Dealing with collections

Know your rights

Collections rules are different. The Fair Debt Collection Practices Act (FDCPA) gives you rights most people don't know exist.

Used right, you can settle for less, force collectors to prove the debt is yours, or get items removed from your credit report.

Don't panic when a notice arrives. Use the system.

Key points

• Request debt validation first. Within 30 days of first contact, send a letter asking the collector to prove you owe. If they can't, they must stop.
• Never pay immediately. Payment can restart the statute of limitations on old debt. Validate first.
• Negotiate pay-for-delete. Offer to settle in exchange for removing the item from your report. Get it in writing before paying.
• Collectors can't harass you. No calls before 8am or after 9pm. No threats. No contacting your employer. Document violations. You can sue under the FDCPA.

The 7-year rule

Most negative items fall off your credit report 7 years after original delinquency. Before paying an old collection, check the date. Sometimes waiting is the right move.