Dealing with debt collectors can be scary, especially if you don’t know the rights you have with collection agencies. There’s a lot of misinformation about debt collectors, how to deal with them, and what they can and can’t do when collecting a debt. Unfortunately, believing the widespread myths about debt collectors can damage your credit, put you at risk of a lawsuit, or even lead you to pay a collection that you don’t owe. Get the facts about debt collectors and the truth behind these common debt collection myths.
Myth — Believe Everything You Are Told!
Debt collectors may be wrong — always double check your records make sure you owe the debt. Dishonest collectors may try to collect an old, canceled, or paid off debt. The debt collector is required by law to send you a letter within five days with the creditor’s name, the amount owed, and informing you that you can dispute the debt.
Insist that they send you a debt validation before you pay anything!
Once you receive the debt validation letter, you have thirty days to dispute the debt in writing. The debt collector cannot contact you within those thirty days.
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Myth — You Can Pay the Original Creditor
Nope. In most cases, the original creditor and the debt collection company have an agreement preventing the original creditor from accepting payment. In some cases, your debt has been sold to a collections agency.
Myth — All Debt Collectors Work for Real Companies
The debt collector could be a scammer! Often, these people will go after debts that are past the statute of limitations or that are not valid. Get a name, address and phone number and check them out before doing anything.
Always ask for a debt validation before you do anything!
Avoid Debt With a Cease and Desist Letter
A cease and desist letter stops debt collectors from calling you. That’s it. Your debt remains even after the debt collector’s stops calling you.
The debt can still be listed on your credit report and will still affect your credit score and ability to get approved for credit cards and loans. The debt may even be assigned to a new collector. If that happens, your previous cease and desist letter does not apply.
Payment Removes Debt From Credit Reports
When you pay a debt collection, the debt collector is only required to update your credit report to show that you’ve paid it. They’re not obligated to remove it from your credit report after you pay it — because paying a debt collection doesn’t change the fact that you owed it. And while paying a collection is overall good for your credit and your financial health, you may not see an immediate increase in your credit score after paying off the collection
Debt Collectors Can Garnish Your Wages
Debt collectors and most other businesses have to follow a certain legal process to garnish your wages for consumer debts. They must first sue you and win a judgment against you. Then, if you do not pay the judgment, the debt collector can go back to court and ask for permission to garnish your wages.
You shouldn’t be blindsided by garnishment unless the debt collector has used the wrong address to have your legal notices served. If that happens, your attorney may be able to have the judgment overturned because you were not served at the right address.
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