Avoid Phony Debt Collectors With These Tips

What kind of debt collection practices by debt collectors should you be wary of?

Is your phone ringing off the wall because of phony debt or bill collectors? In today’s difficult economy, more people are facing unpaid debts and finding themselves having trouble managing debt. When a debt collection agent calls you during dinner, what do you do? Do you feel resigned to admitting your debts? But if you do, acting this carelessly about your finances can cost you more than you think.

How Fraudulent Debt Collectors Can Scam You

I recently watched an ABC News report about phony debt collectors trying to collect fake debts or steal your identity. How do those fraudulent debt collectors know about you? Consider just a few of the ways you might become a potential victim of collection abuse:

  • If you took out a payday loan within the past two years, fake debt collectors may have figured out a way to access your personal information. They already suspect you’re in financial duress because you took out a short term loan, so they may attempt to get additional personal information to steal your identity and money.
  • When you submit personal information online, you may not always be visiting a secure website. Check websites for an SSL certificate so you know online scammers won’t be stealing your information.
  • Zombie debts are sold to debt collection agencies who attempt to collect overdue bills 7 years or more past due. These bills often do not belong to the person called (wrong phone number by this time) because so many years have gone by. Never admit a debt belongs to you unless you are sure. If you admit you owe the money, you will usually be responsible for paying it — even if the debt turns out to be someone else’s.
  • Your credit report is public information. Lenders have access to your credit report so they know when you are applying for loans and if debts are unpaid. When you are contacted by a predatory lender or ruthless collection agent, it is rarely a coincidence.

Fake debt collectors can do serious damage to your finances and credibility. If you give out personal information to a phony, they may use it to steal your identity. Admitting to a bill that isn’t yours can mean you wind up paying a debt you didn’t incur. And even if you owe money, debt collectors are not allowed to be abusive. So how can you protect yourself against debt collection scammers?

Tips To Avoid Phony Debt Collectors

1. Get free copies of your credit report from the three major credit reporting agencies.
By law, you are entitled to a free copy of your credit report annually from Experian, Equifax and TransUnion. Or you can pick up your credit scores and reports through myFICO. Review your credit report for inaccuracies. If you find debts that aren’t yours, contact the credit agencies to dispute them. Review your current debts so you know what you owe. When you are aware of your debts, it’s more difficult to be duped by a phony collection agent.

2. Avoid payday loans.
Payday loans may be useful for some emergencies, but they come at a huge cost. For the most part, payday loans will lead you to further financial ruin. A recent report revealed that people who take out payday loans are more likely to claim bankruptcy. Dealing with payday lenders also may put your personal financial information into the hands of a potential scammer.

3. Get proof of the debts you allegedly owe.
If a collection agent insists you owe money, request proof of the debt. Under the Fair Credit Reporting Act, sending a letter requesting proof of the debt stops all collection attempts until you receive the evidence. Don’t agree to pay a debt until you receive proof in writing that it actually belongs to you.

4. Don’t let a debt collector become abusive.
Whether you owe money or not, you still have legal rights, thanks to the Fair Debt Collection Practices Act. Debt collectors must provide proof of money you owe. They can’t curse at you or threaten you. Collectors are not allowed to submit postdated checks to resolve your payments in advance, nor take unauthorized withdrawals from your bank accounts. Collection agents are limited to calling you between 8 am and 9 pm; they can’t call in the middle of the night or contact your employer, family or friends.

When you keep track of your finances, you’ll have more ammunition to shake off phony debt collectors before they cause serious trouble.

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