Headline: Debt and Damnation??

Date: 12/5/2020

Body: I was scanning the Penny Hoarder, and I found this article.  Unfortunately, I think it’s pretty topical for a lot of people.

How to Deal With Debt Collectors: 5 Steps Anyone Can Take (thepennyhoarder.com)

It happened to me

This happened to me, so, it could happen to you.   Several years ago (being kind to myself) I had an eye surgery.   I had good insurance, so much of it was paid for.  But about 1.5 years later, after 2 moves, I got notice (from a collections agency) of the separate $500 amount that I had “FAILED to pay” and they were going to do horrible things to my credit.   I take this quite seriously, and paid the bill (once verified) and the matter was closed.    But, not before enjoying several nights of terrible sleep.  

Who are these “debt collectors?”

When you initially get a loan (e.g. for a car, or for a major purchase), usually that party will try to collect payment on the debt.  At some point in time, if unsuccessful, they turn this information over to a 3rd party debt collector.   These businesses are paid (often with commission) to collect as much of the debt as possible.   There are some restraints on these entities (by legislation) but, these entities are awfully good at complying with the “letter of the law” while skirting the “intent of the law.”

What do I do if a debt collector contacts me?

First, know your rights.   Under the Fair Debt Collection Practices Act (FDCPA) there are some things that debt collectors are not allowed to do, and you should be aware of these proscribed practices.    Specifically, you have the right to allow these collection agencies to only communicate with you via e-mail.  You can even demand that they never contact you again (this is called a “cease & desist” letter.), but if you do, be aware that this looks really bad, and if litigation is started, this request can be taken as evidence of your intention not to comply.

Be aware that there are things that the FDCPA prohibits debt collectors from doing.  For instance, the hours that they can contact you are restricted (from 8AM to 9PM only), and if you notify them that they would put your job in jeopardy, they cannot contact you there.  Further, though they can call family members or friends, in most states they can only do this once.  They have only 3 to 6 years to complete these collections activities.

Please note that it is very unlikely that you will ever go to jail for debt.  Unless you commit a criminal act (e.g. fraud), prison is extremely unlikely.

After my pulse quiets down, what do I do?

ActionContact Information
File a complaint about collection agency.CFPB (855)-411-2372
File a complaint with your State.State attorney general.
File a complaint with the Better Business Bureau.BBB Online Complaint System
File a civil suit in state or federal court.Contact the National Association of Consumer Advocates to find an attornd

Check carefully to ensure that the facts are correct.   Per the Act, collectors are required to send you a letter explaining all of the particulars of the debt.   To receive this detailed report, you can request a Debt Validation Letter.   This letter enumerates the circumstances of how the debt arose, the amount of the debt, and the creditor’s identification, among other information.   This letter should be received within 10 days of the first communication.   Once the collector does receive your demand letter, they are required to notate that account as “in dispute” and this works in your favor.

Please keep careful records of all communications with the collector.   Each time there is correspondence, notate the date of the communication and a brief description of the contents.  Retain the original of each letter received and print each e-mail.  If there is a phone conversation, also notate the name of the person you spoke with and the title of their position.


Don’t recognize that debt? Here’s what to do. | FTC Consumer Information

What should I do when a debt collector contacts me? (consumerfinance.gov)

Debt Validation Letter: What It Is and Why You Need It – NerdWallet

Should I tell a debt collector to stop contacting me? | Nolo

Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice.   Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.

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