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Are You Getting Calls From Collection Agencies and Worried What Might Happen? Find Out Here!

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In a Nutshell

Calls from debt collectors are stressful and - if you don’t know what to expect they can be downright scary. Learn whether a collection agency can sue you and how to protect your rights, so you’re ready the next time a collection agency calls.

Written by Attorney John Coble
Updated March 22, 2021

If a debt collector is calling you, there are several tactics you can use to resolve the situation. The worst thing to do is to let the issue continue without resolution.

Types of Debt Collectors

Some debt collectors can sue you and others cannot. The distinction depends on the type of debt collection agency you're dealing with. Some collection agencies are paid a contingency fee to represent the original creditor and try to collect the debt. The more these collection agencies collect, the more they receive in payment from the original creditor. These collection agencies cannot sue because they do not own the debt. But, they may send the unpaid debt back to the original creditor who may sue you. Sometimes, a law firm will act as a contingency based collection agency. When a law firm is attempting to collect from you, they cannot sue you in their own right but can sue you on behalf of their client, the original creditor.

Another type of collection agency is a debt-buying firm. As the name sounds, these collection agencies buy the debts from the original creditor. They usually pay pennies on the dollar for the debt. Anything they collect greater than their cost for the debt is profit. In some cases, the debt buyer may hire a contingency based collection agency and have that agency attempt to collect for them. With the debt being passed around so much, it can sometimes be difficult to determine who the original creditor is.

Collection Tactics Used by Debt Collectors

When the debt-buyer buys the debt from the original creditor, they gain the same right to collect the debt as the original creditor. They will often hire an attorney to attempt to collect for a contingency fee. If the attorney fails to collect this way, the attorney may sue you.

The questions then become, what can you do to avoid a debt collection lawsuit? What can you do to resolve the debt? Or, how can you stop the collection agency from bothering you?

The primary techniques debt collectors will use against you are phone calls, threatening letters, negative reports to the credit bureaus, and lawsuits. The tools you can use to defend yourself are debt settlement, bankruptcy, winning the collections lawsuit, using the Fair Debt Collections Practices Act (FDCPA), and possibly, even using the Fair Credit Reporting Act (FCRA).

 Fair Debt Collection Practices Act

The FDCPA regulates all third party debt collectors. If the collection agency fails to meet the requirements of the FDCPA, you may be able to sue the collection agency. Remember that one of the rules of debt collection is that they cannot call you before 8:00 AM or after 9:00 PM in your local timezone.  As a general rule, original creditors are not subject to the FDCPA. 

Within five days of the first call by a collection agency, or before the collection agency sends any other written letters, you should receive a debt validation notice from the collection agency. 15 U.S. Code § 1692g(a) requires the validation notice show the amount of the debt, the name of the creditor, and a statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector, notification that you can request verification of the debt within thirty days, notification that you can request the name and address of the original creditor within thirty days. 

If you request validation as this letter mentions, the collection agency will stop calling you until it has met these validation requirements. You need to keep a record of having requested this validation. It's a good idea to do this by making a copy of your letter to the collection agency and also send your letter via certified mail with a return receipt. If you make this request within thirty days, the collection agency should stop calling you until they have sent you verification of the debt. If you make this request after your thirty day period has expired, they will continue calling you but will have to verify the debt.

Debt collectors will usually call you repeatedly during the legal hours until they have collected the debt. You can give written notice to a debt collector telling them to stop calling you. Under the FDCPA, they must stop the calls. If the debt collector contacts you after you have sent this letter, you may be able to take legal action against the debt collector. However, if the creditor sees that collections calls are not working, they are much more likely to resort to a lawsuit to collect the debt. They might send the debt to a different collection agency thereby requiring you to start the process over again.

Your Credit Report

Another commonly used collection tactic is to report your refusal to pay a debt to the credit bureaus. Each of these negative reports will harm your credit score. If the notations put on your credit report are inaccurate, you may be able to sue them under the Fair Credit Reporting Act (FCRA).

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Should You Settle With the Debt Collector?

Before attempting to settle a debt, make sure you have verified the debt. You don't want to settle a debt that you would not have had to pay anyway. The next important issue with debt settlement is that you get a written settlement agreement before you send any money. You want proof of the settlement and proof you complied with the settlement agreement. The most important part of compliance proof is evidence from your bank account or credit card account that you made the payment. It is not as uncommon as you might think, for a new collection agency to try to collect a debt that you have already paid to another collection agency. For this reason, you always need to keep records of your proof of payment.

There is nothing to stop you from settling a debt yourself. There are professional debt settlement companies that you could use. A professional negotiator that has dealt with the debt collectors many times before will have a better chance of success than you will. Some of these companies have proved to be scams in the past, so it is important that you research any company you plan to hire. It's a good idea to contact the Attorney General's Office in your state to inquire about any debt settlement company you consider hiring. Ask if the company has complaints against it. Most state's attorney generals have consumer protection divisions that specialize in complaints against financial services companies such as debt settlement companies.

