I was watching a cable news financial show the other night. They had a segment on debt collectors and unfortunately, gave very bad and flat-out wrong advice, so I thought I would write about this topic. Thanks to a financially-irresponsible ex-husband (and yes, that is why he is an ex), I have lots of experience with collection agencies.
There are different ways to deal with collectors depending on whether you owe the debt vs. whether you do not owe the debt.
If you owe the debt
If you owe the debt, you do need to respond to them. However, they do not have the right to harass you, your family, friends, or employer. If you are getting harassing phone calls, tell them that they are only to communicate with you in writing, then send them a letter that states they are to only contact you in writing. While you are at it, tell them to validate the debt. They may send you a letter saying you owe the debt- this is not validation. Validation will give you the name of the creditor, the account number, the account information, etc. This is the law and they have to follow it. You can try and negotiate a lower payment or a payment plan with them. If you do pay them, do NOT ever give them your checking or savings account information-they may take more than you authorize. The same goes for your credit card number. Pay them only with a money order.
If your spouse or ex owes the debt
Keep in mind that if you are or were married at the time the debt was incurred, even if it was only in your spouse's name, you may still be legally responsible for the debt. It may not matter what the divorce papers say. The best bet here, is try to stall the debt collectors until the statute of limitations expires as they will be, at first, looking for your spouse. Don't tell them he or she doesn't live here anymore or provide contact information. Just tell the collectors they have the wrong number that there is “no such person here”.
Always be aware of the statute of limitations for debt in your state, before you pay. This information is easily found online. If the debt is older than the statute, collectors can try to collect the debt, but they cannot sue you over it. Never pay a debt that is beyond the statute of limitations- tell them “so out of luck” (SOL-this is actually the legal term) applies. However if you get a notice that they are suing you, you need to show up in court. If you do not, they can still get a judgment unless you defend yourself, using SOL.
If you do not owe the debt
Now, if you do NOT owe the debt and a collection agency starts to bother you- it is a completely different story. There are what is known as “zombie debt collectors” or “bottom feeders” who buy old debts for pennies on the dollar and try to collect. This is the worst type of debt collector and to deal with them you need to be smart and know your rights. A favorite method of harassment is the autodialer- where they have a computer call your number several times a day. If you see a strange number on your caller ID, go to whocalled.us, enter the number and if other people have been called by them, you will find out who they are. Budd Hibbs also has a great website that discloses who these people are and their tactics. I highly recommend you check it out.
Most importantly, DO NOT even speak to these people. They are usually nasty, anyway. Do not pick up an autodial call- this will let them know they have a “live” number and the calls will increase. Do keep a written log of each call – with the date and time. After you do some research and find out who they are, look up their mailing address and send them a letter. In this letter, tell them that they are harassing you, they are not to call your number again, that you are keeping track of the calls, and that they are to validate the debt in writing- with the original contract for the debt, with a valid signature (trust me, they do not have this information). Also tell them that if they continue to violate the Fair Debt Collection Practices Act, you will take them to court (yes, you can and you can win $1,000 for each time they violate the law by calling you again). You will never hear from them again.
Search on The Fair Debt Collection Practices Act to learn more about your rights.