What You Need to Know About Debt Collectors

By Julie Ford

In light of this recent news about debt collectors, I’d like to point you to some helpful resources about your rights and how to protect yourself against debt collectors (also called collection agencies). In short, two debt collectors have been charged with seeking to collect on debts they couldn’t prove they owed - and they weren’t nice about it either.  

While it’s discouraging to read headlines of a business taking advantage of consumers, this is a refreshing example of the law successfully protecting people. 

Let’s review some basics about debt collectors so you don’t fall victim to these sorts of shenanigans. 


What is a debt collector?

Debt collectors are in the business of collecting past due-debts from people.  They buy past-due debts at a huge discount from lenders (like credit card companies, banks, or medical offices – those that originally lent you the money) and then turn around and attempt to collect the debt from you. 

If you’ve missed a debt payment, you might hear from a debt collector. They will probably try to contact you by phone or mail, but if not, you’ll see their name on your credit report as a past-due debt.  


Know your rights

The Fair Debt Collection Practices Act provides you with rights and protection against debt collectors. There are very specific things debt collectors are NOT allowed to do. Unfortunately, there’s a lot of rule breaking. I’ve seen it first hand with clients. This article does a great job of explaining your rights.


Stop harassment

If a debt collector is harassing you, there are things you can and should do to stop it. Check out this article for guidance.


Validating your debt

When your debt has been sold to a debt collector, you should make sure the collector legally owns your debt before you make any payments. This process is called debt validation. Here’s an over-simplified example: You get a letter in the mail from a company you don’t know saying you owe them money. You’re familiar with the debt but not the company. You reply (within 30 days) with a written letter asking them to prove to you that they own the debt. This also lets the debt collector know that you’re aware of your rights. They respond with the appropriate support and then you proceed with payments.  Here’s a great overview with more details on the process that will even give you letter templates and flowcharts to guide your communication with debt collectors.