A call from a debt collector is never a happy experience. Collectors are always persistent and often aggressive. They will call again. If you don’t know how to communicate with debt collectors your first impulse may be to panic.
So what do you do?
First, take a deep breath and relax. This won’t be easy, but it’s not the end of the world. You have rights. You can take the initiative and resolve the situation.
☝️ The rules surrounding debt collection in the US changed dramatically on Nov. 30, 2021, with the adoption of Regulation F, the first major update to the Fair Debt Collection Practices Act. Those changes have been incorporated into this article. We also have more information on Regulation F.
What to Do When a Debt Collector First Contacts You
Regulation F has redefined the way debtors communicate with debt collectors and given debt collectors new responsibilities. One of the most noticeable changes is in the letter that a debt collector must send you within five days of their first contact with you. This letter is called a Debt Validation Notice.
Before we get into how to handle the Debt Validation Notice there’s one thing you should remember about debt collectors and how they work.
A Thing to Remember About Debt Collectors
Debt collectors usually buy debt in bulk. The collector who’s calling you may be working through a stack of hundreds or thousands of debts purchased at the same time. Collectors pay an average of four cents for every dollar of debt that they buy.
That means two things.
- Collectors may not have complete records. Documents and files get lost or mixed up, especially when collectors buy debts from other collectors (yes, that happens).
- Collectors don’t expect to collect all the debt they buy. Some won’t be collectible at all, and when they do collect it often won’t be the full amount. Because they pay so little for the debt, they can still make a profit.
Those facts can work for you. A collector may not be able to prove that the debt is yours. Even if they can, they will probably accept less than you actually owe.
Debt collectors are like any other predator: they go after the weakest target. Don’t be that target. Don’t be intimidated, don’t apologize, don’t admit anything. When you communicate with debt collectors you should know your rights and be firm. We’ll give you some statements that you can use at different stages in the process.
👉 Never admit that your debt is legitimate or that you owe it. Whether it’s in writing or on the phone, always treat the debt as a matter of dispute.
Receive a Debt Validation Notice
In some cases, a Debt Validation Notice may be the first contact you have with a debt collector.
A debt collector may call you before you receive the Debt Validation Notice.
What to Say if a Debt Collector Calls You Before You Receive a Debt Validation Notice
If a debt collector contacts you for the first time by telephone, do not discuss the debt. Do not acknowledge that it is yours. This is what you say:
📢 “You are legally required to send me a written Debt Validation Notice within five days of this contact. I will not discuss this matter until I have received this notice.”
That’s all you have to say. If the collector keeps talking, keep repeating that sentence.
💡 Tip: Write down the date and time of the call so you can confirm that the Debt Validation Notice is postmarked (or delivered, if it’s by email) within five days.
Read and Check the Debt Validation Notice
When you receive a Debt Validation Notice you should read it at once. Don’t put it off. Nobody wants to do it, but it’s important to maintain the initiative. Whenever you communicate with debt collectors you should respond promptly and assert your rights.
A legal Debt Validation Notice must contain an itemization date. This must be one of five dates.
- The date of the last statement or invoice that the creditor provided to the consumer. by the creditor.
- The charge-off date.
- The date of the last payment you made on the debt.
- The date of the transaction that created the debt.
- The judgment date, if there is court judgment on the debt.
If there is no itemization date, the notice is invalid.
A legal Debt Validation Notice must also contain these items.
- The name and mailing address of the debt collector.
- The full name and mailing address of the consumer.
- If the debt is from a loan, credit card, or other financial product, the name of the creditor to whom the debt was owed on the itemization date must be in the notice.
- Any account number that is associated with the debt.
- The name of the creditor you currently owe the debt to.
- The currently owed and an itemized list of any payments you have made and any fees, interest, or other charges that have been added to the amount.
The Debt Validation Notice must contain a returnable form (or a checkable prompt if it’s sent by email) allowing you to dispute the debt and choose one of three reasons for disputing the debt.
- This is not my debt.
- The amount is wrong.
- Other (with a space to supply further information).
The notice must also advise you of your right to dispute the debt and request further information.
The Consumer Financial Protection Bureau (CFPB) has prepared a model Debt Validation Notice. You can compare the notice you receive to this sample to see if it is complete. If you believe that the notice is incomplete, advise the collector of the issue.
💡 Tip: Keep a complete record of everything you send and receive as you communicate with debt collectors. Keep all letters you receive and keep a copy of all letters you send. Send letters by certified mail and keep the return receipts. Write down the date and time of all calls, the name of the person you speak to, and what is discussed.
Set Your Communication Preferences
Regulation F established that debt collectors can use text messages and email to communicate with you. It also allows you to decide how and when you wish to communicate with debt collectors.
There are specific regulations on the frequency of contact.
