Being sent to collections for a genuine financial mistake can feel humiliating. It’s arguably worse, though, when an account is wrongfully sent to collections—and unfortunately, it isn’t that uncommon. In fact, consumers made 280,000 credit-related complaints in 2020—more than twice the number of complaints filed in 2019.
So, what can you do if one of your accounts gets sent to collections in error? In this article, we’ll explore your legal rights, and we’ll share a step-by-step guide to disputing credit errors.
Why Do Collections Errors Happen?
You’ve never missed a payment—but suddenly, your credit card account gets sent to collections without notice. What’s going on?
Most collections errors happen for one of the following three reasons:
- Creditor admin mistakes: Simply put, someone at the credit card company sent your account to collections by accident. They accidentally put your name on the wrong form, pressed the wrong virtual button or got you mixed up with someone else.
- Collections company admin mistakes: When consumers prove hard to find, collection companies try to track them down. Sometimes, they simply locate the wrong person.
- Bad information: When debt collectors purchase a large number of accounts at the same time, they occasionally receive erroneous information from the original creditor. Occasionally, creditors accidentally sell accounts in good standing at the same time as accounts in default.
- Identity theft: People who commit identity fraud usually cut and run after accruing debt. Later, you receive a call from a collection agency.
What Are Debt Collectors Allowed to Do?
If they believe the debts they’re chasing are genuine, debt collectors are allowed to contact consumers. Collection agencies can call you on the phone, send letters to your address, fax you, email you or text you via mobile.
If you don’t want a debt collector to communicate with you, you can tell them to stop contacting you via any and all means. However, if they later decide to take you to court to recover the debt, they areallowed to let you know.
Are There Restrictions on Debt Collectors?
Yes. Debt collectors can’t contact you after 9:00 p.m. local time or before 8:00 a.m. unless you tell them it’s okay for them to do so. They also can’t contact you if you tell them you have an attorney and your attorney is handling your debts for you.
Thanks to the Fair Debt Collection Practices Act, debt collectors also can’t:
- Discuss your debt with anyone else, including family members, employers and friends.
- Contact anyone else more than once to find out where you live.
- Tell people they contact to find you that they’re a debt collector.
- Send any mail to anyone who knows you that indicates they’re trying to collect a debt.
- Try to get information about you from your employer.
- Call you at work if you tell them not to.
- Pretend to be a government agency or anyoneother than who they are.
- Say you owe more than you really do or that you’re guilty of a crime.
- Refuse to give you their contact information.
- Threaten to sue you if they don’tintend to take you to court.
- Tell you they’re an attorney or that they represent an attorney if they’re not or they don’t.
- Send you fake court summons papers.
- Send you legal forms in disguise.
- Tell anyone else false or defamatory information about you.
- Threaten you, threaten to commit violence, harass you or say you’ll be arrested.
- Threaten to publish your name for refusing to pay a debt.
- Use obscene language.
- Deposit a post-dated check prematurely.
- Threaten to take your house or property unless they’re legally entitled to do so.
- Collect more than you owe them—with the exception, in some states, of a recovery fee.
Remember—debt collectors aren’t government agencies, and they don’t have the power to have you criminally charged for not paying a debt. If you feel harassed or threatened in any way, contact an attorney.
Handling an Erroneous Collection
If a debt collector contacts you by letter or telephone to try to recover a debt you’re sure you don’t owe, ask for proof of the debt. Send them a letter within 30 days of the first contact, requesting documentation of the account, and tell them not to get in touch again until they can prove you owe them money.
The agency must provide you with proof of the debt within 30 to 45 days. If they can’t find proof, or if they notice a mistake, they can’t collect the debt. If they do find some sort of proof, you may need to contact an attorney or a credit repair agency to handle the matter for you.
What to Do if You See a Collections Error on Your Credit Report
If you don’t recognize an account on your credit report, take action straight away. Tackling the mistake promptly can help prevent—or alleviate—damage to your credit. Here’s what to do:
- Get a copy of your credit report from each major credit bureau—Equifax, Experian and TransUnion.
- List all the erroneous collection accounts on your credit reports and write down as much information as possible about each item.
- Write a dispute letter and send it to each credit bureau. Include information about each of the disputed items—account numbers, listed amounts and creditor names.
- Write a similar letter to each collection agency, asking them to remove the error from your credit reports.
- Allow between 30 and 45 days for the credit bureaus and collection agencies to process your dispute.
Under the terms of the Fair Credit Reporting Act (FCRA), companies and credit bureaus have to prove that you owe a debt to list the item on your credit report. If they can’tprove the debt is yours, they have to remove the listing from your credit profile.
Can You Sue a Company for Wrongfully Sending You to Collections?
In short, yes, you can. Under the terms of the FDCPA, consumers cansue creditors who send accounts to collection agencies—especially if those collection agencies don’t follow FDCPA guidelines or behave illegally. Always consult a lawyer to help you decide what your best course of action is for you.
Credit Repair Options
If you’ve been the victim of identity theft or you don’t feel comfortable tackling disputes by yourself, consider contacting a credit repair company. Credit repair companies tackle disputes and help customers recover from financial hardship all day, every day—so they know what they’re doing. Well-rated credit repair companies include CreditRepair.com and Lexington Law, both of which offer consumers a full range of repair services.
Take Charge of Your Credit
It’s important to keep an eye on your credit report after you resolve the erroneous account. If you notice any other errors, or if any of your other accounts are sent to collections by accident, tackle them straight away. To see a free credit snapshot, sign up for a Credit Report Card from Credit.com, or sign up for ExtraCredit to see the bigger picture.
Disclosure: Credit.com and CreditRepair.com are both owned by the same company, Progrexion Holdings Inc. John C Heath, Attorney at Law, PC, d/b/a Lexington Law Firm is an independent law firm that uses Progrexion as a provider of business and administrative services.
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