8 Debt Collection Mistakes Not to Make
You think you’re on top of things … and then the phone rings. A debt collection agency claims that you owe them money. What do you do? Or perhaps the bigger question should be: “what do you not do?”
Too many people make mistakes with that first phone call—mistakes that can cost them dearly. Read on to know how to avoid these common debt collection faux pas.
1. Ignoring Those Calls
What we mean: Thinking that you can just ignore the calls when the number shows up on caller ID won’t make the debt—or the collector—go away.
It can be intimidating when you answer the phone and a voice at the other end starts talking about collecting a debt. But if you continue to ignore the calls, they will start to send collection letters—and possibly notice of legal action. Don’t let it get to that stage.
What to do: Answer the phone, remain calm and know your rights (more on that below.) Before they call again, get your paperwork in order (more on that later, too), so you won’t be caught off guard when you answer the phone. If they’re already sending letters, don’t toss them—read them and seek advice.
2. Not Verifying the Debt in Writing
What we mean: Always ask for written verification of the debt to be mailed to you. In trying to track down a debtor, companies may resort to something as simple as checking the phone directory. Do you want to be held responsible for someone else’s debt simply because that person has the same name as you?
What to do: Explain to the caller that you do not make any decisions on the phone, and that you need written proof of the debt. (By law, they must provide it.) Request that they mail you all of details of the debt, including the name and address of the borrower, the amount borrowed, the date the debt was incurred and, if possible, a copy of the original debt application or approval letter.
3. Not Knowing the Legal Status of Your Debt
What we mean: Some debts are subject to a statute of limitations. While the actual amount of time varies from state to state, this means that if the creditor has not made contact with you in a specific time period (typically five to seven years), that debt can legally be struck from the books.
What to do: Check the debt statute of limitations for your state. The statute applies when the company owed the money has failed to make reasonable efforts to obtain the money owed, not when you have ignored attempts to collect. When does the clock start ticking? Usually from the date of last activity on the account, but this may vary by state.
If the statute of limitations has expired on your debt, write to the debt collector, advising them that it has expired, and not to contact you anymore. Sending the letter by certified mail ensures that they have received it. If the statute has not passed, talk to a legal or financial professional experienced in debt collection to learn about your repayment options.