Dealing With Debt Collectors
Many people struggle with what to do when contacted by a debt collector, especially when the collector is calling from a company they have never heard of. Under state and federal laws, you are protected from abusive, deceptive, and unfair debt collection practices. Set out below is more information on your rights when dealing with debt collectors, and tools and tips you can use to protect yourself from being defrauded into paying a debt you do not owe.
Request Additional Information from a Debt Collector
If you are contacted by a debt collector that you don’t recognize or about a debt you don’t recall, you may want to request additional information from the collector.
Under federal law, if you request information on a debt collector within 30 days of the first contact, the debt collector must provide you verification of the debt, including information about the original creditor.
Under New York debt collection regulations, New Yorkers have the right to request additional information on most “charged-off” debts, which are defaulted debts that a creditor removed from its books, and then, typically, sold to another entity to collect. For example, this could be a defaulted credit card debt that was sold by your credit card company to another company to collect.
You can make this information request, called “Substantiation of a Debt,” on the phone with a debt collector, although the collector may then require you to send a written request. Sending a written request for Substantiation of a Debt is the best way to request this information, because it provides a record of the request.
Whether you make the request by phone or in writing, you should keep records of when you asked for information from the debt collector and when you heard back. When a debt collector receives your request, it must stop collection efforts until it provides you the requested information. The debt collector has 60 days to comply after receiving the request.
Sample letter to request Substantiation of a Debt
If you are not sure whether the debt you’ve been contacted about is the kind of “charged-off” debt for which you are entitled to Substantiation, you may still make a request for Substantiation of the Debt. Even if the collector advises that the alleged debt is not “charged-off”, you can still ask a debt collector for additional information. Legitimate debt collectors often provide, at your request, some proof that the collector has a right to collect the debt and is not a fraudster.
Protections from Harassment and Abuse
Debt collectors are not allowed to:
- Use or threaten violence.
- Make repeated phone calls made with the intent to annoy, abuse, or harass you.
- Use obscene or profane language when collecting from you.
- Call you at times they know, or should know, are inconvenient, including before 8 am and after 9 pm (unless you give permission otherwise).
- Contact you at work if the debt collector knows or has reason to know that your employer prohibits you from receiving personal calls, such as debt collection calls, at work.
- You have the right to demand, at any time, that a debt collector stop contacting you. If you make this request in writing to the debt collector, they must stop most communication. While this will stop attempts to collect your debt, it does not cancel the debt or prevent the collector from trying to collect by other means, including by a lawsuit.
- You can tell a debt collector the best time to contact you. Debt collectors cannot contact you at times they know are inconvenient, so you can tell collectors when they should and shouldn’t contact you.
Avoiding Debt Collector Scams
These fraudsters will try to collect money from consumers who already paid off their loans or debts to the legitimate creditor, or consumers who merely started an application for a loan, including a payday loan, but who never actually took out a loan. Fraudulent debt collectors use various tactics to scare the consumer into paying, including threatening arrest, legal action, garnishment of wages, and seizure of the consumer’s assets.
Don’t be victimized by this scam. Be mindful of the following:
- Payday Loans Are Illegal In New York. If a collector is claiming to collect on a payday loan, be aware that these loans are void under New York law and debt collectors do not have the right to collect them. If you have taken out one of these illegal loans, you can find out how to stop the loan.
- Ask for Proof of Debt. Ask the caller for written proof of the debt, including for his or her right to collect it. A legitimate debt collector should be able to provide you documentation showing what you owe and to whom. If the caller refuses to provide proof, the caller may be a fraudster.
- Don’t Provide Personal Information. Fraudsters sometimes try to trick consumers into giving them their personal information. Don’t provide your personal information to anybody you’re not sure you know.
- Contact the Original Lender. Even if you think you may owe money, do not send payments in response to an unknown caller’s demands. Contact your original creditor to ask whether or not your account is in collection, which company it has hired to collect on your account, or which company has purchased your debt. If a company purchased your debt, contact them directly to find out the status of your debt.
- Don’t Respond to Threats. It is illegal for debt collectors to harass borrowers or make threats of any kind. Also, while you may be sued to collect a debt, the police cannot arrest you for failing to pay back a debt.
Phantom debt collection scams can take many forms. These scams can target payday loan borrowers and consumers who have never taken out a payday loan.
Debt Collection Lawsuits
In 2014, DFS adopted 23 NYCRR 1, a regulation to reform debt collection practices by debt collectors, including third-party debt collectors and debt buyers. In order to assist debt collectors in complying with these rules, DFS provides some answers to frequently asked questions in our FAQs: Regulation of debt collection by third-party debt collectors and debt buyers (23 NYCRR 1)
If you are sued or have been sued by a debt collector, the New York State Unified Court System has information on your rights, how to handle a debt collection lawsuit, and in some cases, how to overturn a wrongful judgment against you.
Find out more at the New York State Unified Court System’s website.
File a Complaint
If you have been contacted by somebody you believe is a phantom debt collector, or believe that you are the victim of a debt collection scam, contact our Consumer Hotline at (800) 342-3736, or file a complaint with DFS.