5 Ways to Get Rid of Debt Collectors

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Key takeaways

Know your rights under the Fair Debt Collection Practices Act and report anyone who violates them.
Always verify the debt. You have the right to dispute it if it is not yours or has already been paid.
You can negotiate a settlement or payment plan so that repaying does not strain your finances. You can also wait for the statute of limitations to pass.

Are you overwhelmed by constant calls and letters from debt collectors? You’re not alone. The Consumer Financial Protection Bureau found that nearly one-quarter of all Americans have a collection tradeline on their credit report. A collection tradeline means you owe money, and collectors may call.

Dealing with collection agencies is far from fun. You likely don’t have the means to pay the full amount owed but want the calls to stop. The first thing you need to know is how to handle debt collectors and what rights you have.

In this article, we’ll go over how to get rid of debt collectors without paying or by paying less than you owe.

What is a debt collector?

A debt collector is a person or agency hired to recover unpaid debts on behalf of a creditor. These debts may be overdue credit card balances, medical debts, personal loans, student loans, old utility bills, or any other financial obligation. Typically, the creditor will first try to collect payment internally. After several months of this not working, they may sell the delinquent account to a third-party collection agency for pennies on the dollar.

Once the debt collection agency takes over, they will contact you through phone calls, letters, emails, or even text messages. Collectors are known for being relentless in their efforts to obtain payment.

Tips for dealing with collection agencies

Dealing with debt collectors can be stressful, but there are ways to manage the situation effectively. The key is to stay organized and informed. Here are the first steps to follow when contacted by a collector.

Know your rights

Debt collectors have to play by the rules established in the Fair Debt Collection Practices Act. The act aims to protect consumers from unfair debt collection practices and harassment.

Prohibits abusive practices: The FDCPA makes it illegal for collectors to use abusive language, deceptive practices, or unfair practices when attempting to collect payment. They cannot threaten you with arrest, property liens, or bank levies, harass you, or use profane language.

Regulates communication: The law limits how and when collectors can contact consumers. They can only call you between 8 a.m. and 9 p.m. and cannot call your workplace if your employer disapproves. They can contact friends and relatives for location information but cannot reveal that you owe money.

Disclosure requirements: Collectors are required to identify themselves and provide clear information about the debt they are collecting. This includes how much you owe, who the original creditor is, and that you have the right to dispute it.

Right to dispute: Consumers have the right to dispute collections. If a consumer requests validation, the collector must cease collection efforts until they provide verification.

Protections against misrepresentation: The FDCPA prohibits collectors from misrepresenting themselves or the amount owed. They cannot pretend to be an attorney or make false claims about the legal status of the debt or the consequences of not paying.

If they break the rules, you can report them to the Consumer Financial Protection Bureau (CFPB) or your state attorney general.

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Gather the facts and verify the debt

Before paying anything, ensure you owe the money. Ask the collector to send you a validation letter if they haven’t already. The validation letter should provide details on the debt and how to dispute it. It should have the name of the original creditor and how much you owe, including interest, fees, or penalties added. It should also give you the contact information for the collection agency.

Once you’ve verified that you owe the money, gather your own records. Look for communication with the original creditor, documentation of past payments, or the original contract. Then, keep records of all communication with the collection agency. This includes any letters, emails, or text messages. Note down the dates and times of all phone calls and the person you talked to. All the documentation can help you if something goes wrong.

Know what you can afford to pay

Do not give in to pressure and agree to pay when the collection agency first comes calling. Take time to figure out what you can afford. Look at your income and set money aside for groceries, utilities, rent or mortgage payments, and transportation. Next, see what you can allocate toward debt payment. You can offer a partial payment or a lump-sum. Never agree to pay more than you can manage. This way, you can avoid further financial trouble and handle delinquent debts more effectively.

How to get rid of debt collectors

There are three ways to get rid of debt collectors. You can pay what you owe, dispute the debt, or wait for the statute of limitations to pass. If the debt is legitimate and you owe the money, you should pay something, but you don’t have to pay the full amount.

