If you fail to pay a debt, your creditor will do everything they can to you to pay them back. Eventually they may even send your debt to a collections agency that will get to work recovering the money you owe. The collections agency may hound you to pay your debt, potentially threatening to garnish your wages until it’s settled.
But what happens if you don’t believe you owe the debt in the first place? You may have already paid it off, and the collections agency did know. Or a scammer may have gotten hold of your personal information and used it to fraudulently open an account that’s now delinquent.
If you don’t believe a debt is yours, this guide can help you take steps to dispute a debt and win.
How to Dispute a Debt
When receiving calls about a debt that isn’t yours, your first step is to collect as much information about the debt as possible. Find out who is calling, the name of the company, the company address, and company phone number. At this point, don’t give out any personal information. Doing so could come back to bite you later, especially if you’re dealing with a scammer.
By law, collectors have to provide a letter with information on the debt and their contact information within five days of the initial call. Once you receive it, contact the original company to which you supposedly owe money to find out more about the debt.
While you’re at it, you may also want to find out what type of collector is calling. Is it in-house collections, a hired collections agency, or a debt buyer? In-house collections departments should have the most information at their disposal about the debt, while the others may have incomplete information, which could signal the potential for mistakes.
If the collector won’t give you information about themselves, it is a red flag that you may be dealing with a scammer.
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What Is a Debt Dispute Letter, and How Do I Write One?
Once you’ve got the address of the collector, send a debt dispute letter within 30 days receiving the information. Fail to respond in this timeframe, and the collector can proceed as if the debt is valid.
Debt letters are not necessarily complicated to write. They may simply say that you’re writing about a collection on a debt you don’t think you owe. Ask the company to provide proof that you owe the debt in question and to stop contacting you if it can’t be proven.
If there’s any other information you need that you haven’t gotten yet, you can ask for it at this point.
Keep a copy of the letter for yourself, and track the copy you send so you can be sure it was received. A dispute letter alone will sometimes stop the collections calls.
The Consumer Financial Protection Bureau (CFPB) provides a sample dispute letter that you can mail to collectors.
Can a Debt Collector Contact You If You Dispute the Debt?
Once they receive the letter, the collections agency has to stop contacting you until it sends you a debt validation letter that documents that you owe money.
With this letter in hand, contact the original creditor and ask them if they have any record that you’ve taken out a loan and are delinquent. If not, they may decide to stop pursuing the debt.
Know Your Rights Under FDCPA
The Fair Debt Collection Practices Act (FDCPA) is a federal statute that governs how debt collectors are allowed to act. There are certain things collectors are not allowed to do, including:
• Collectors cannot call before 8:00 am or after 9:00 pm, and they are not permitted to call you at work if you’re not allowed to take those calls.
• They are not allowed to harass you with threats of violence, profane language, or by calling repetitively.
• They cannot present you with false information, including how much you owe and who is collecting the debt.
• They cannot speak to anyone about your debt besides the original creditor, credit reporting agencies, and your lawyer. That said, they can contact others to try to find you as long as they don’t discuss the nature of your debt.
• Collectors cannot engage in unfair practices, such as charging more than allowed by your state.
If a collector violates these rules, you may sue them in civil court, where you may win monetary compensation or they may be subject to fines.
Is There a Statute of Limitation on Debt?
Debts can exceed a statute of limitation, becoming too old to collect. Rules will vary by states, but collectors generally have three to six years. Once the statute of limitation is up, the debt becomes a “time-barred” debt. A collector can still try to collect, but they don’t have a legal standing to make you pay it.
When you contact a collector for the first time, be sure to find out when the debt was supposedly incurred. Contact your state attorney general’s office to find out what the statute of limitations is in your state to determine if the debt is time-barred.
What Not to Do When You’re in Debt
It is likely not fruitful to dispute debt that you do actually owe. If you are in debt, do what you can to pay it off, even when it’s been sent to a collector. Unpaid debt will damage your credit score, making it more difficult and expensive for you to seek credit in the future.
Keep on top of your debt with tools like a spending app, which helps you track how you spend and save each month and manage upcoming bills.
Ways to Remove Collections from Your Credit Report
If collections on a debt you don’t owe shows up on your credit report, you may dispute your credit report with the three major credit reporting bureaus: Equifax, TransUnion, and Experian.
You’ll need to send a dispute letter that includes your contact information, a list of mistakes with account numbers, an explanation of how the information is incorrect, a request to have the collections removed, and supporting information about how the dispute should be reported. Note that if information changes on your credit report, it’s possible your credit score may drop after a dispute.
If you pay off a debt and it’s no longer in collections, you may send a letter to the agency asking them to remove the collections from your credit report. The collector may remove the information from your report as a courtesy, though they don’t have to.
Recommended: Closing a Credit Card With a Balance
Check Your Credit Reports Regularly
It’s a good idea to check your credit report annually. Make sure there are no errors on the report, and be on the lookout for evidence of credit card frauds or accounts that were opened fraudulently. You can receive a free credit report from each of the credit reporting bureaus once per year.
Recommended: Guide to Canceling a Credit Card Payment
If collectors are asking you to pay up on a debt you don’t believe you owe, dispute it as soon as possible. In some cases, it may be a purchase or debt that slipped your mind, or it may be an error. If the debt is particularly difficult to prove or disprove, you may need to hire a lawyer who can help you settle the matter in court.
Regularly monitoring your credit score is one way to keep financial matters from slipping through the cracks. A money tracker app can also help. The SoFi app connects all of your accounts in one convenient dashboard. From there, you can see all your balances, spending breakdowns, and credit score monitoring, and get other valuable financial insights.
How do you fight a collections agency and win?
If a collections agency is trying to collect a debt you don’t owe, your best course of action is to gather information about the debt and send a dispute letter immediately asking for debt validation. This is sometimes enough to stop the collections process. But if a debt is difficult to prove or disprove, you may need to hire an attorney.
Can I dispute a debt sold to a collections agency?
Yes, you can dispute a debt sold to a collections agency.
What is the best thing to say when disputing a collection?
A dispute letter should say that you’re writing about a debt you don’t owe. It should also ask that the collector prove the debt or cease contacting you.
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