Dealing with aggressive debt collector tactics


Credit Smart
Credit Smart columnist Susan C. Keating
Susan C. Keating is the president and chief executive officer of the National Foundation for Credit Counseling. Prior to joining the NFCC, Keating spent 29 years in financial services. She was the highest ranking female CEO of a U.S. bank holding company, serving as president and chief executive of Allfirst Financial Inc., the largest U.S. holding of AIB Group. She currently serves on Bank of America's National Consumer Advisory Council and is a board member of the Council on Accreditation. Keating also participates in the Financial Regulation Reform Collaborative, a nonpartisan group committed to finding solutions for reforming financial services regulation.

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Dear Credit Smart,
I was pressured to by a collection agency to either sign an agreement on a 6-year-old debt or go to court. They said the debt was almost $3,000 more than the original debt, which was $300. They claimed the bank wanted a 25 percent yearly increase. I haven’t made a payment yet. They have bad reviews and are reported as scammers under some site reviews. What are my options? I haven’t received any documents in the mail proving the debt. The debt they are talking about is not on my credit report. – Ty


Dear Ty,
You say you haven’t made a payment yet and I really hope that means that you haven’t signed an agreement yet either. If you haven’t signed that agreement, don’t. I’m not sure whether you are dealing with an aggressive debt collector, or a scammer, but you need to act to protect your rights.

You also said you have not received any documents that prove the debt. The Fair Debt Collection Practices Act of 1977 protects consumers from unfair collection tactics. One of the provisions of that act is that the collector must send you a “validation notice” that tells you how much you owe within five days of contacting you. You say you have not received any such notice, which appears to be a violation of the act. It is very important to have the verification of the debt in hand before you sign anything. 

If you have signed the agreement, that may have “re-aged the debt,” restarting the clock on collection for the debt. If so, it likely will start showing up on your credit report so I would suggest you keep an eye on those reports for the next few months.

I must warn you that you could still be headed to court if you signed the agreement and don’t pay. You probably do have the law on your side, assuming that the state you live in has a statute of limitations that is six years or less. Most state statutes of limitations on credit card debt are between three and 10 years, so be sure to find out what your state’s law is.  

It is important to remember that just because the statute of limitations may have run out does not mean that you don’t still owe the money. I would agree that a 25 percent yearly increase is excessive and a judge might also. Courts are increasingly skeptical of such huge increases on charged-off debt. But you must show up to court and state your case. If you don’t, you run the risk of having a judgment placed against you, which could result in wage garnishment (again depending on the state you live in). I recommend you contact a consumer attorney if you do receive a court summons, because you simply cannot ignore that. You will lose if you don’t show up.

If you don’t receive a court summons but are contacted again by the collector, tell them that you know your rights under the Fair Debt Collection Practices Act and that you require proof of the debt. Telling a scammer (if that is truly what they are) that you know your rights may be enough to make them go away. 

Remember to always use your credit smarts!

See related: When to pay, not to pay, old debt

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Published: July 2, 2016

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Updated: 10-22-2016

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