10 Facts About Debt Collector Calls: What to Do When They Call

You get a debt collector call one day from a number you don't recognize. When you pick up the phone, the caller tells you they're with a debt collection agency and that you owe money on an unpaid account. You're not sure you recognize the debt. The caller is trying to convince you to make a payment right away.

The good news in this situation is that the law limits what a debt collector can do and say when trying to collect a debt. Understanding these rules can help you spot bad actors more easily and choose a course of action with greater confidence.

You've made a smart decision to find information about debt collector calls. Once you know about consumer protections and how to deal with debt collectors, you'll be better positioned to take control of the situation and get debt relief. To help with that, here are the top 10 facts about debt collector calls that you should know.

Why Am I Getting Calls From a Debt Collector?

You're getting calls from a debt collector because they have information that says you owe a debt. This information may or may not be accurate. Mistaken identity does happen in the debt collection business. Verify the debt by asking for a debt validation letter before you discuss anything with the debt collector.

Here are the most common reasons behind debt collection calls:

• You have a past-due account with a creditor. For example, if you haven't made a loan or credit card payment, the creditor is likely to call you to try and get you to pay.

• A debt collector bought your debt. Many creditors eventually sell past-due accounts to debt collectors. Once a debt collection agency buys your debt, it reaches out for payment.

• Someone fraudulently racked up debt in your name. You'd likely need to file a police report and dispute the debt in this situation.

• A debt collector is calling you by mistake. Debt gets sold and resold, which could lead to information mix-ups. You could get a call about a debt that's not yours or that you already paid.

When a debt is legitimate, the collection process usually starts with the original creditor contacting you. The creditor that issued the debt is known as a first-party collector.

If the original creditor can't collect, it may eventually charge off the account, meaning it closes the account and writes off the debt as a loss. The creditor may then sell the debt to a third-party collector. A third-party collector is a company that buys debts and attempts to collect on them.

The timeline depends on the creditor. Many creditors charge off accounts and sell debts to collectors after around six months of missed payments, and the exact timing varies by creditor.

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1. Not All Debt Collector Calls Are Legitimate

Some debt collectors call you by mistake because they have inaccurate information. The debt collection business also has plenty of bad actors who use illegal threats and lies to trick people out of money.

To spot these bad actors right away, here are common red flags of scam calls:

• They pressure you for an immediate payment. The debt collector may be trying to get you to restart the statute of limitations on an expired debt. Or they may know that the debt wouldn't hold up if you request a validation letter.

• They threaten to have you arrested. It's illegal for debt collectors to threaten you with arrest, and you could report them to the state attorney general for doing so.

• They ask you to pay with a gift card or wire transfer. These payment methods are usually irreversible, which makes them popular with shady debt collectors.

• They don't provide you with much information. If a debt collector gives evasive answers about their company or the debt they're after, there's a good chance the call is a scam.

How do you know if a debt collector call is real?

A legitimate debt collector provides their name, their company name and address, and details about the debt. Use this information to figure out if the debt collector call is real. Find out if the debt is an account you recognize, and research the debt collection agency to confirm it's a real business.

If the debt collector called the wrong person, let them know you're not who they're trying to reach. Even if the debt does seem legitimate, don't take any action or admit that it's yours yet.

Tell the caller that you want validation information about the debt. Debt collectors are legally required to provide this information by mail or electronically.

2. You Have 30 Days to Dispute a Debt After the Validation Notice

A debt validation letter gives you the opportunity to recognize whether a debt is yours and if you're legally responsible for it. If not, you may dispute the debt.

Validation notices normally include the following information:

• Debt collector's name and mailing address

• Name of the original creditor

• Account number associated with the debt

• Current amount of the debt

• How much you owe, broken down into fees, interest, payments, and credits

• What to do if you don't think the debt is yours

• An explanation of your rights

The validation notice must also have a tear-off form for you to send back to the debt collector to dispute the debt or take another action. Once you've received the validation notice, you have 30 days to dispute the debt if you don't believe it's valid.

3. Creditors and Debt Collection Agencies Are Not the Same

If you don't recognize the name of the debt collection company contacting you, that doesn't always mean the debt collector is calling the wrong person. You could be dealing with debt collectors who either bought your unpaid debt or were hired to collect it.