Consider negotiating a settlement

Negotiating may allow you to pay less than you owe. Contact the collection agency to discuss a possible debt settlement. Collectors will often agree to a lower amount in exchange for a lump-sum payment.

Start by explaining your financial situation. Offer a realistic amount you can pay upfront, such as 40% to 70% of the total balance. Always get the agreement in writing before making payments to avoid future disputes.

While negotiating a debt settlement first appears like the perfect solution, it comes with serious detractions. Forgiven debt over $600 is considered taxable income by the IRS. The account is marked as ‘settled for less’ on your credit report. The negative notation will hurt your credit score and make future lenders wary of working with you. Furthermore, if you work with a debt settlement company, you’ll have to pay their fees.

Set up an affordable payment plan

If a lump-sum payment isn’t feasible, you can arrange a payment plan. A payment plan allows you to break down your debt into manageable monthly installments based on your income and expenses. Contact the collector and propose a payment schedule you can realistically afford, even if it means smaller payments over a longer period.

Get the agreement in writing. Specify the payment amounts, due dates, and terms. Stick to the schedule to avoid additional fees or legal action. Keep in mind that interest may still accrue during the repayment period, so aim to pay more than the minimum when possible to reduce the total cost.

A payment plan can help you repay what you owe without added financial strain and get collectors off your back.

Work with a credit counseling agency

Credit counseling agencies offer expert advice on personal finances and managing debt. These nonprofit organizations will work with you to create a debt management plan (DMP). A DMP consolidates multiple debts into a single monthly payment. The agency will then negotiate on your behalf for lower interest rates or waived fees. The goal is to make repayment more affordable. Once you enter a DMP, the debt collector contacts the credit counselor instead of you – taking a weight off your shoulders.

When choosing a credit counseling agency, ensure it’s accredited, ideally by the National Foundation for Credit Counseling (NFCC). Take note of fees. Most DMPs do cost money, though they are designed to be affordable.

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Dispute the debt in collection

If you believe a debt is incorrect, already paid, or not yours, you can dispute it. Send a dispute letter to the collection agency using certified mail. Keep a copy of the letter and return receipt for proof.

You must send the letter within 30 days of initial contact. Do not ignore collection efforts. The letter should clearly state that you are disputing the collection and request written verification, including details like the original creditor and the amount owed. Include any evidence supporting your claim – canceled checks or documentation that you already paid – in your letter.

Once you submit your dispute, the debt collector must cease all collection efforts until they can verify that you owe the money.

If the debt is proved invalid, the agency cannot collect. You do not have to pay anything. Do not stop there. Dispute the false account with the credit bureau to get it removed from your reports. Credit bureaus are required to delete any information that cannot be confirmed. Disputing a debt can protect you from paying what you don’t owe and safeguard your credit report from inaccurate negative marks.

Wait it out

All debts have a statute of limitations. Once it expires, collectors cannot sue you. You still owe the money, but they have lost the legal right to enforce payment.

The time period varies by state and the type of debt owed. Typically, it ranges from three to six years. Paying or acknowledging a time-barred debt can restart the statute of limitations. It all depends on your state laws, so be careful.

Waiting for the statute of limitations to pass is a feasible way to get out of paying, but it’s not recommended. Even if you have a time-barred debt, you owe the money, and the mark may remain on your credit report for up to seven years, dragging down your score. It’s better to try to pay what you owe.

Want to file for bankruptcy?

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Why you shouldn’t ignore a lawsuit

Debt collection lawsuits are a common and effective way for collectors to get paid. Ignoring them is not recommended and can have severe consequences.

If a collection agency sues you and you fail to respond, the court will issue a default judgment in their favor. The judgment could allow the collection agency to garnish your wages, freeze your bank account, or place a lien on your property to recover the money.

If you receive a summons, carefully review the document to understand the charges and the deadline for your response. Responding promptly gives you the opportunity to dispute the lawsuit, negotiate a settlement, or set up a payment plan before the case escalates.

