Your phone rings. Someone on the other end is claiming to work for a collection agency of some kind. He tells you that the purpose of this call is to collect a debt. A debt which you either do not remember owing or is so old that you thought it was gone. How do you ensure this is legitimately collectible?
The caller must identify who he is and who he works for. A legitimate debt collector will supply a phone number, business name and mailing address. A scammer will fudge around this or claim he does not have to supply this information.
The majority of collection agencies will send you a letter prior to calling you. Federal law requires them to send you a letter about the debt no later than five days after their first contact with you. Sending the letter first ensures they are following the law and eliminates the surprise to you when they call.
You have the right to have the collection agency verify the debt. You must do this in writing and I recommend you send the letter via certified mail with return receipt so you have proof they received the letter. A sample letter from the Consumer Financial Protection Bureau can be found at consumerfinance.gov.
Though there is no federal definition of what constitutes a debt verification, the assumption is that if they can prove to a judge that you owe the debt, then that is acceptable verification. So you should receive one or more of these items:
A copy of the original, signed contract.
A copy of the charge-off statement from the original creditor.
A copy of at least one cancelled check paid from you to the original creditor.
Information from the creditor that ties you with the debt (the creditor’s name, an account number, the charged off amount, the current balance and the last four digits of your social security number).
The collection agency has thirty days to supply this verification to you. During this time period, the collection agency cannot attempt to collect this debt in any manner and they cannot report this debt to the credit bureaus (note the original creditor can still report it).
Some things you should do during this thirty day period:
Check your credit report to make sure the debt is truly yours. The original creditor will report this as “Charged Off” if it has been transferred or sold to a collection agency. You may also determine the debt is too old under your state’s statute of limitations for the collector to sue you.
Contact the original creditor to determine who they sold the debt to. They can tell you this information. If the debt has been sold numerous times, you will have to follow the “chain of title” to learn who the actual owner is. And if it has been sold numerous times, the chances of this collection agency being able to verify the debt drops dramatically.
If the verification cannot be supplied to you within the thirty days, then the debt is uncollectible. But if they do verify it, the debt is collectible and the collection agency will add this to your credit report.