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by The Ascent Staff | Updated July 17, 2021 - First published on Oct. 1, 2019
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Have you ever answered a phone call by accident? Mid-text message, you realize you've picked up the phone for the dreaded "unknown" number. There's an awkward silence. Then the voice on the other end asks for you -- with the most creative pronunciation of your name that you've heard to date.
With your finger hovering over the "end call" button, you suddenly decide now is as good a time as any to deal with that pesky debt collector you've been avoiding. The caller is looking to get as much money as possible from you, and while it may feel cathartic to finally square up with your debtor, don't give away the farm -- or any of the things listed below.
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These calls are monitored for quality assurance purposes. A verbal admission could revive expired debt that you no longer owe. Even if the debt sounds vaguely familiar, make sure the caller represents the agency that's been assigned to collect. Imagine paying a settlement to the wrong person and then finding out the debt is still due!
Before confirming that you owe the debt that the caller is referring to, request written validation. You'll be mailed a statement showing the amount and original lender of the debt, as well as some details on the collection agency.
Each state has regulations on debt expiration. Even after the statute of limitations has expired, some collectors may still continue to pursue a debt. If they can convince you to make a partial payment, the expiry period starts over, and they have more time to chase down the balance due. It's important to note that if you are sued for repayment of an expired debt and you don't show up to defend yourself, you may still be held liable. With a court order in hand, the lender may even be able to garnish your wages.
So you've finally come to a settlement agreement, and you're ready to pay. Then the debt collector asks for your bank account and routing numbers. Do not provide this information. Fraud isn't a guarantee, but it's certainly possible. Once that information is in the collector's hands, "mistakes" can happen. After all, collection agencies get to keep some or all of the debt they collect, and their employees often earn a commission, so the incentive to withdraw more than the agreed-upon amount is high.
You may have the time, energy, and/or legal assistance to sort everything out after the fact. But who wants to deal with that? Alternatively, what if you lose your job and are suddenly unable to make the settlement payments as agreed? The next business to hire a collection agency to track you down could be your bank. Overdraft and insufficient funds fees vary and multiply like fake news.
To protect your bank account from any excessive withdrawals, consider making payments with classic checks sent via certified mail. This payment method is traceable and limits the payee to the authorized amount.
Once they have you on the phone, debt collectors often ask you for additional phone numbers, employer information, and maybe even some info on your family members. You are not required to provide this information. The debt collector has already found a way to reach you this time -- and will undoubtedly manage if they need to reach you again.
A good rule of thumb is not to provide any information to them that the debt collector wouldn't give you in return over the phone. Name? Check. Address? OK. Banking information? Probably not. Social Security number? Not a chance.
Are there exceptions to this rule? Certainly. But in general, when you are being cold-called by a collection agency, you should treat the caller with skepticism until the collector can be authenticated and the debt can be verified in writing.
You may have impeccable credit, but you may also share a name with someone who only pays bills under duress. You cannot assume the debt collector did its due diligence. Some do, but to others, any Smith who pays the bill is the right one. This is why authenticating your debt is imperative.
Now here's a fun fact.
Let's say you're completely clear on the fact that you don't have any debts in collections. The debt collector didn't do enough research to make sure he contacted the right person, yet he's been a supersleuth when it comes to digging up information on you. He's called your house and your job, leaving menacing voicemails. Lucky for you, not only are there state regulations to keep creditors in line, but you also have protection under the Fair Debt Collection Practices Act.
The appropriately named "drop dead letter" is an official request for a creditor to stop contacting you. Upon receiving the request, the debt collector cannot legally contact you further. This is an important tool if you're being harassed for a debt that is not yours. If the debt is valid, that letter won't eliminate the debt or keep you from being sued. However, it will give you some peace of mind while you sort things out (and it will feel pretty darn good to write). You can find sample letters on ConsumerFinance.gov.
You can also have a lawyer draw up a document for a more emphatic denial.
Dealing with debt collectors is a daunting task. They may seem to have all of the power, but don't forget that you also have some weapons in your arsenal.
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