- If a debt collector speaks with you on the phone they must wait seven days before calling again.
- A collector can only call seven times in any consecutive seven-day period.
A collector may also send “limited information messages” on media that other people may have access to, like voice mail. These messages cannot refer to a debt or identify the caller as a debt collector.
You can tell a debt collector how you want to be in contact. You can specify phone only, email only, or any other method you choose.
⚠️ You can refuse to allow any contact from a collector, but this is not always a good idea. The collector may decide to move straight to legal action, which you should try to avoid.
Always Dispute the Debt
If a debt collector contacts you, always dispute the debt. You may know the debt is yours but the collector may not be able to prove it. If you feel a moral obligation to pay the debt, remember that whatever you pay will go to the collection agency, not the original creditor.
After you receive the Debt Validation Notice you have 30 days to dispute the debt. Send your dispute letter early to be sure that you meet that deadline.
Once you dispute the debt all collection efforts must stop until the dispute is resolved.
Before Regulation F you were required to write a formal dispute letter, often referred to as a debt validation letter.
Under Regulation F you can dispute the debt simply by checking the appropriate box on the dispute form included in the Debt Validation Notice.
Send a Debt Dispute Letter
While you can dispute a debt simply by checking the appropriate box on the Debt Validation Notice, you may wish to include a letter requesting specific information.
Much of the information that consumers once asked for in debt dispute letters must now be provided in the Debt Validation Notice. You may still wish to ask for other facts or documents.
- Ask for documentation that verifies that you owe the debt, such as a copy of the original contract.
- Ask whether the statute of limitations on the debt has expired. The collector doesn’t have to tell you, but they can’t lie. If they won’t say, the statute of limitations may have expired.
- Ask whether the agency is licensed to collect debt in your state. Again, the collector is not allowed to lie. You can ask for the date of the license, license number, and the state agancy that issued the license as well.
- A copy of the last billing statement sent by the original creditor.
If you believe that there are deficiencies or missing information in the Debt Validation Notice, list those as well.
What to Say if a Debt Collector Calls You After You Receive a Debt Validation Notice
If you receive a Debt Validation Notice you’re likely to get a call from the collection agency soon after. If you have read the Debt Validation Notice and it contains all of the necessary information, tell the debt collector this.
📢 “I am disputing this debt claim. I will not discuss this matter until my dispute is addressed.”
Again, don’t engage in conversation. Say your piece and say it as many times as you need to.
What to Do if You Missed the Dispute Deadline
If you have an existing collection account and the debt collector sent you a Debt Validation Notice more than 30 days ago, the debt collector can presume that the debt is valid. You still have options.
- If you never received a Debt Validation Notice, contact the collection agency and inform them that you did not receive the required Debt Validation Notice. Ask them to cease all contact until they can prove that they sent it.
- Dispute the account with the credit bureaus. Use our credit dispute letter (“609 letter”) template. If the credit bureau cannot verify the debt they will remove it from your credit record, and you will know that the collector does not have complete information.
- Offer a settlement. If the collection company’s records are complete and they can answer your questions, use the settlement/pay for delete process described below.
Again, don’t admit liability for the debt, and don’t let the collector intimidate you.
What to Do if Your Debt Is Validated
As soon as you send your debt collector dispute letter, start getting ready for your next move.
If the collection agency does not respond to your letter, you’re off the hook. That’s a great outcome, but don’t count on it.
If you receive a response, examine it closely. See if the information is complete and consistent with your own records.
If the response does not contain the information you request or if some information is inaccurate, you may wish to seek a lawyer’s opinion on whether or not should continue to negotiate. If you can’t afford a lawyer there are ways to get free legal advice.
Offer a Settlement
The response to your letter may be complete and accurate. If the collector validates the debt, you will want to offer a settlement immediately. That’s why you should prepare as soon as you send your debt validation letter.
You may be able to get the company to refrain from reporting your collection account to the credit bureaus. If you move immediately you may be able to settle the account before the collector files a report.
Before Regulation F, many debt collectors used “passive collection”. Instead of contacting you, they would report the debt to the credit bureaus and wait for you to notice the damage to your credit and contact them
This is no longer legal. A debt collector must contact you before they report a debt to the credit bureaus.
Send a Debt Settlement Letter
Your debt settlement letter will include a “pay for delete” clause. You are offering to pay a settlement if the collector agrees to remove the account from your credit record.
These clauses don’t always work. The collector may refuse it and the credit bureau might not remove the account even if the collector accepts. It’s still worth a try.
Here’s what to do.
- Read up on debt settlement. This article is a good start.
- Decide what you can offer. Be sure you can make any payment you promise. If you fail to make the payment the Company may not negotiate again.
- Offer less than the maximum you can pay. You may get lucky and you’ll have room to negotiate.
- Prepare a debt settlement letter. This debt settlement letter template should get you started.
