How To Deal With Collection Agencies When You Do Not Owe
Bookmark this page and share it with others! (Or press Ctrl/D on Firefox)Collection agencies are businesses who get paid to collect debts on behalf of a company or buy the debts of a company to collect the full amounts for themselves.
It serves them best to collect the debt because they make their profit solely from the proceeds of debt collections. They do not care about your problems, history, or situation. As far as they are concerned, that is your problem. They are only concerned that you pay the debt which was presented to them in good faith and you do it immediately in whatever way you can.
Of course, they are not perfect. Sometimes they make mistakes. Sometimes the company sends them the wrong information. If a collection agency contacts you regarding a debt (or a portion of a debt) that you don't believe you owe, there are specific things you must do to document the dispute.
Be sure to keep a copy of all letters you send as well as letters they send you in a file to be kept handy for up to 15 years.
Ideally, when the collection agency first contacts you, you need to dispute the debt in writing within 30 days. You cannot just dispute it over the phone. With all letters of communications to collection agencies, send them certified mail WITH return signature receipt so you will have a record mailed back to you with their signature as proof they did receive it. Send them a dispute letter by certified mail such as this one:
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Upon receiving your letter, the collection agency must halt collection activity until a copy of a debt verification is sent to you.
A verification may include a signed agreement, a copy of a judgment against you regarding the debt or an itemized statement of services rendered under your name (or the name of a dependent or spouse). It can also be as simple as a copy of the last bill the creditor sent you.
The collection agency cannot report the disputed debt to a credit bureau without also reporting that it is being disputed. However, if the collection agency reports the debt to a credit bureau before you dispute it, they are not obligated to update the credit bureau report.
If the debt cannot be verified by the creditor, the collection agency must cease collection activity on the account.
Chances are, if the agency bought the debt from the company there will be no proof, but don't count on this being the case in every instance. If there is no proof sent to you within 30 days, follow it up with another certified letter like this:
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Bill collectors are seldom able to properly validate debts because the original creditor has lost, misplaced or deleted your account information or the debt has been sold so many times it's nearly impossible to validate it with the original creditor.
When collectors cannot validate a debt, they often sell the debt to another junk debt buyer. Because the FDCPA does not require collectors to tell you when they sell your account and the law prohibits collectors from sharing your information with other collectors, you can expect to be contacted by a different collection agency thus forcing you to dispute the debt all over again.
If verification is obtained from the creditor, the collection agency must mail a copy of the verification to you. It may then continue its efforts to collect the debt.
A legitimate debt should never be disputed merely to postpone repayment. In doing so you risk losing any leniency the creditor or collection agency may have granted you in paying back your debt.
CEASE AND DESIST!
If the debt is legitimate the collection agency has every right to contact you to demand payment. However, they are required to abide by certain rules.
They cannot call before 8AM or after 9PM if they work for a collection agency unless you have sent them written instructions otherwise. The original creditor, however, does not have to abide by this rule.
They cannot harass you. Calling to demand payment is not enough to claim harassment. Harassment would include verbal abuse, vulgar language, threats of physical violence, derogatory remarks as well as calling constantly in a day for the purpose of being annoying, hang up calls, or making threats of legal action they cannot take.
They cannot publicize your debt in any way. This includes sending you communication by post card, including on an envelope that you are owing a debt, tell anyone [other than a spouse or a child] that you owe a debt, or print your name where people will see you owe a debt.
They cannot write telling you they have started proceedings for a legal action if they have not in fact done so.
They cannot contact you at work if you have sent them a letter telling you the calling work is off limits.
If a collection agency is acting abusive while collecting a debt, you do not have to stand for it. You do have the right to be treated humanely.
When collectors are calling several times a day demanding money or they've been calling for weeks harassing you and your family and you're stressed out just want the calls to stop, you do have an option.
According to the Fair Debt Collection Practices Act, [15 USC 1692c] Section 805(c): CEASING COMMUNICATION:
"If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt."
Should the creditor, debt collector, or credit reporting or repair agency violate the law, you will have the necessary documentation to prove it, and perhaps sue them in civil court. If you encounter difficulty and need to hire a lawyer or file a formal complaint, accurate records are needed to support your case.
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Has The Debt Reached Statue Of Limitations? You Don't Owe!
Another reason why you may not have to deal with the collection agency or they could not give you proof of the debt - the debt has reached the statute of limitations [SOL].
Perhaps you have been called out of the blue by a collection agency about a debt you may or may not have remembered from 15 years ago. You may owe it, but legally are not required to pay it. First off, get the name and address of the collection agency along with the account number and send them a letter like this by certified mail:
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Every state has an SOL on the books for when time has expired in order to take legal actions to collect debts. Although the debt may have reached SOL, that does not prohibit creditors and collectors from attempting to collect the debt. It just means the courts cannot be used to force you to pay the debt through legal actions such as judgments, liens, wage garnishments and so forth.
SOL is almost always counted as beginning on the first missed payment date with the original creditor. Time is counted from that date forward. At any time, if you once acknowledge making a payment arrangement and miss it, the count begins with that new day.
Assuming a debt is valid, once it expires, it's up to you to decide whether or not to pay it.
If you choose not to pay the debt send a letter informing them of the expired statute of limitation and your intention to use it as your defense should they decide to pursue legal actions.
As most collection agencies go after payment for open or revolving accounts, such as credit, medical bills, and the like, I will cover only this area.
Laws can change, but these are the general rules by state. It goes into effect the day the last missed payment was registered. Judgments, contracted deals, and real estate actions have too many variables to be listed here. See if this applies to your situation:
- Alabama - 3 years
- Alaska - 3 years
- Arizona - 3 years
- Arkansas - 3 years if not in writing, 5 years if in writing
- California - 4 years
- Colorado - 3 years
- Connecticut - 3 years
- Delaware - 3 years
- District of Columbia - 3 years
- Florida - 4 years
- Georgia - 4 years
- Hawaii - 4 years
- Idaho - 4 years
- Illinois - 5 years
- Indiana - 6 years
- Iowa - 5 years
- Kansas - 5 years if in writing, 3 years if not
- Kentucky - 4 years
- Louisiana - 3 years
- Maine - 6 years
- Maryland - 3 years
- Massachusetts - 6 years
- Michigan - 6 years
- Minnesota - 6 years
- Mississippi - 3 years
- Missouri - 5 years
- Montana - 8 years if in writing, 5 years if not
- Nebraska - 5 years if in writing, 4 years if not
- Nevada - 6 years if in writing, 4 years if not
- New Hampshire - 3 years
- New Jersey - 3-4 years
- New Mexico - 6 years
- New York - 4 years
- North Carolina - 3 years
- North Dakota - 4 years
- Ohio - 6 years
- Oklahoma - 5 years
- Oregon - 6 years
- Pennsylvania - 4 years
- Rhode Island - 10 years
- South Carolina - 3 years
- South Dakota - 6 years
- Tennessee - 6 years
- Texas - 4 years
- Utah - 4 years
- Virginia - 3 years
- Vermont - 6 years
- Washington - 6 years
- West Virginia - 5 years
- Wisconsin - 6 years
- Wyoming - 10 years
If your debt qualifies for SOL, this is a letter you can send:
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