Before settling with the collection agency, you need to ask yourself if it makes sense to settle with this creditor. Will settling with this creditor put you behind with another creditor thereby causing more collection accounts? Will this cause other accounts to fall into collections as if they were dominos? If this is the case, you should consider a consultation with a nonprofit credit counseling agency. A credit counselor will explain what your best options are to solve all your debts with one plan.

Alternative Debt Solutions

Your credit counselor will go over alternative solutions with you. These solutions may include debt management plans, debt consolidations, and debt settlements. If your credit score is high enough to get a favorable loan to consolidate all your consumer debt, a debt consolidation loan is a solution that will not harm your credit report. But, be careful doing this. If you pay off the debt and then run up new debt on credit cards that you used the loan to pay off, your credit score will be harmed. By running up new debt, your ratio of debt to available credit will have increased. This ratio is one of the most important factors in the credit score calculation formula. 

A debt management plan is like a debt consolidation except there is no loan. With a debt management plan, the credit counselor negotiates with your general unsecured creditors to obtain more favorable terms including lower interest rates. You then have a payment plan with the credit counselor to make one payment and the credit counselor will use that money to pay down your debts until the debts are eliminated. This method will harm your credit report at first since you're paying slower, but your credit will improve as the balances on your debts decrease. You could also try to settle all your credit card debt as well as some other unsecured debts. This method usually requires large lump sum payments. These settlements are for less than the full amount due. Since the debts aren't paid in full, a debt settlement will hurt your credit score.

If You Refuse to Pay, The Debt Collector Could Sue You

If a debt collector sues you, it isn’t the end of the road. You still have options and defenses.

Defend Your Case. Is the Lawsuit Barred by the Statute of Limitations?

If you do not owe the debt, you should tell the debt collector. If they sue you, fight it in court or they will get a default judgment. The first thing to do is to file an answer to the complaint that the collector filed with the court. Then, demand proof of the amount of the debt. If it is a debt-buyer that's suing you, demand proof that the debt-buyer actually owns the debt. Demand proof that an old debt is not a time-barred debt due to the statute of limitations. With statutes of limitations, it's important to understand the time period for the statute along with the time frame. The problem with time frames is that it's sometimes difficult to tell what event caused the statute of limitations time period to begin to run. The creditor will need to have the documents necessary to prove these things. If the creditor fails to prove all these factors, ask the judge to dismiss the case. Usually, the case will not go your way, but you would be surprised how often lawyers come to court unprepared and are unable to prove their case. If you believe you have a good case, you might want to hire an attorney. If you cannot afford an attorney, you may want to check with legal aid.

Are You Judgment-Proof?

Some people are judgment-proof. This is a term of art that means that creditors can get all the judgments they want, but they aren't going to be able to get any money. Having no nonexempt equity in your property and having all your income exempt will make you judgment proof. The creditor can sue you and win the case, but will not be able to get any money out of you. Of course, should your income increase, or you win the lottery, then that creditor will already have a judgment against you and will be able to collect. That is, they will be able to collect in this last situation if the judgment has not expired. Like statutes of limitations to file lawsuits to collect a debt, there are also statutes of limitations on the time allowed to enforce a judgment.

What Can Bankruptcy Do for You?

If a debt collector sues you, you do owe the money, and you can't pay, the best option could be bankruptcy. Filing bankruptcy will immediately stop the lawsuit. With bankruptcy, most people lose nothing except their debt. Bankruptcy can also be the first step to repairing your credit. Yes, bankruptcy will harm your credit at first. But, the most important aspect in the determination of your credit score is your financial health. Bankruptcy greatly improves your financial health. Within a year of filing bankruptcy, most people have a higher credit score than they did the day before they filed bankruptcy. There are many variables to consider and how much bankruptcy will help you depends on your unique situation.


If you are looking for a solution to stop harassment from a debt collector, the first thing to consider is, do you actually owe the debt? Do you have excessive debt? If this is the case, the first place to look for help should be a nonprofit credit counseling agency. They can give you some good unbiased options. If necessary, the credit counseling agency will recommend bankruptcy. If you have a simple straight forward bankruptcy case, you may be eligible to use Upsolve's free tool to file your own Chapter 7 bankruptcy. For more complicated cases, you will need to contact an experienced bankruptcy attorney in your area.

If you do not owe them money, or you do owe the money, but you think the debt collector has wronged you, it's a good idea to contact a consumer attorney. These attorneys specialize in issues such as FDCPA and FCRA violations.

Written By:

Attorney John Coble


John Coble has practiced as both a CPA and an Attorney. John's legal specialties were tax law and bankruptcy law. Before starting his own firm, John worked for law offices, accounting firms, and one of America's largest banks. John handled almost 1,500 bankruptcy cases in the eig... read more about Attorney John Coble

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