Myths About Debt Collectors

Lerner & Rowe Law Group
myths about debt collectors

There are a lot of myths surrounding the topic of debt collection, including many misconceptions about what a debt collector can and cannot do. Once you have a fuller understanding of your rights and responsibilities as a consumer, you’ll be much better equipped to fight back against harassment from creditors and choose the right debt relief option for you. In this article, the Arizona bankruptcy attorneys at Lerner and Rowe Law Group dispel some of the most pervasive myths about debt collectors.

Myth: Debt collectors can call you, your family, and your employer anytime they want.

Under the Fair Debt Collection Practices Act (FDCPA), debt collectors cannot contact you at an unusual or inconvenient time or place. Contact before 8:00 a.m. or after 9:00 p.m. local time is prohibited. If you notify a debt collector that they are not allowed to contact you while at work, they must honor this request. In addition, if you hire an attorney, debt collectors must not communicate with any person other than your legal representative regarding your debt.

Myth: You can’t dispute a debt once it’s gone to a debt collector.

Within five days of being notified of an outstanding debt, you should also receive written notification of the amount of your debt and the name of the creditor. If this doesn’t look or sound right, you have the right to ask for verification of the debt. You also have the right to dispute part or all of the debt within 30 days. If you provide a written request for the name of the original creditor within 30 days, debt collectors are required to provide this information, too. Finally, if a debt collector receives a written dispute of debt from you or a request for the name of the original creditor, they must cease all collections of debt.

Even if the 30-day window to dispute your debt has already passed, it’s important to note that not disputing a debt is not (and cannot be used as) an admission of liability in any court.

Myth: Debt collectors can tell your family, friends, and employer that you’re in debt.

Although debt collectors can call your employer or family in an attempt to locate you, they are prohibited from outright telling anyone that you have outstanding debt. They may not communicate with a so-called “associated person” more than once unless they have reason to believe that the contact information given in the first communication was incorrect and that the associated person may now have updated information about the whereabouts of the debtor.

Debt collectors also are not allowed to reveal their employer to anyone other than the debtor unless expressly asked or send communications by mail that include any language or symbols on the envelope which indicates that the communication is related to debt collection.

Myth: Debt collectors will go away if you keep avoiding or ignoring their calls.

There is a way to stop harassment from debt collectors, but simply ignoring or dodging their phone calls won’t work. Instead, you need to notify the debt collector verbally (and also preferably in writing) that you do not wish to receive any further communication from the debt collector. Once you do this, debt collectors may only contact you to let you know that they are no longer pursuing payment for the debt or that they will be taking specified legal remedies (such as obtaining a judgment) against you.

Myth: Debt collectors can take your next paycheck if you don’t pay them immediately.

debt collection myths

While it is technically true that a creditor can obtain a money judgment against you for wage garnishment, this is not something that happens overnight, and it isn’t something a debt collector can do without successfully suing you first. Until your employer receives a garnishment notice, debt collectors have no way to take your next paycheck.

If your employer does receive a garnishment notice, you can challenge the judgment in court. Alternatively, you can file for bankruptcy, which triggers a protection called the automatic stay. The automatic stay will halt all further attempts by creditors to collect debt from you, including garnishing your wages, during the bankruptcy process.

Myth: Not paying a debt collector will result in criminal charges or jail time.

Being in debt is not a criminal offense in the United States. Any debt collector who tries to tell you that a warrant has been issued for your arrest or that police are on their way to take you to jail is lying. At worst, having unpaid debts can result in a civil—not criminal—lawsuit against you. Should you find yourself facing a lawsuit for unpaid debts, an experienced bankruptcy lawyer can assist you in resolving the matter and rebuilding your financial health.

Myth: Debt collectors will come to your home or workplace to demand payment.

Technically, debt collectors can show up at your house. But in the vast majority of cases, debt collectors aren’t going to turn up at your front door unless a money judgment has already been secured and your assets are subject to seizure or repossession.

There is one notable exception here. Under Arizona law, repossession agencies are not required to notify you before repossessing your vehicle if the creditor has perfected its security interest in the car and it is notated on the car title. If you have missed a car payment or your vehicle was recently seized, an attorney may be able to help you fight the repossession and save your car.

Myth: If you make a partial payment, debt collectors will stop calling.

This is one of the many debt collector myths that creditors hope consumers will fall for. Often, this tactic is deployed when someone has old debt. This is because there is a statute of limitations on filing a civil lawsuit for unpaid debt. The statute of limitations may vary depending on the type of debt; in Arizona, the limit on credit card debt is 6 years, car loan debt is 6 years, medical debt is 6 years, mortgage loans is 6 years, and state tax debt is 10 years.

In reality, making a partial payment will not get debt collectors off your back and can even reset the statute of limitations, giving the debt collector more time to pursue legal action against you. 

Myth: Debt will stay on your credit report indefinitely unless you pay it.

debt collector myths

There are some myths about debt collectors that go hand in hand. One is that if you make a payment to a debt collector, your credit score will improve immediately. Another is that if you don’t make a payment, the debt will stay on your credit report forever. Both of these are nothing more than debt collector myths. 

In truth, most debt will drop off of your credit report within 7 years. (The same is true of filing for bankruptcy, which has a shelf life of about 7 to 10 years.) At the same time, although paying off your debts is a good thing, you won’t see an immediate rise in your credit score if you make a payment to a creditor or debt collector, especially if you have multiple sources of debt.

If you truly can’t afford to pay your debts, you’re better off filing for bankruptcy, which will result in either discharged debt or a restructured repayment plan that you can afford. Although the bankruptcy may remain on your credit report as long as an outstanding debt, it will often give you a better opportunity to steadily build your creditworthiness over time.

Get a Free Bankruptcy Case Evaluation

If you’re struggling to make ends meet and exploring all your debt relief options, contact the Phoenix bankruptcy attorneys at Lerner and Rowe Law Group. Understanding all possible solutions can give you the peace of mind and confidence to take decisive action and secure your financial future. Our experienced legal team will review your case at no cost to you and with no obligation to hire us.

Should you decide to move forward with the bankruptcy process, know that you’ll have a dedicated ally on your side, guiding you every step of the way. Not only do we offer $0 down bankruptcies, our law firm can also arrange affordable payment plans to make getting the legal help you need more accessible. Call us at 602-667-7777, connect with one of our LiveChat agents, or send us a brief message about your case to get started.

The information on this blog is for general information purposes only. Nothing herein should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.