Debt collectors often rely on misinformation and intimidation tactics to pressure individuals into making payments, sometimes under less-than-favorable terms. But when you know the truth, you regain some of the leverage that they typically take away.
Here are several common myths that debt collectors want you to believe, and the truths that will help you stand your ground.
1. Myth: You Must Pay All Debts Immediately, No Matter What
One of the most common tactics debt collectors use is making you feel like you need to pay the full amount immediately, regardless of your financial situation. They might tell you that delaying payment will only make things worse or that you’ll be hit with additional penalties if you don’t pay right away.
The Truth: You are not legally obligated to pay off a debt in full the moment a collector contacts you. In fact, you have the right to negotiate a payment plan that works with your financial situation. Debt collectors want you to believe you need to pay everything immediately because it’s in their best interest to collect as quickly as possible. But you should never feel pressured to drain your savings or miss other essential payments just to satisfy a collector.
It’s wise to assess your finances and see if you can negotiate a payment plan or settlement. You can also ask for a validation of the debt before making any payment to ensure it’s accurate and legitimate.
2. Myth: You Can Be Sent to Jail for Not Paying Your Debts
Some debt collectors will resort to threats to scare you into paying, and one of the worst tactics is suggesting that you could be jailed for not paying your debt. They may imply that ignoring their demands or failing to meet deadlines will result in legal action that could land you behind bars.
The Truth: You cannot be sent to jail for not paying most consumer debts, such as credit card balances, medical bills, or loans. Debtors’ prisons were abolished long ago, and it is illegal for debt collectors to threaten jail time. The Fair Debt Collection Practices Act (FDCPA) strictly prohibits this type of intimidation. The only way you could face jail time is if you are involved in criminal activity related to your debt, such as fraud.
If a debt collector threatens you with jail time, they are breaking the law, and you can file a complaint with the Consumer Financial Protection Bureau (CFPB) or your state’s attorney general.
3. Myth: Ignoring Debt Collectors Will Make the Debt Go Away
Many people believe that if they simply ignore the debt collector’s calls or letters, the debt will eventually disappear. This is a common misconception fueled by the hope that debt collectors will give up if you don’t respond.
The Truth: Ignoring debt collectors won’t make your debt disappear. In fact, the situation may worsen if you don’t address it. While debt collectors cannot harass you endlessly (thanks to the protections of the FDCPA), unpaid debts don’t just vanish. Over time, ignoring a debt could lead to the creditor filing a lawsuit against you, which could result in wage garnishment, a lien on your property, or other legal actions.
The best course of action is to engage with the debt collector, request verification of the debt, and explore your options for repayment or negotiation. Being proactive gives you more control over the outcome.
4. Myth: Unpaid Debts Will Permanently Ruin Your Credit Score
Debt collectors may claim that unpaid debts will forever damage your credit, suggesting that your credit score will be ruined beyond repair if you don’t pay immediately.
The Truth: While unpaid debts can hurt your credit score, they don’t cause permanent damage. Credit scores are designed to reflect your financial habits over time, and many negative marks (like late payments or charge-offs) will fall off your credit report after seven years. If you’re able to resolve the debt, whether through payment, settlement, or dispute, your credit can start to recover.
“In the long run, filing for bankruptcy can improve your credit rating,” Reed Law Firm, P.A. explains. “In most cases, you will be able to obtain a mortgage or other loan within a few years of completing bankruptcy.”
Additionally, there are steps you can take to improve your credit over time, such as making consistent on-time payments on other accounts, keeping credit card balances low, and disputing any inaccuracies on your credit report.
5. Myth: Debt Collectors Can Contact You at Any Time
Some collectors will call you multiple times a day, send threatening letters, or even show up at your home, leading you to believe they have the right to contact you whenever and however they choose – but this simply isn’t true.
The Truth: The FDCPA limits how and when debt collectors can contact you. They cannot call you before 8 a.m. or after 9 p.m., and they cannot harass you with repeated phone calls or threats. If you want the communication to stop, you have the right to request that the debt collector cease contact in writing. Once they receive your letter, they are legally required to stop contacting you, except to inform you of any legal action they plan to take.
Debt collectors are also prohibited from contacting you at work if they know your employer doesn’t allow personal calls.
6. Myth: You Can’t Dispute a Debt Once It’s in Collections
You might think that once a debt has been sent to collections, there’s nothing you can do except pay it. Some collectors may even claim that disputing the debt is pointless or too late.
The Truth: You can dispute a debt at any point, even if it’s already in collections. If you believe the debt is incorrect, fraudulent, or unreasonably inflated with fees, you have the right to request debt validation. Once you dispute the debt, the collector has to stop contacting you until they provide proof that the debt is valid.
Adding it All Up
Without making a judgment on debt collectors as people, we can safely say that they aren’t the most ethical or empathetic professionals. They will say and do almost anything to get the results they want – even if that comes at your expense. By understanding some of the most common myths that they want you to believe, you can expose the truth and protect your best interests.
