What Is a Debt Collector?

A debt collector is a person or company that collects payments on overdue bills. They can be hired by a company or buy debt from other companies.

Learn what debt collectors can and cannot do and what debt collection means to you.

Definition and examples of a debt collector

A debt collector is a person or agency that collects payment on an overdue debt. They work on behalf of the lender or company that you owe money to.

It is often cheaper for companies to hire debt collectors than to keep spending their own time and money trying to get you to pay. Many companies work with debt collectors, such as:

  • Medical offices
  • Credit card companies
  • Public utility services
  • Telephone companies
  • Loan officers
  • Other businesses

Debt collectors also include "debt buyers" who buy past due debts and try to collect them.

Typically, a business will try to contact you for several weeks or months to pay off your debt. Otherwise, the account is sent for debt collection.

Debt collectors generate more fraud alerts to the Federal Trade Commission (FTC) than any other industry. This is because few people have good experience dealing with debt collectors.

How do debt collectors work?

When an account is sent to a debt collector, it depends on the company. By looking at your credit card or loan agreement, you can get an idea of ​​the lender's hours.

Many credit card bills are sent to a collection agency after a few months without payment. Others may send bills to collection agencies after just a month or two or late payments.

When they try to get you to pay your debt, debt collectors:

  • I'll call you
  • Send letters
  • Notify credit bureaus of billing account

By law, debt collectors must follow the Fair Debt Collection Practices Act (FDCPA) when collecting your debts from you. However, the thousands of complaints filed against debt collectors each year show that they do not always comply with the law.

When and where can collection agencies call?

Debt collectors can only call you from 8:00 am to 9:00 pm your local time. They are allowed to call several times a day. But they can't call you repeatedly to "tease, abuse, or harass you."

If they have your business phone number, debt collectors can even call you at work. However, you have the right to avoid this by informing yourself that your employer does not approve of these calls.

Some debt collectors have been known to show up at someone's home to collect debts. You will be surprised to know that this is great. Debt collectors can call your personal number if you have given your creditor the number to contact you.

The latest rules from the Consumer Financial Protection Bureau allow debt collectors to send you text messages or emails. But they should include clear cancellation instructions when they do.

Who can contact debt collectors?

When a debt collector has a hard time contacting you, they may call your friends or neighbors. They can ask these people to verify their contact information.

They are allowed to do this, but cannot reveal that they are collecting a debt. Most of the time, they cannot communicate with the same person more than once.

What Warnings Should Debt Collectors Provide?

Debt collectors will send payment notices to the address they submitted for you. On the first invoice, they have to notify you that you have 30 days to request validation of the debt. This forces the debt collector to provide proof that you owe the debt.

The debt validation notice can also be sent to you by phone. This should happen if a phone call is the first time the debt collector has contacted you.

If they do not have the correct address, you will never receive a notice about the debt. And if the bill collector doesn't have your correct phone number or address, they won't be able to find out about the account until they see it on your credit report.

What does this mean to you

When a creditor submits an account to a debt collector, the debt collector can submit your account information to a credit bureau. The lender does not need to say that your account is being sent for collection.

However, the debt collector must notify you that they are collecting the debt. They must do this before taking any action.

A collection account can appear on one or all three credit reports, depending on which credit bureaus the debt collector works with.

Having a debt collector report an account to a credit bureau can lower your credit score. This will make it difficult to obtain a credit card or loan. It can also make it difficult to open a utility bill or rent an apartment.

The correct debt collection accounts can remain on your credit report for up to seven years from the date of your first missed payment. If your credit report contains a collection that does not belong to you, you can remove it by challenging it with the credit bureau.

The fees paid may seem better to some lenders when applying for a loan. But your credit score will not improve immediately after paying a debt collector.

As time goes on, the billing account will affect your credit less. Continuing to pay all your other bills on time will also help your credit score recover from debt collection. After seven years, it should be on your credit report.

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Source: Protecting Consumer Rights

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