How to dispute your debt with creditors and collectors – Forbes Advisor

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A consumer’s biggest problem with debt collectors isn’t annoying phone calls over dinner, threats of driver’s license suspension, or wage garnishment. These are not even the promises to tell their friends, relatives and employers about the debt. The main complaint consumers have about debt collectors is that they are trying to collect a debt that the consumer does not owe.

More than half (52%) of the 82,700 debt collection complaints received by the Office of Consumer Financial Protection in 2020 were from consumers who said they had been contacted about debts they had not owed. And it’s getting worse and worse: this figure increased by 25% in 2020 compared to the previous two years.

There are many reasons for mistaken debt collection attempts. Sometimes collectors prey on people with names similar to real debtors. Identity theft can explain some cases. The company that originally provided the credit may sell the debt to a debt collector without providing enough information about the debt or the debtor for the collector to accurately identify the true borrower.

It is not uncommon that the consumer has already paid the debt and the collector does not know it. Additionally, scammers sometimes brazenly claim that consumers have non-existent debt, in hopes of intimidating or scaring their targets into paying money they don’t owe.

Whatever the cause, if you get calls about a debt you don’t have, you don’t have to take or pay it anymore. Here’s how to dispute debt and earn.

How to dispute a debt

When a tax collector calls about a debt you think you don’t owe, the first thing to do is find out who you’re talking to. Get the person’s name, business name, address, and phone number. But do not give any information on your part. This includes correcting errors like a wrong address or wrong phone number.

In fact, don’t discuss the debt at all. If you say the wrong thing, it could work against you. So say as little as possible beyond asking for information about the collector. If the collector doesn’t provide it, that’s a red flag that you may be dealing with a scammer.

On the first phone call or within five days, the collector is legally required to provide you with information about the amount of the debt, the name of the current owner of the debt, and the information you need to contact the original creditor. . Use this information to contact the company from which you allegedly borrowed or purchased on credit. It might be something that escaped you, in which case you might want to admit the debt and pay it off.

Or it could all be wrong. To help determine this, ask if the original creditor uses an internal collection service, hired a collection agency, or sold the debt to a collection agent. The type of collector can have a lot to do with the amount of information the collector has about the debt. Internal collectors should have all the details. Collection agencies may have less information and debt buyers the least of all.

Send a debt dispute letter

The next step is to send a debt dispute letter, also known as a verification letter, to the address you received from the caller. You must do this within 30 days of receiving the contact details. If you do not respond within this time, the collector may assume that the debt is valid and may continue to contact you about it.

A letter of protest can be very simple to create. You’re just saying you’re responding to a collection contact and don’t think you owe the debt. Also ask them to provide proof that you owe the debt and, failing that, to stop contacting you about it. You can also request more information, such as the contact details of the original creditor if you don’t already have them.

Sending the dispute letter can sometimes end the case. This is especially true if the collection effort is carried out by a scammer or by a debt buyer who has no proof that you actually owe the debt. In either of these cases, you may never hear from it again. To make sure you have a record of the letter, keep a copy and send it by a method that tracks the letter and shows that it was delivered.

What happens next

Once the collector receives the dispute letter, the agency should stop contacting you, at least temporarily. He can get back to you after sending a debt validation letter. The basic information contained in the validation letter could also have been provided during the first phone calls. If not, the collector has five days to get the details for you. If not, you could have legal action against the collector and the delay will not necessarily affect the validity of the debt.

The validation letter is supposed to certify that you owe money. It could be an invoice for the initial purchase or a copy of a court judgment confirming the debt – the law is vague on what precisely is required here. Sometimes the validation letter may contain little or nothing that really proves that you owe the debt. If the collector has little or no documentation, then again, this may be the last you hear about it.

Using the documentation you got from the validation letter, try again to see if the original creditor has a record of a purchase or loan that shows you owe something. While you’re at it, check your credit report. The disputed claim may not appear there. If so, it may not go away for seven years, even if the collector stops pursuing it. However, if you can support your claim that it is a mistake, you can write to the credit reporting agency and request that the mistake be corrected and the debt removed.

If a disputed debt is particularly difficult to refute and the collector takes legal action to collect it, you may need to hire a lawyer to represent you in court.

Know your rights under the FDCPA

The main law governing debt collectors is the Fair Debt Collection Practices Act (FDCPA), a federal law. It covers collection efforts for many types of consumer debt, including credit cards, auto loans, mortgages, student loans, and medical loans, but not commercial debt. The law is enforced by the Federal Trade Commission and the Consumer Financial Protection Bureau (CFPB).

The FDCPA prevents collectors from calling you at home at night or at work if you cannot take calls at that time. It does not specifically limit the number of times you can be called, so you may be contacted multiple times per day. However, it prohibits harassment in the form of threats of physical violence or the use of obscene or profane language.

Collectors cannot tell others about the debt they are trying to collect. This includes printing a notice that they are trying to collect a debt on the envelopes they send you. They can’t lie, tell you that you owe more than the actual debt, or pretend to be a law enforcement officer and threaten to arrest you. They can’t claim that they will sue you unless they intend to.

Prescribed debts

If a debt gets too old, it cannot be collected. A debt that has passed the statute of limitations is called a prescribed debt. Different states have different rules, but it’s usually three to six years. You can check your state’s rule by contacting your state’s attorney general.

A debt collector can continue to try to collect a prescribed debt. The collector simply cannot force you to pay them. To find out if a debt is time-barred, get the date the debt was incurred from the collector. And be careful not to say anything in writing or orally that might indicate that you acknowledge the debt. It could restart the timer.

Final result

Debt collectors usually try to collect money from people who don’t think they have to. If this happens to you, there is a process in place for you to challenge and hopefully derail the collection effort. There are laws to protect you from abuse throughout this process, and if they are broken, you can complain to the CFPB complaint hotline. While it may seem futile to pit yourself against an arrogant and demanding collector, the point is, you can dispute wrong debts and win.

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About Joan Ferguson

Joan Ferguson

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