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What to Do If a Debt Collector Asks for Money You Don’t Owe

By Valencia Higuera

debt collectorWhile there is never any excuse for abuse, the behavior of some relentless debt collectors can border on abusive. Though there are laws to protect you from harassment, a collector may call your home nonstop, as well as harass your family or any other person listed as a reference on your account. Some collectors speak harshly or issue threats, and if you don’t take a stand, this bad behavior can continue for months or years.

If you don’t owe the debt in question, harassment makes the situation even more difficult to deal with. You may repeatedly deny the debt, but to no avail. To resolve your situation, you must start by understanding how debt collectors and collection accounts work.

What Is a Debt Collector?

A debt collector is any creditor who calls for payment on a debt, including an original creditor. However, debt collectors often are collection agencies that purchase an outstanding debt from another company in order to profit on it. For example, if you default on student loans or on a medical bill, the original creditor may give your account to a collection agency. The collection agency can buy the old debt from your original creditor for a reduced amount and keep whatever they collect. Alternatively, original creditors can hire a collection agency and only pay once the debt is collected.

How a Collection Account Affects You

Creditors report collection accounts to the credit bureaus, and the information stays on your credit report for seven years. Furthermore, a collection account lowers your credit score. Having a collection on your report – regardless of whether it’s reported in error – means you could be denied credit cards, auto loans, or a mortgage, and you may also pay a higher interest rate on future loans. Due to the seriousness of a collection account, you should never ignore a debt collector.

What to Do When You Don’t Owe a Debt

1. Don’t Pay or Acknowledge the Debt

Each state has a statute of limitations that dictates the amount of time you’re legally responsible for a debt. This time frame varies from state to state, but averages between 3 and 15 years. The statute of limitations applies to unsecured debts, such as credit cards, medical bills, utility bills, and private student loans, but not federal student loans.

If a debt collector calls out of the blue, don’t hastily acknowledge that a debt is yours. If the debt is valid, in all likelihood, the statue of limitations has passed and you no longer owe the money. Some collectors call after the statue of limitations has passed in a last-ditch effort to collect on an old balance. If you acknowledge the debt, this restarts the statue of limitations, which gives collectors the green light to pursue collection attempts.

2. Request Proof of the Debt

Within 30 days of being contacted about a debt, write the collection agency and ask the company to verify the debt. By law, debt collectors must provide written verification of this information or cease collection attempts. Keep a copy of the letter for your records. To ensure that your letter reaches the collector, mail your request via certified mail. In return, you receive a receipt when the postal service delivers the letter.

You can challenge or dispute a balance after the debt collector verifies the debt, but you must contact the original creditor to clear the mistake. Call the original creditor, or write a dispute letter. Likewise, the creditor must investigate and respond to your inquiry.

To improve the outcome of your claim, gather proof to support your argument, such as canceled checks or old account statements. If the original creditor verifies the debt and you cannot provide evidence to support your claim, seek help from a debt dispute lawyer.

past due bills

3. Order Your Credit Report

Identity theft may trigger an unknown collection account. Thieves may open a credit account in your name, and when creditors do not receive payment on these accounts, the information is sent to a collection agency.

Every consumer is entitled to an free annual credit report from each of the three main credit bureaus. Contact AnnualCreditReport.com to order your copy, and then check the report for signs of identity theft. If you do not recognize an original creditor or a collection agency, dispute the entry. Submit an online dispute via AnnualCreditReport.com, or write the individual credit bureaus. The bureaus will investigate and, in instances of fraud, remove the collection account from your credit file.

4. File a Complaint

You have rights. If a debt collector fails to verify a debt but continues to call your home or work, file a complaint with the Federal Trade Commission. Furthermore, because this action is in violation of the law, you can sue the debt collector within one year of an alleged violation.