Take these steps before you receive the debt collector’s response to your dispute.
💡 If the debt collector responds to your debt validation letter, read the response immediately. If the information is complete and accurate, send your debt settlement/pay for delete letter at once.
Check the Statute of Limitations
Even if a debt is valid, you should check the letter for the date of the original debt. After that, check the statute of limitations on debt in your state. You can find this information in our article on the statute of limitations on debt in every state.
If the statute of limitations has expired, the debt is time-barred. You can no longer be sued for it. You can send a letter to the collector asking them to cease all communication with you and they will have to comply.
If a debt is nearly time-barred you may choose to simply wait it out. Remember that in some states making a payment on a debt or admitting that you owe it may restart the statute of limitations. Never admit, in writing or verbally, that you owe a debt. Always treat the debt as disputed.
What to Say if a Debt Collector Calls You After You Offer to Settle the Debt
If a collection company representative calls you after you receive the response, here’s what you can say.
📢 “I have offered a settlement for this debt. I will not discuss this matter until I receive a written reply.”
Again, be persistent. You are willing to negotiate the terms of the settlement, but you want the negotiations to be conducted in writing. Don’t discuss it on the phone.
What to Do if a Debt Collector Sues You
A debt collector can file a lawsuit against you for the collection of a debt. Some collectors will sue over even relatively small amounts.
Many debtors do not respond to a lawsuit or attend hearings. In these cases, a judge will often render a summary judgment in favor of the collector without even reviewing the evidence. This may lead to wage garnishment or even the seizure of assets.
Debt collectors know this, so they may sue even if they don’t have full documentation of the debt. If a debt collector sues you, respond to all documents and appear in court when ordered to do so. Simply appearing and contesting the case may be enough to get it dismissed.
Regulation F has imposed one big change in debt collector lawsuits. Debt collectors used to be able to sue you over a debt even if the statute of limitations had expired. If you didn’t show up and claim the statute of limitations as a defense, a judge could still rule against you.
Under Regulation F a debt collector can no longer sue for a time-barred debt.
If you have debts in collections it’s important to learn more about debt-collection lawsuits.
3 Tips For Dealing With Debt Collectors
If a debt collector comes calling, it’s important to learn as much as you can about your rights in debt collection and the proper way to communicate.
Know Your Rights in Debt Collection
Debt collectors can be aggressive, but there are limits to what they can say or do. A debt collector cannot do any of these things:
- Lie to you about the type, amount, or legal status of a debt;
- Threaten you with violence, imprisonment, or any action they cannot legally take;
- Impersonate a representative of any official agency;
- Use obscene or profane language;
- Call you at unreasonable hours.
There’s more. If you are going to communicate with debt collectors it’s a good idea to read up on your rights in dealing with debt collectors.
Keep Those Letters Straight
It’s important to keep each letter in its place, so let’s sum them up.
- Debt Validation Notice. This is the letter that the debt collector must send to you withing five days of their first contact with you.
- Debt Collector Dispute Letter. You will send this letter to a collection company to dispute a Notice of Debt.
- Credit Dispute Letter (“609 letter”). You send this letter to a credit bureau if you believe a debt has been reported incorrectly. The credit bureau may delete the record but the collection agency can still pursue you.
- Debt Verification Letter. This letter contests the right of a creditor to report a debt to a credit bureau. You can send it to a collection company or an original creditor.
- Debt Settlement Letter. You send this letter to a collection company offering to pay a settlement if the collector agrees to remove the account from your credit record.
There are several other letters that you may wish to use.
- No Contact Letter. This letter instructs a collection company to stop all contact with you. Use it carefully. The collector may choose to sue you if you cut off contact.
- When to Contact Letter. This letter tells the collection agency when they are permitted to contact you.
- Lawyer Only Letter. If you have a lawyer you can instruct a debt collector to send all communications to your lawyer.
You probably won’t need all of these letters, but it’s important to understand them and be ready to use them if you need to.
Always Take the Initiative
If debt collectors are pursuing you the worst thing you can do is nothing. Don’t hide, don’t pretend there’s nothing wrong, don’t try to avoid them. They will find you.
When you communicate with debt collectors it’s important to take the initiative. If a collector calls, you tell them what you are willing to talk about. Don’t admit anything. Respond promptly to every communication. Show them that you know your rights. Use the right letter for each situation. Don’t be intimidated and don’t make yourself an easy target.
Always stay organized. It’s easy to panic and forget to save letters or make notes of calls. Debt collectors will use that panic against you if you let them.
☝️ One more time: Never admit that you owe a debt, verbally or in writing. Always treat the debt as a contested matter, even if you’re offering to settle it.
It’s never easy to communicate with debt collectors, but if you make the right moves you can come out of the situation with the least possible amount of damage!