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    5 Tips for Dealing With Debt Collectors

    Sun Tzu said: “Know the enemy and know yourself. Your victory will be painless. Know the weather and the field. Your victory will be complete.”

    So let’s first discuss the enemy: the debt collector. In order to understand the debt collector, you have to understand how debt collection works. Most small businesses do not want to get into debt collection because of the incredible array of laws and regulations that govern collections. They will typically sell your debt to a third-party collector. The same goes for government agencies, such as parking ticket collections. Larger businesses, like credit card companies, may have a debt collection unit, but when they strike out on collecting, they will typically sell it off to a third party as well.

    That third party will make some attempts to collect the debt, including sending threatening letters and perhaps calling you. After a while, as the debt gets older, they will typically sell it for pennies on the dollar to yet another debt collector — and another — and another. The more times this debt is sold, typically, the shadier the debt collector and the less legitimate the debt.

    Layer that ongoing process with the laws around debt collection: debt collectors have to abide by federal and state laws that govern everything from how long they can try to collect the debt, the words they write in collection letters, and the ability of the debt collector to chase you around on the phone, text message, and on social media.

    All of that is a lot for a debt collector to know, and it is even more for you to know, but it makes for an effective weapon to fight back. If you know the rules that your enemy has to play by, you know the field (the laws and regulations that govern the collection of that debt), and you will be more prepared to fight back and perhaps even avoid the bankruptcy process altogether.

    Here are five very important tips to help you battle debt collectors:

    1. Know your debts.

    Most of us have been in a financial place where we struggle to keep up with monthly bills. Surprises like parking tickets or an old water bill get pushed aside, with the intent to pay them some day, but eventually we forget about them.

    It can be tough to get organized and know the scope of your debt problem when all you get in the mail are sporadic letters from different collection agencies, sometimes attempting to collect the same debt, and rarely with enough information for you to figure out where the debt originated.

    Check your credit report to get a broader view of your debt situation. You can use the resources at to get a credit report once per year, for free, courtesy of the federal government. With that report, you can start down the long list of addressing each debt that has been reported to the credit bureaus. If you do not recognize the debt, know the debt is invalid, or have proof that you paid the debt, you can write to the credit bureaus and dispute the debt on your credit report. Often, it will fall off the report, and unless the creditor responds in time, it will not return.

    2. Check your calendar.

    In most states, there is a time limit for collection on a debt. This is called a “statute of limitations.” This time limit varies by type of debt, and by your state, so you will need to look up your state’s rules separately. However, the key thing to know about these limits is that in most cases, from the moment you incurred the debt there is a time limit for the debt collector to commence legal action — they typically have anywhere from 2 to 5 years to file a lawsuit over the debt. 

    If they wait too long, they have no legal recourse. This means they cannot file a lawsuit to collect or garnish your wages, though they may be able to report the debt to the credit bureaus and some of the less reputable debt collectors out there will continue to call and harass you about the debt.

    3. Never admit the validity of the debt unless you are ready to pay.

    Federal and state law varies based on the type of debt and where you are located. However, it is very common for local laws to allow debt collectors to resume, or even restart the clock on a debt, if you admit that the debt is valid. You can admit this debt explicitly, over the phone or in writing, or you can admit it by making payments on the debt.

    Obviously, if you know you can pay the debt and you want to just take care of it, do so. It will save you a lot of time and headaches. But if you are unsure about the validity of the debt, or cannot afford to pay it, think hard before agreeing to a payment plan or before admitting that the debt is valid yourself — this will take away a major defense to the debt and it may extend the time the debt collector has to chase you on collections.

    4. Know if you are uncollectible.

    There is a certain class of debtors that debt collectors prey on, even though they have no recourse if that person cannot pay: the judgment-proof uncollectible debtor. Certain retirement, disability and Veteran benefit incomes, and assets are legally protected from creditors under the Fair Debt Collection Practices Act. What this means is that while these companies will be happy to allow you to rack up debt, if you do not pay, they cannot go after those classes of income — you are in a sense, completely uncollectible. They can call you, they can send you letters, and they can report the debt to credit bureaus, but that is about it – garnishing your retirement or Social Security benefits is not an option for them. 

    It can be a very strong negotiating tactic to either tell these debt collectors that you’re uncollectible and to go away, or to negotiate a settlement for pennies on the dollar in order to clear up your credit.

    If you are an uncollectible debtor, and the harassment has gotten to be too much, there are nonprofit law firms like your local legal aid office or HELPS  ( that can assist you in quieting these predators.

    5. Bankruptcy is an option.

    For many, bankruptcy is a last resort. And while we have talked a lot about the benefits of bankruptcy and dispelled a lot of myths surrounding the process, it is definitely a decision that you should not take lightly. Once you have done the above steps and have a better understanding of the scope of your debt, if you are tired of negotiating with those collectors, dodging their attempts to garnish your wages, and tired of them harassing you with new and persistent debt collection methods, then the “great reset button” is still an option.

    Here at, we connect our users with bankruptcy attorneys who can help them review the debt landscape, the time limits on their debt, and decide whether filing for bankruptcy is the right next step for them – get started today.

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