Roadmap Roadmap

The 5 Mile Markers

Mile Marker 3: Debt Collectors

After six months of non-payment, the original creditor will likely write off your account as bad debt and debt collectors will start contacting you. If you don't understand the difference between original creditors and debt collectors, then go back and read the Debt Relief section.

Step One: Respond to Dunning Letters

Federal law requires that you be sent a dunning letter five days after the debt collector makes initial contact. Also remember that the "dunning letter" can be delivered verbally, as long as the debt collector provides the required information.

How should you respond? See the Resource Library for a sample response to a dunning letter.

Just make sure you never volunteer any information; simply assert your right to have the debt verified. Never acknowledge the debt or your responsibility for the debt.

Always send your request for verification and validation by certified mail, return receipt requested. Keep a copy in your correspondence log.

You'll probably receive a response—but sometimes you won't. If the debt collector can't verify a debt, or simply doesn't want to take the time and incur the expense necessary to provide verification of the debt, they may drop the account or, more likely, sell the debt to another debt collector. Even those that do respond may not respond in an appropriate manner.

Action Steps:
  1. Respond in writing to dunning letters (or to "dunning letter" calls) within 30 days.
  2. Use the provided templates for guidance on writing your own letters.
  3. Send your request by certified mail, return receipt requested.
  4. Keep records of all correspondence.
Step Two: Document All Communications and FDCPA Violations

Debt collectors will try to scare, intimidate, and bully you. They'll ask questions. They'll play good cop/bad cop. No matter the approach, their goal is to confirm they've reached the right person, get you to acknowledge that you owe the debt, and then work hard to get a payment, no matter how small.

Action Steps (when the debt collector calls):
  1. Ask who is calling.
  2. Record the call and give proper notice if
  3. Record the call and give proper notice if you are in an all-party state.
  4. Go "violation fishing" or state you no longer wish to be contacted via phone. Follow up with a Do-Not-Call letter, sent certified mail with return receipt requested.
  5. Never, never, never acknowledge the debt or provide any additional information such as your address, your place of employment, etc.
  6. Don't give in to fear, guilt, or intimidation.
  1. Document the call in your call log.
  2. Listen carefully for FDCPA violations. We've covered these before, but stay alert for the most common violations:
    • Calls before 8 a.m. and after 9 p.m.
    • Failure to identify themselves completely when they initiate a conversation
    • Failure to send a dunning letter within five days of making initial contact
    • Continuing collection efforts or reporting negatives to the credit bureau before they have complied with your verification validation request
    • Failure to comply with your Do-Not-Call request
    • Threats, harassment, abuse, or use of profanity
    • Calling multiple times per day
    • Making false or misleading statements

Key Note: Keep in mind that how you respond to debt collector threats or harassment is important. In a way, violations of the FDCPA are like personal injury cases: emotional distress is a factor in determining damages. If you feel threatened, you often have been threatened. If you feel intimidated, by law you may actually have been intimidated, even if the debt collector did not intend to do so. The key is how you felt.

For example, it's possible a debt collector could stress you out so much you can't sleep or even have an anxiety attack. If that happens, write it down. By keeping logs and phone recordings, it's a lot easier to prove harassment because you have the documentation to back it up.

Step Three: Sue or Threaten to Sue if Your Rights Are Violated

If your rights are violated you can threaten to sue, or actually sue. The more numerous and egregious the violations, the better leverage you have against a debt collector. Consult the guidelines and charts in the Know Your Federal Rights section on Debt Relief.

Action Steps:
  1. Match your documentation against the violations list.
  2. If you find major violations or numerous minor violations, consult with an attorney.
  3. Use the threat of a lawsuit to make them zero out the debt and update your credit report to "paid as agreed" or remove the record altogether. You may need to actually file a suit to get the leverage you need.
Step Four: Begin Credit Repair

Credit repair is a process, not an event. Once your account has been charged-off and assigned or sold to a debt collector you can begin the process of credit repair.

Remember, credit repair is more than just removing negative entries from your credit reports. Keeping older accounts in good standing open, having a good mix of credit, keeping your balances low, rebuilding credit with secured cards, etc. all work towards increasing your overlder accounts in good standing open, having a good mix of credit, keeping your balances low, rebuilding credit with secured cards, etc. all work towards increasing your overall credit score.

Of course, removing negatives from your credit report can have a dramatic impact on your score, so make sure you read and understand the dispute process described in the Credit Repair section of this website and start ASAP.

Action Steps:
  1. Get a current copy of your credit report from all three bureaus.
  2. Start disputing negative entries.
  3. Implement other credit building strategies.
> Mile Marker 4: You Are Served with a Lawsuit