How to Deal with Debt Collectors

Sometimes money can get tight, there’s no doubt about it. And while we all want to pay our bills on time, every now and then, bad things happen to good people. It can be as serious as losing a job, or as simple as forgetting a payment. Neglecting to make timely payments to creditors not only wrecks your credit rating, it puts your reputation at risk.

You may find yourself dealing with stern and persistent debt collectors, which only adds to the stress of a financial setback. But remember, in addition to your responsibilities, you have rights. Here’s how to deal with debt collectors, negotiate a settlement, and be treated with respect.

Know your credit collection rights

debt collectionsWhen you are being pursued by debt collectors, you might cringe each and every time the phone rings. While you don’t want to answer, it’s in your best interest to keep the lines of communication open between you and your creditor. The conversations are never easy but you are protected by the Fair Debt Collection Practices Act from rude and unscrupulous collection agents. The Federal Trade Commission enforces the FDCPA and can prosecute illegal collection procedures in the U.S., which include:

  • Phone calls prior to 8am or after 9pm, unless you agree. Debt collectors simply must refrain from calling you at inconvenient times or inappropriate places. And they can be prohibited from calling you at work, if you aren’t allowed to take calls on the job.
  • Debt collectors must discontinue contact with you if they are notified in writing. There are only two exceptions: to advise you that there will be no further contact, or to inform you of a pending action, such as the filing of a lawsuit. While further contact will end, you will still owe the debt.
  • Third parties cannot be contacted by debt collectors to discuss your debt, only to gain contact information. However, your attorney or spouse can be designated to discuss the situation on your behalf.
  • You cannot be threatened, harassed, or spoken to with profane or obscene language. Debt collectors also cannot lie or misrepresent themselves, the amount you owe, or who they work for.
  • You cannot be threatened with arrest.
  • A debt collector may not make threats regarding the seizure of property, wage garnishments, or any other action that is not legally authorized.

Dealing with debt collectors: When you do owe the money

If you truly owe the creditor who is contacting you, be proactive. Try to resolve the matter as quickly as possible, if you are able. The sooner you respond, the less damage will be done to your credit rating. Here are some proactive steps you can take:

  • First, if any debt collector has infringed your rights as stated above, report it to your state Attorney General’s office ( and the Federal Trade Commission ( While the federal rights outlined by the Fair Debt Collection Practices Act prohibit the actions as listed above, many states have their own debt collection laws that may vary. Your state Attorney General’s office can assist you. Note that these regulations cover the collection practices regarding personal debt, but not amounts owed in the operation of a business.
  • Check your personal records to confirm that the amount being collected by the creditor is correct. If you doubt the information being provided by the debt collector, request verification of the debt in writing.
  • Try to work out a settlement. Many times creditors will reduce the amount you owe — sometimes by as much as half or more — if you can show a hardship and offer a lump-sum payment. Determine how much you can afford, and then offer a settlement a bit less than that. Then negotiate the best deal you can, up to your budget limit. Remember, the debt collector is nearly as motivated as you are to come to some kind of agreement: they don’t get paid if you don’t pay. If you do make a deal, be prepared for another bill at tax time. The amount written-off by the creditor may be reported as income to the IRS and subject to federal taxes.
  • Be sure to get any agreement documented in writing before providing payment. For safety, as well as for creating a permanent record of the transaction, it’s best to issue the lump-sum as a cashier’s check or electronic transfer, rather than writing a check.

Dealing with debt collectors: when you don’t owe the money

Perhaps this whole matter is an ugly misunderstanding. Maybe your records have been confused with another creditor — or it could even be a matter of identity theft. Whatever the reason, here’s what to do when you don’t owe the debt:

  • Don’t agree to pay the debt, not even a partial payment, and don’t acknowledge the amount owed until you are convinced it is yours — with written proof.
  • If no proof of the debt is provided, instruct the debt collector in writing to discontinue all further contact and collection efforts.
  • If the matter is concerning an old debt, it may be uncollectable because of time limitations that are imposed on credit collections. Statute of limitations vary from state to state and for different kinds of debt. For example, the statute of limitations on credit card debts can be as long as 10 years, according to the Federal Trade Commission. Most states impose a period of three to six years. You may want to get assistance from a legal aid lawyer, your attorney, or your State Attorney General’s Office.
  • Check your credit report to make sure that there has been no negative impact to your credit rating.

Debt regret

Imagine what it must be like to have a job calling on people all day long to collect debts. It would make just about anybody cranky. Now, we’re not saying you have to be best buddies, but treating debt collectors with the same consideration and respect that you deserve and expect may help the matter pass with the least amount of stress for all involved.

Knowing your rights, understanding your options to negotiate and getting all information in writing will help protect you and your credit rating.