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Consumer Reports: How to Stop Harassment for Debts You Don’t Owe

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By Aimee Picchi

As a Type 1 diabetic, Sarah Stark expects to have to cope with a lot of medical bills. But one hassle that’s taken her by surprise is dealing with debt collectors. Earlier this year, she says, a debt collector claimed she owed a medical bill that she had already paid.

“I know I paid it; I have the documentation,” says Stark, who lives in Michigan. She says it’s the second time in three years she’s had to cope with a debt collector erroneously claiming she owed a bill.

“For me, it creates a whole other workload, so now there are multiple calls I need to make during work hours,” Stark says. “It can be very emotionally stressful.”

Stark isn’t alone: 44 percent of all complaints against debt collectors are about attempts to collect a debt that isn’t owed by the complainant, according to an analysis of the Consumer Financial Protection Bureau (CFPB) complaint database performed by consumer advocacy group U.S. PIRG Education Fund in May.

Adding to the stress is that debt collectors currently have no limits on how many times per day or week they can call a consumer, as long as it doesn’t constitute harassment—although the Fair Debt Collection Practices Act (FDCPA), the law that oversees the debt collection industry, doesn’t define the number of calls that would cross that line.

Luckily, consumers have some powerful rights on their side, including the right to ask a debt collector in writing to stop contacting them–and have them comply. Even though that might be a tempting first step, it’s important to understand that a debt collector can continue to try to collect on a debt regardless—by filing a lawsuit to force a court judgment for instance—after you ask them to stop calling you. 

Because of that, consumer advocates recommend taking a number of other steps first, such as informing the debt collector that the liability isn’t theirs and demanding the collector provide debt verification, two important legal rights of which consumers often aren’t aware. 

While it might seem that it should be easy enough to resolve a debt you don’t owe—simply send the debt collector a copy of your receipt—it’s not always that simple. Sometimes the original cause of the debt may be unclear or it may be a charge you never owed—or the collection agency may not follow the rules. In cases of identity theft that wasn’t reported to the police or debt that belongs to someone with a similar name, for instance, it can be difficult to convince debt collectors that you aren’t on the hook, advocates say. 

You can sue the collection agency, too, but before you do, there are steps you can take to resolve the situation. Here’s what the experts recommend.

Steps to Take to End the Harassment

Dispute the Debt Within 30 Days
Consumers can ask for more information about a debt or dispute debts they believe are in error, but they have only a 30-day window to do this after they receive a written notice from the debt collector. If a consumer doesn’t take this step, the debt collector will assume the debt to be valid, according to the CFPB.

Stark said she wasn’t aware of her right to dispute the debt, nor the time limit—and that isn’t uncommon, consumer advocates note. “I think it’s fair to say that a lot of people aren’t sufficiently aware of their rights,” said Suzanne Martindale, senior policy counsel at Consumer Reports.

If you need to dispute a debt (or simply find out more about what it is), you should put it in writing and send it via certified mail to the debt collector, the CFPB advises. Sample dispute letters can be found at the CFPB.

Consumer advocates say the FDCPA is unclear on how the dispute may be resolved if you supply evidence that the debt is not yours at this stage. But Issa Moe, general counsel for the debt collection industry trade group ACA International, notes that agencies have their own methods to address such situations.

“Collection agencies will generally have policies and procedures on this issue that will be dictated by, among other things, applicable law, industry best practices, and client requirements,” he says. 

Get Verification of the Debt
Two things will happen after you dispute the debt if it’s still unresolved. The debt collector will send you verification of the debt—and it must by law stop efforts to collect the debt until it has done so.

But it’s important to understand what “verification” means—as well as what it doesn’t mean. The Fair Debt Collection Practices Act says verification is simply providing the name and address of the original creditor or the copy of a court judgment saying you owe the debt.

Consumer advocates say the definition of verification is too vague and feeds into the industry’s high complaint rate about erroneous data. Because of this lack of clarity, some consumers may find themselves in a gray area when it comes to convincing a debt collector they don’t owe a debt, consumer advocates say. 

Some of those tough situations can involve people who are victims of identity theft, especially if they never filed a complaint with their local police force, says Susan Shin, the legal director at the New Economy Project, an economic justice organization in New York City that runs a financial justice hotline for low-income New Yorkers experiencing abusive debt collection and other problems. (If you think you may have been a victim of identity theft, the FTC has a website that can help you through the recovery process.) 

“It can be tough to prove a negative,” Shin notes. “Some people end up fighting things much longer than they have to.”

In other cases, consumers may have already paid the bill but haven’t kept records, especially if the debt occurred years ago. Other sticky situations can include cases where debt collectors confuse consumers with similar or matching names, advocates say.

What’s more, debt buyers, companies that purchase debts for pennies on the dollar and then try to collect on the IOUs, are rarely given the documentation needed to accurately pursue debts, a 2013 Federal Trade Commission study found. But you may at least be able to find out who originally billed you. 

Tell the Debt Collector to Stop Contacting You
According to Moe at the ACA International, if you don’t think that the verification proves the debt is yours, you can notify the collector in writing not to contact you any more, and by law, the company must cease (except for a few instances, such as letting you know that they are no longer pursuing the debt). 

By law, debt collectors are barred from calling consumers to the point of harassment—but the FDCPA doesn’t currently define what counts as harassment.

“Even a few phone calls a day can really affect people,” Shin says. “We hear from people that just being able to get them to stop contacting them gives them so much peace of mind, because they had been getting 10 to 12 phone calls a day from a debt collector.” 

If You Are Sued, Respond Immediately
Even though by law debt collectors must stop calling you if you request it, their debt-collection efforts can still continue, including filing a lawsuit against you. If a debt collector sues you to collect the debt (in small claims court or civil court), don’t ignore it, Martindale says. Contact the courthouse to see if they can refer you to an attorney, or, if your income is low, a legal aid organization, she recommends.

“If you don’t answer in time, they will win by default” in the courts, she says. “They can go to the court and try to garnish your wages and freeze your bank account.”.

Complain—or Sue
At any point in the above process, if you believe a debt collector isn’t following the rules, is contacting you to the level of harassment, or is contacting you about a debt you don’t owe, there are a few places to lodge a complaint.

Chief among them is the CFPB’s complaint database, where consumers can submit a complaint. The CFPB says it works with the financial services companies to get a response to consumer complaints. You can also take complaints to your state’s attorney general, who can enforce fair debt collection practices.

You can also sue if you believe a debt collector has violated the FDCPA—for example, if it continues to contact you after you asked it to stop—Martindale notes. “If you can find a lawyer who thinks your FDCPA rights have been violated, you can take these debt collectors to court,” she says. “That’s a powerful legal right.”

As for Stark, the woman from Michigan who was asked by a debt collector to pay a bill she’d already settled, she says she still needs to clear up the error and feels frustrated that it’s on her shoulders to fix someone else’s mistake.

“It’s like another slap in the face for a debt collector to come after you for a bill you already paid,” she says. “When there is something as simple as a paperwork error that creates so much more stress on my behalf, it’s very frustrating.”