking and triathlons when not reporting on personal f.
Mark Henricks ContributorMark Henricks has written on mortgages, real estate and investing for many leading publications. He works from Austin, Texas, where he engages in songwriting, wilderness backpacking, whitewater kayaking and triathlons when not reporting on personal f.
Written By Mark Henricks ContributorMark Henricks has written on mortgages, real estate and investing for many leading publications. He works from Austin, Texas, where he engages in songwriting, wilderness backpacking, whitewater kayaking and triathlons when not reporting on personal f.
Mark Henricks ContributorMark Henricks has written on mortgages, real estate and investing for many leading publications. He works from Austin, Texas, where he engages in songwriting, wilderness backpacking, whitewater kayaking and triathlons when not reporting on personal f.
ContributorDaphne Foreman is a former Banking and Personal Finance Analyst for Forbes Advisor. She has worked as a personal finance editor, writer, and content strategist covering banking, credit cards, insurance and investing. As a small business owner and for.
Daphne Foreman is a former Banking and Personal Finance Analyst for Forbes Advisor. She has worked as a personal finance editor, writer, and content strategist covering banking, credit cards, insurance and investing. As a small business owner and for.
Written ByDaphne Foreman is a former Banking and Personal Finance Analyst for Forbes Advisor. She has worked as a personal finance editor, writer, and content strategist covering banking, credit cards, insurance and investing. As a small business owner and for.
Daphne Foreman is a former Banking and Personal Finance Analyst for Forbes Advisor. She has worked as a personal finance editor, writer, and content strategist covering banking, credit cards, insurance and investing. As a small business owner and for.
Updated: Nov 4, 2021, 7:00am
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Creditors And Collectors" width="100%" height="145px" />
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A consumer’s biggest problem with debt collectors is not the annoying phone calls during dinner, the threats of driver’s license suspension or wage garnishment. It’s not even the promises to tell their friends, relatives and employers about the debt. Consumers’ main complaint about debt collectors is that they’re trying to collect a debt the consumer does not owe.
More than half (52%) of the 82,700 complaints about debt collection received by the Consumer Financial Protection Bureau in 2020 were from consumers claiming they were contacted about debts they did not owe. And it’s been getting worse—this figure was up 25% in 2020 compared to the previous two years.
There are many reasons for mistaken debt collection attempts. Sometimes collectors go after people with names similar to the real debtors. Identity theft may explain some cases. The company that originally extended the credit may sell the debt to a collector without providing enough information about the debt or debtor for the collector to accurately identify the real borrower.
Not infrequently, the consumer has already paid the debt and the collector doesn’t know that. Also, scammers sometimes brazenly claim consumers owe nonexistent debts, hoping to browbeat or frighten their targets into paying money they do not owe.
Whatever the cause, if you are getting calls about a debt you don’t owe, you don’t have to take it—or pay it—anymore. Here’s how to dispute a debt and win.
When a collector calls about a debt you believe you don’t owe, the first thing to do is to find out who you’re talking to. Get the name of the person, company name, address and phone number. But don’t volunteer any information of your own. This includes correcting mistakes like a wrong address or phone number.
In fact, don’t discuss the debt at all. If you say the wrong thing, it could work against you. So say as little as possible beyond asking for the collector’s info. If the collector won’t provide it, that’s a red flag that you may be dealing with a scammer.
During the initial phone call or within five days, the collector is legally required to provide you with information on the amount of the debt, the name of the current owner of the debt and the information you need to contact the original creditor. Use this information to contact the company that you supposedly borrowed or bought from on credit. It may be something that slipped your mind, in which case you may want to acknowledge the debt and pay it.
Or it could all be a mistake. To help determine this, ask whether the original creditor uses an in-house collection department, has hired a collection agency, or sold the debt to a collector. The type of collector may have a lot to do with the amount of information the collector has about the debt. In-house collectors should have all the details. Collection agencies may have less information and debt buyers the least of all.
The next step is to send a debt dispute letter, also called a verification letter, to the address you got from the caller. You should do this within 30 days of the time you get the contact info. If you don’t respond within this time, the collector can assume the debt is valid and can continue contacting you about it.
A dispute letter can be very simple to create. You just say you’re responding to a collection contact and you don’t think you owe the debt. Also request that they provide proof that you owe the debt and, failing that, to stop contacting you about it. You may also want to ask for more information, such as contact information for the original creditor if you don’t already have it.
Sending the dispute letter can sometimes end the affair. This is especially true if the collection effort is by a scammer, or by a debt buyer that has no documentation that you actually owe the debt. In either of these cases, you may never hear about it again. To ensure you have a record of the letter, keep a copy and send it by a method that tracks the letter and shows it was delivered.
Once the collector has received the dispute letter, the agency has to stop contacting you, at least temporarily. It can resume contacting you after it sends a debt validation letter. The basic information in the validation letter could also have been provided in the initial phone calls. If it’s not, the collector has five days to get you the details. If it doesn’t, you may have a legal claim against the collector and the delay won’t necessarily affect the debt’s validity.
The validation letter is supposed to document that you owe the money. This could consist of a bill for the original purchase or a copy of a court judgment confirming the debt—the law is vague about precisely what is required here. Sometimes the validation letter may consist of little or nothing that truly proves you owe the debt. If the collector has little or no documentation, again, this may be the last you hear of it.
Using the documentation you’ve gotten from the validation letter, try again to see if the original creditor has any record of a purchase or loan showing you owe anything. While you’re at it, check your credit report. The disputed debt may not appear there. If it does, it may not go away for up to seven years, even if the collector stops pursuing it. However, if you can support your claim that it’s a mistake, you can write to the credit reporting agency and request that the mistake be corrected and the debt removed.
If a disputed debt is particularly hard to disprove and the collector files a lawsuit to collect it, you may need to hire an attorney to represent you in court.
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