To file a complaint with the FTC, call its helpline at 1-877-FTC-HELP, or complete the online complaint form. You can also file a complaint or sue if a debt collector employs other tactics, such as:

  • Abusive language (profanity, threatening physical harm)
  • Calling your home before 8am and after 9pm
  • False threats, such as threatening to sue or garnish your wages
  • Speaking to others about the alleged debt
  • Calling your place of employment after you’ve asked them to stop

Final Word

Regrettably, some people do not stand up to debt collectors, which only encourages their behavior. If you don’t owe a debt, understanding your rights can help you deal with the collection agency and prevent continued harassment. Keep accurate records throughout the entire process and be patient, as it can take weeks to resolve a collection error.

What other steps have you taken to get a debt collector off your back?

Valencia Higuera
Valencia Higuera is a personal finance junkie who enjoys reading articles on budgeting, saving money, and credit cards. She has written personal finance articles and blogs for several online publications. She holds a B.A in English from Old Dominion University and currently lives in Chesapeake, Virginia.

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  • http://madsaver.com Mac

    Good info for those people who fall victim to this, especially the part about the debt of former spouses. If it isn’t your debt, you don’t need to pay it. Simple enough. The hard part is getting those debt collectors off your back. It’s happened to me once or twice, but only because they had the wrong #.

  • http://www.yourfinances101.com/blog David/Yourfinances101

    I’d say the best bet would be to not get yourself into that position.

    If its already too late, then you just have to deal with it–but as the post states, know your rights? Know what your responsible for and not responsible for.

  • Gina

    I had a creditor calling repetitively who did not believe that I was not the person they were trying to reach. I found it easiest to change my phone number–problem was solved!

    • http://madsaver.com Mac

      Wow – they got so bad you had to switch #’s? Ouch. I wonder if creditors are legally obligated to stop calling if you would have given them some kind of proof that you were who you said you were. Harassing innocent people repetitively seems illegal somehow to me.

      • Winston

        As far as they could tell, these people are not innocent. If you tell them you are not the person in question, they will assume that you are simply lying to get off from paying the debt.

      • Fed Up

        Unfortunately, if you were to provide them proof that you are not the person you are, you are also providing them with the information they need to steal your identity.

  • http://www.moneyobedience.com/blog/ ctreit

    The Fair Debt Collection Practices Act (FDCPA) may state that “a debt collector should only contact you once.” Unfortunately there are many debt collectors who pass debt from one collector to the next. Each one of them has the right to contact you once. It does not matter whether you try to convince one that the debt is not yours or not valid; the next debt collector does not get this information and tries to collect the debt just like the previous one did and the next one will – all within the restrictions of the FDCPA.

  • Em D.

    This is a problem at my house. My housemate has owned the house for about three years and there’s at least three names that debt collectors call for- often. We screen all our calls and basically never answer the phone. Since most friends call our cell phones, this works pretty well. Why we still have a land line is a question I keep asking.

  • Winston

    My boss once had the misfortune of getting legal notice letters from a law office for some outstanding gambling debt of another person with the same name. He had to call the law office several times to explain that the debt couldn’t possibly belong to him because he had never been to Neveda in his life. Every time head called, the receptionist always apologized for the mistaken identity, but the letters kept on coming. So finally my boos had had it. He drafted up a letter explaining the ridicule of the situation and threatening to sue them if they continue that nonsense. After that, the letters finally stopped coming.

  • EDFcompain

    I am currently dealing with EDF’s pre-paid gas meter and the fact that the previous tenant had over 1000 ponds debts on it?!?! 4 months down the line and still, whenever I top up my card, more than half goes toward the debt. EDF has all different excuses for not resetting my meter so I am forced to be paying it off. I am so tempted to get a layer as I am no longer sure what to do.

  • http://www.financialexecutives.org/ Jenny

    This can be incredibly frustrating. It happened to my husband and it turned out to be a breach of security in our mortgage lender’s office. We consulted with an attorney to find out how to do it. After getting proof of the debt, my husband discovered it was not his and disputed it. The process took awhile but was well worth it.

  • Susan Brownfield

    I think your insurance

  • http://www.budgetforwealth.com/ Long Pham

    It’s important to note that if someone passes away with debt, the company or collector may try to get you to pay the deceased debts. You do not have to pay them. You would only be responsible if you were a co-signer on the note.

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