You have an unpaid bill that is overdue to your creditor (for example, your bank); maybe it’s even been moved to an in-house or third party collections agency. Now what?

First, it’s important to understand the parties involved. Your creditor is who you owe money to (for example, your bank). Your creditor may move your unpaid bill to an in-house collections team or a third party collector (a separate organization that your creditor to try and get you to pay an outstanding balance). You can have an account “in collections” with either a creditor or a third party debt collector.

Regardless of who you’re dealing with to resolve an unpaid bill, it’s important to know that you still have protections. Below are seven things to consider when discussing your debt with your creditor or a third party collections agency:

  1. You’re entitled to information
  2. You can dispute a debt on a credit report
  3. There are limits to how and when you can be contacted about a debt in collections
  4. You can tell a creditor or third party collector not to contact you
  5. You may be able to negotiate
  6. Creditors can take legal action
  7. How long a creditor can sue to collect a debt varies by state

1. You’re entitled to information

If you’re speaking with a third party collector, they have to tell you which creditor turned the account over to them and the amount owed, either in their initial conversation with you or in writing within five days of contacting you. If you don’t recognize the creditor, submit a written request to the third party collector within 30 days asking them to provide the name and contact information for the original and current creditor. Per the Consumer Financial Protection Bureau (CFPB) (which has lots of useful information for anyone with unpaid bills in collections with their creditor or a third party collector), the third party collector must then cease efforts to collect the unpaid bill in your name until they’ve given you this information. This is true of a creditor as well. Remember, always keep a copy of your letter for your records.

2. You can dispute a debt on a credit report

The Fair Credit Reporting Act (FCRA) gives you the right to dispute any reported debt. It is best to do so by registered mail and be sure to send it certified so you can get a notice of receipt. Or you can submit online, but registered mail gives you a paper trail to refer back to.

Under the FCRA, the credit bureaus are legally required to investigate disputes. You can also dispute the debt directly with the creditor, which must investigate and respond to your dispute.

3. There are limits to how and when you can be contacted about a debt in collections

The Fair Debt Collections Practice Act (FDCPA) says creditors or third party collectors may contact you, but cannot send postcards or publicly announce that you have an account in collections. Similarly, creditors and third party collectors may use U.S. mail, phone, text messages or email to contact you. However, they cannot call you before 8 a.m. or after 9 p.m. in your time zone, or contact you at work if you tell them not to, or if they should know that your employer does not allow such calls.

4. You can tell a creditor or third party collector not to contact you

You can write a letter to your creditor or third party collectors saying they must cease further contact. While they must honor your request once they receive your letter, the FDCPA does allow them to contact you with specific communication, including notification of legal action.

5. You may be able to negotiate

A creditor or third party debt collector may agree to accept less than the total amount owed, but the CFPB recommends securing a written agreement of any negotiated amount or repayment plan you make with a collector before you make a payment. If you have multiple accounts in collections, the FDCPA states that you can specify the debt to which the payment you are agreeing to make will apply. There can be tax implications of settling a debt for less than the amount you originally owed, and settled debt may appear on your credit report. 

6. Creditors can take legal action

The FDCPA says third party collectors cannot make empty threats about seizing property or suing you to get you to pay your debt, but your creditors can take legal action in an attempt to collect from you.

7. How long a creditor can sue to collect a debt varies by state

States have different statutes of limitations for how long you can be sued in an attempt to collect on debts owed. Once the statute expires, you can’t be sued, but some creditors or third party collectors may still try to contact you.

Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.