Debt collectors are companies that collect money from people who owe them. They can contact you by mail, phone, fax, or in person. They can also use databases to find people who owe money and attempt to get them to pay their debts.
Debt collection is a legitimate business and most collectors are honest and reasonable. However, sometimes a collection agency’s methods are illegal or abusive. If a collector contacts you in these ways, you can file a complaint with the federal Consumer Financial Protection Bureau or your state’s attorney general.
The Fair Debt Collection Practices Act (FDCPA) sets rules for how debt collectors can contact you and what they can do to try to collect payments on your unpaid bills. They can’t lie or misrepresent the amount you owe, they must share information about your rights, and they must tell you how to dispute the debt in writing.
You should never give a debt collector any personal or financial information until it sends you this written notice, called a “validation notice.” The validation notice must include the amount of the debt, the name of the creditor and a statement that you can dispute the debt in writing.
Disputes can occur for many reasons, such as the amount is incorrect, you don’t believe it’s your debt or the collection agency contacted you by mistake. The Consumer Financial Protection Bureau provides a sample letter that you can use to dispute the debt.
In most cases, you can contact the original creditor to dispute your debt if it was purchased by a third-party collector. This can save you time and money, as you won’t have to worry about the debt collection agency contacting you again.
First-party debt agencies usually work on behalf of the original creditor and are often subsidiaries of the company you owe the money to. They sell your unpaid debt to a third-party collection agency for a percentage of the balance, and then they collect the money.
A debt collection agency may be a small, local firm or a large national company that has multiple locations and employees. They can handle both individual and corporate accounts, including loans, medical bills, student loans, credit card debt and other types of outstanding debt.
They might also specialize in a specific type of debt or have a particular niche for collecting certain kinds of bills. For example, they might only handle credit card debts, but not other types of bills like mortgages or car loans.
It’s important to know that these companies may report your account to the three major nationwide consumer reporting agencies — Equifax, TransUnion and Experian — and your credit score can drop when a collection agency reports a past-due debt to them.
You can ask your employer to stop a debt collector from contacting you at work, as long as they have your permission. You can also ask a friend or relative to block debt collectors from calling you at their home.