Dealing with debt collectors? Help is here

No one wants to deal with debt collectors. Even the most professional and courteous debt collector in the world is trying to get you to give them money, which is rarely much fun.

Debt collectors are governed by rules and regulations designed to keep consumers from being harassed or treated unfairly by those attempting to collect debts. Unfortunately, while most collectors follow these rules there are many who do not.

According to the Federal Trade Commission, the debt collection industry generates more formal complaints to the FTC each year than any other industry. Those complaints include reports of harassment, verbal threats, demands for larger payments than allowed by law, refusal to verify disputed debts and more.

Now the federal government is becoming more directly involved in resolving complaints and reducing incidents of rule-breaking and that should be a very good thing for consumers.

The complaint process

You can now submit your complaints about any type of consumer debt collection – credit cards, medical bills, student loans, etc. – to the Consumer Financial Protection Bureau (CFPB). The CFPB will forward your complaint to the offending collection agency, which will then have 15 days to respond with the steps they have taken or plan to take to address the complaint. The CFPB estimates that most complaints will be addressed, rectified and closed within 60 days.

The CFPB also released a bulletin outlining a few debt collection practices that may be considered illegal and should be reported if experienced by consumers. Those practices include

  • threatening action that the debt collector does not have the authority to pursue,
  • falsely representing the character, amount, or legal status of the debt,
  • misrepresenting that a consumer’s debt would be waived or forgiven, and
  • failing to properly post payments or credit to a consumer’s account with payments.

Action letters

In addition to expediting the resolution to collection complaints, the CFPB has also created a series of “action letters” that consumers can use when corresponding with collection agencies.

The letters are designed to help consumers ask the right questions and properly exercise their existing rights regarding collection practices. There are five letters for use in the following scenarios:

  • If you need more information on the debt in question
  • If you want to dispute the debt and request that the debt collector cease contact until they are able to prove that the debt is yours
  • If you want to restrict how and when a debt collector can contact you
  • If you want to advise a collector that you have an attorney and all future correspondence should be directed to the attorney
  • If you want the debt collector to stop any and all contact

Always remember that if the debt is legitimate the appropriate agency does have the right to try to collect, provided they follow the proper rules and guidelines.

Need more information on debt collection?

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.