A creditor is the original issuer of a debt. For example, on credit card debt, the creditor is the card issuer. A debt collection agency is a third-party company that attempts to recover debt.

Once an account has been delinquent for a certain amount of time, most creditors either send your debt to a debt collector or sell it to them for a fraction of what you owe. This is called a charge-off.

The creditor may get a debt collection agency involved. Some creditors hire debt collection agencies to chase down debt for them. Other creditors sell debt to collection agencies for pennies on the dollar.

4. You're Protected From Unfair Debt Collection Practices

The Fair Debt Collection Practices Act (FDCPA) is a federal law that governs debt collection. Under the FDCPA, it's illegal for debt collectors to:

• Contact you at unreasonable hours. Debt collectors may call, text, or mail you, just not at unreasonable or unusual times. The general guideline is that debt collectors can't contact you before 8 a.m. or after 9 p.m. unless you agree to it. If you tell a debt collector that they've called you at an inconvenient time, they must end the call. If they call your employer and you’re not allowed to take phone calls there, they can no longer contact you at that number.

• Harass or threaten you. Debt collectors cannot threaten to harm you, use obscene or profane language, or repeatedly use the phone to annoy you.

• Make false statements or misrepresent themselves in any way. It's illegal for a debt collector to make false claims about you or themselves when they are trying to collect a debt. For example, a debt collector can't claim to be a lawyer or a government agent, say that you've committed a crime, or misrepresent the amount you owe.

• Threaten to seize, garnish, or sell your property or wages. A debt collector cannot threaten to seize or garnish your wages unless they get a court order to garnish your wages or intend to take you to court in order to do so.

• Talk to others about your debt or publicize it. A debt collector can't communicate to third parties about your debt without your consent. They also can't talk about your debt publicly or post to social media about it. The FDCPA essentially prevents debt collectors from publicly shaming anyone. In some cases, it makes sense to let debt collectors talk to others about your debt, like if you enroll in a debt relief program.

The FDCPA applies only to third-party debt collectors, not to original creditors. Some states require original creditors to follow similar rules.

5. Debt Collectors That Don't Follow the Law Could Face Legal Consequences

If you think debt collector calls or other such actions may be violating the FDCPA, contact an attorney to find out if you have any legal recourse. You have rights as a debtor, and there are legal consequences for creditors and collection agencies who violate those rights. You may also file a complaint with the two federal regulators that oversee the FDCPA:

• Consumer Financial Protection Bureau (CFPB): 1-855-411-2372

• Federal Trade Commission (FTC): 1-877-382-4357 (FTC-HELP)

If you prove a violation of the FDCPA took place, you may receive $1,000 in damages plus compensation for any actual harm the debt collector caused. The debt collector could also be responsible for paying your legal fees. You have only one year from the date of the offense to file a lawsuit for a violation.

6. Could the Statute of Limitations Affect Your Debt?

Every state sets a statute of limitations on debt—a window of time a creditor or debt collector has to sue you over an unpaid debt. Once that window closes, the law no longer allows them to come after you for that debt through a lawsuit. A collector may still contact you and could still file a lawsuit, since anyone can sue anyone. If that happens, telling the court the debt is past the statute of limitations is a valid defense. 

If you make a payment or agree that you owe an old debt, the clock could restart in some states. Confirm the statute of limitations for your state and the type of debt before you say anything about it or send money. A debt validation letter shows how old a debt is, which helps you check the timing.

7. Should You Answer Debt Collector Calls?

You're generally better off answering debt collector calls. When you keep the lines of communication open, you could work through issues more quickly. You may be able to work out an agreement with the debt collector, such as a debt settlement or a payment plan. It also helps you find out if the debt is legitimate in the first place.

Answer the phone to avoid a lawsuit. If a debt collector can't reach you, a lawsuit becomes its only remaining option. Talk to the debt collector to work out a deal for your debt, even if you can't pay in full, and get any agreement in writing before you pay anything. This could have a positive impact on your credit score, especially if the collector agrees to remove the account from your credit history.

If you notice red flags, such as high-pressure tactics or threats, end the conversation. Then talk to a lawyer or work with a debt relief company that talks to debt collectors on your behalf.

8. What Happens if I Ignore Debt Collection Calls?

Debt collection calls don't stop just because you ignore them. If the debt is valid, the collector likely keeps pursuing it.

