How to Protect Yourself from Debt Collection Errors

As the economy continues to stagnate, debt collectors are becoming increasingly aggressive and some are crossing the line, hounding people for debts they’ve paid or never owed. (See our September 13, 2010 post.) Debt “sharks” who buy up old debt lists from banks and credit card issuers don’t verify debts or identities before filing suit and moving to strip alleged debtors of their bank accounts, garnish their wages and attach their assets. When this happens, unfortunate consumers bear the burden of proving their innocence.

If you are contacted about a debt you don’t believe you owe, credit repair experts and the Better Business Bureau recommend you take the following steps:

1. Keep a chronological file of all communication involving the debt collection action. Make a record of every contact you have with the debt collection agency, including the date of each conversation, phone numbers called, the name of the person you talked to and the company they say they represent, and a summary of your discussion. Print all email correspondence and save all items received in the mail. Make copies of any correspondence or emails you send out about the matter, making certain to date them and include the recipient’s name and address.
2. Request written proof of the debt and check with the Better Business Bureau to verify the legitimacy of the collection agency.
3. If you do not owe the debt, contact the company who provided the incorrect information. Collect documents that back up your assertion and provide copies if requested. If you mail supportive documents, send them via certified mail, return receipt requested. You will receive a post card verifying that documents were received and showing the name of the person who signed for them. Check the Federal Trade Commission website for additional information about debt collection.
4. Make a practice of checking your credit report annually with each of the three major credit reporting bureaus: Experian, Equifax and TransUnion.  By law, each agency is required to provide consumers with one free copy of their credit report annually.
5. Report and correct any errors found in your credit report immediately to the credit reporting agency.
6. Once the issue is successfully resolved, send a letter to the collection agency via certified mail requesting that they stop contacting you.
7. If you feel the debt collector has violated the rules, file a complaint with the FTC.