What to Know When a Debt Collector Calls - American Credit Foundation

What to Know When a Debt Collector Calls

What to Know When a Debt Collector Calls

Debt collectors are third-party businesses hired by creditors to collect unpaid debts. Some companies buy past-due debts from creditors or other businesses and then try to collect them. Say you have a past-due balance with ABCredit; they may hire PQRecovery to collect the debt you owe. 

Debt collectors aren’t part of the company that extended credit to you, so it might be confusing to suddenly start receiving communications about your debt from a company you’ve never heard of. And if you’re facing debt collection, you likely have plenty of questions. Let’s consider a few common issues to arm you with the knowledge that will enable you to come out ahead.

What types of accounts go into collections?

Your unsecured accounts are the types of debt that debt collectors will come for, such as credit cards, utility bills, medical bills, and personal loans. In contrast, if you default on your secured loans – think: mortgages or auto loans – you will instead face foreclosure or repossession.

How late must I be on my past due payment to receive a call from a debt collector?

If you fail to pay your bill on time, you typically have a “grace period” to get it turned in. Your creditor will remind you in writing – usually multiple times – that they still haven’t received your past due payment, and that your account will move into collections if you don’t pay up. At this point, your payment is considered delinquent. Most creditors will allow you to remain delinquent for a few months before turning your account over to a debt collector because that is their last resort to recover their money from you.

How did this debt collector get my info?

How did this debt collector get my info?

It’s the collector’s job to locate people, and they use various tactics to do so – some genuine, others more unscrupulous. A legitimate debt collector (one actually hired by your creditor for a real past due amount) will receive your account information and contact information when your original creditor assigns them your account. They can also find your current address and phone number from your credit report. Even a quick internet search can reveal much of your personal information.

But collectors also acquire contact info in more spurious ways. They have been known to send scary letters about your debt and demand that you call them – and when you do, their caller ID captures your phone number. They might also contact your acquaintances (whose numbers they find in a random internet search), claiming a dire need to reach you. Wanting to be helpful, your unsuspecting friends may readily give up your phone number.

Is this debt collector legit?

The first thing you need to do is to make sure the debt collector you’re dealing with is real and not a fake. Ask the caller where they received your information. If it came from your original creditor, the collector will be able to prove this by confirming your personal details such as where you live, the amount owed, and the original creditor.

If a debt collector is posing as the police or threatens you with jail time, you’re probably being scammed. End the call immediately, and report the threat to the Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau.

Can I stop these calls?

You can end the stream of incessant calls by sending the collection agency a letter requesting that they stop calling you. Paying the past due balance is another option that will cease all those phone calls for good – but don’t simply give in to the pressure on first contact! Don’t pay, don’t promise to pay, and don’t give payment information. Rather, ask for information about the debt, and tell them you’ll call back after you’ve had time to think it through. You can also bring in legal counsel to work through your debt issues – once you’ve hired a lawyer, the collector may not call you, only your attorney.

What is the debt collector prohibited to do?

Several important rules under the federal Fair Debt Collection Practices Act (FDCPA) protects you, the borrower. For one, collectors typically can’t call you at work, outside a “reasonable” timeframe (typically 8:00 am – 9:00 pm), or multiple times a day. This is considered harassment – and could signal a debt collection scam. Also, the debt collector must provide company information, including a callback number. Most importantly, debt collectors can’t make you pay more than you owe or threaten you with jail time, wage garnishment, or property liens if you don’t pay. 

Debt is stressful enough without a collections agent breathing down your neck. Constant badgering phone calls to remind you – or threaten you – to pay off your past due balances do nothing but add to the weight. If you’ve tried to get the calls to stop, or simply can’t figure out how to move past your collections situation, please realize that you don’t have to go it alone! Contact American Credit Foundation today to speak with a helpful financial advisor.