Debt collectors may call you multiple times if you ignore their calls, and they could also try other contact methods. They're also allowed to contact you via email, text messages, private messages on social media, and through letters in the mail. They'll typically use any method they have available, unless you send a cease-and-desist letter.

If you don't respond at all or you request that the debt collector stop contacting you, the next step could be a lawsuit. This depends on the debt collector and the amount of the debt, since a small balance may not be worth the collector's trouble. If the debt collector could make a profit by suing you, it might go that route.

A lost debt collection lawsuit could bring serious consequences. In addition to what you already owe, the court could hold you responsible for court fees and the debt collector's attorney fees. A court order also gives the debt collector more ways to collect, which could include:

• Garnishing your wages or bank account

• Seizing your assets

• Putting a lien on your property

Debt collectors don't need a judgment to harm your credit. After they provide a validation notice, debt collectors may report the unpaid debt to credit reporting agencies. This negative mark could cause your credit score to drop.

9. Steps to Take When a Debt Collector Calls

When a debt collector calls, start with the name of the person calling, the company name, the original creditor on the debt, and the amount. Jot down all this information. Don't say the debt is yours or that you might recognize it, and definitely don't agree to pay anything yet. For the first call, you're just gathering information.

Avoid sharing your Social Security number, bank account information, or card numbers with the caller. A legitimate collector doesn't need these details to send you a validation notice, and giving them to an unverified caller puts your finances at risk.

Tell the debt collector you'd like a debt validation notice sent to you by mail or email. After you request the validation letter, end the call politely.

There's no need to have a long conversation. If you're trying to stay calm, remind yourself that you don't need to argue, explain anything, or say much at all. The debt collector would like you to start to talk openly, especially if it gets you to agree to a payment right then and there. What's best for the debt collector isn't what's best for you.

Once you get the debt validation letter, check if it's a legitimate debt and that it's within the statute of limitations. If not, dispute the debt with the debt collector. The debt validation letter should include a tear-off dispute form for you to use, as this is legally required. If the tear-off dispute form isn't available, put your dispute in writing yourself and explain why the debt isn't valid. If the debt is valid, decide whether to negotiate a deal yourself or get professional help.

10. How to Get a Debt Collector to Settle for Less

Debt collectors are often willing to negotiate. This is especially true with third-party collectors that buy debt for pennies on the dollar. Since these collection agencies normally pay a small fraction of a debt's face value, they're able to accept a settlement and still make a profit.

You may negotiate on your own. Here's how:

• Figure out what you're able to offer. If you have money saved, you could propose a settlement for less than the full balance, or ask about a payment plan that lets you pay what you owe in installments.

• Contact the debt collector and explain that you can't pay the full amount on your debt. Find out if they offer you a deal first. Ideally, it's better than the one you were going to suggest. If not, or if you can't afford their deal, make your own offer.

• Negotiate an agreement that works for you. You may need to go back and forth, depending on how much you're offering and how flexible the debt collector is. You don't need to come to an agreement right away, so don't feel pressured. Debt collectors sometimes provide better offers if they think that you're willing to end the conversation.

• Get the debt collector to sign a document accepting the agreement. A deal is only official when you have it in writing. Don't pay anything until you have a contract in place.

You don't have to do it all yourself. A professional debt settlement company experienced in creditor negotiations could contact them for you on unsecured debt, such as credit card balances or personal loans. You make one affordable monthly deposit into a dedicated debt settlement account. Once you have enough money in this account to make an offer, the company contacts your debt collectors to negotiate and work out settlement agreements.

When a debt collector agrees to a settlement, you decide whether to approve the offer. If you do, payment is made from your debt settlement account. The debt collector receives the payment, and the debt is officially settled, so you don't receive any more calls about it.

Debt settlement may negatively impact your credit.

Stop Debt Collector Calls and Take Control of Your Finances

If you're struggling with debt collector calls or worried about your monthly payments, it's time to learn how debt relief works and take control of your situation. Freedom Debt Relief could help you understand your options for dealing with your debt, including our debt relief services. Our Certified Debt Consultants could help you find the right solution for your financial future. Find out today if you qualify.

If you need debt relief in Missouri (or anywhere else in the country), explore your options. The first step is the most important one—find out more today.