Ignoring a summons will not resolve the lawsuit and could lead to more severe financial consequences. Always take court notices seriously and seek advice from a pro bono attorney.

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How to spot a scam

Not paying bills on time may expose you to debt collection scams, but even if you don’t owe money, you could still be targeted. To ensure a collector is legitimate, keep an eye out for these common warning signs.

Insufficient information: Legitimate debt collectors must provide detailed information about your debt and the original creditor. If they avoid giving specifics or refuse to send a written validation letter within five days of contacting you, be cautious.
Aggressive tactics: Scammers often pressure you to pay immediately, using threats of arrest, lawsuits, or wage garnishment. All these are actions legitimate collectors cannot take without following legal procedures. Threats, obscene language, and harassment, all violate fair debt collection practices.
Unfamiliar debt: Check your credit report for any unknown accounts. Scammers might claim you owe money you’ve never borrowed.
Unverified contact: If you receive calls from debt collectors, ask for their full name, company, and contact information. Then, cross-check their details with your original creditor or consult resources like the Consumer Financial Protection Bureau (CFPB). If something feels off, trust your instincts and report the scam.
Payment demands: Be wary of demands for payment via wire transfers or prepaid cards. Legitimate agencies will ask for payment via traditional methods.

If something feels off, trust your instincts and report the scam to the Federal Trade Commission (FTC) or your state attorney general’s office.

Frequently asked questions

1. How can you dispute a debt and win?

To dispute a debt that was sold to a collection agency, you first need to send a formal letter via certified mail to the collector. Do so within 30 days of the initial notice. The letter should clearly state you’re disputing the debt and include your name, contact information, and relevant details such as account number and amount. Include any evidence or documentation that supports your claim. Also, request validation, which requires the collector to provide proof that you owe money. The agency is required to cease all collection efforts until they can validate that you owe the money.

2. How can you get rid of debt collectors without paying?

You can get out of collections without paying by disputing invalid debts or identifying accounts past the statute of limitations. You may have to pay something if the debt is valid and not close to being time-barred. Many collectors are willing to negotiate a settlement where you pay less than the full amount owed or work out a payment plan.

3. What happens if you ignore debt collectors?

Ignore collection efforts, and you may end up in court. Lawsuits are an effective way to enforce payment. If you do not respond to a court summons, the judge will issue a default judgment against you. The judgment may result in wage garnishment or bank account levies. It’s better to address the issue head on to avoid escalating consequences.

4. Can you negotiate with a debt collector?

Yes, you can negotiate. You can try to settle for less than you owe or to work out an affordable payment plan. Always get any agreement in writing before making payments to avoid disputes later.

5. Do you have to pay a time-barred debt?

You are not legally required to pay a time-barred debt, as it’s past the statute of limitations for collection and so you cannot be sued. Collection agencies can still contact you. If you make a payment or acknowledging that you owe the money, you could restart the statute of limitations period in some states.

Bottom line

Dealing with debt collectors is not pleasant, but you have options. Familiarize yourself with the laws regulating collection efforts and your rights as a consumer. Knowing your basic protects helps ensure fair treatment.

Whatever you do, do not avoid collectors. Verify the debt is legitimate. Then, decide if you want to dispute it, wait for the statute of limitations to pass, or find a way to pay. The right decision for you depends on your financial situation. It is possible to get out of paying debt collectors.

While collection calls can be stressful, you can put an end to them and resolve the debt for good.

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Rachel Alulis

Rachel Alulis has been the lead editor for Moneyfor’s credit cards team since 2015 and for the financial rewards team since 2023. Before joining Moneyfor, Rachel worked at USA Today and the Des Moines Register. She then established a successful freelance writing and editing business specializing in personal finance. Rachel holds a bachelor’s degree in journalism and an MBA.

5 Ways to Get Rid of Debt Collectors

Key takeaways

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What is a debt collector?