Debt Collector Guidance For Consumers From The CFPB

The Bureau of Consumer Financial Protection, formally the “CFPB,” released a guidance on how debt collection works for consumers. It was formatted in a frequently asked questions style albeit acknowledging that not all situations will have the same answer. They provide steps on what to do immediately after contacted by a debt collector, how to respond, and how to know if the debt collector is legitimate. It continues to list 3 steps to negotiate a dent settlement and how to avoid illegal scams such as upfront payments. Naturally they addresses lawsuits by debt collectors and responding to court actions. Finally, it describes what a statute of limitations time period for debt collectors to file a lawsuit. The press release topics can be found below.


What should I do when a debt collector contacts me?

There are different ways to respond appropriately to debt collectors.

When contacted, find out:

  • The identity of the debt collector, including name, address, and phone number
  • The amount of the debt
  • What the debt is for and when the debt was incurred
  • The name of the original creditor
  • Information about whether you or someone else may owe the debt

We also have sample letters that will help if you’re experiencing common problems that may come up with debt collection.


How can I verify whether or not a debt collector is legitimate?

Ask the caller for their name, company, street address, and telephone number. If your state licenses debt collectors, you can also ask for a professional license number. You can also refuse to discuss any debt until you get a written “validation notice.” Do not give personal or financial information to the caller until you have confirmed it is a legitimate debt collector.

Keep an eye out for warning signs that could signal a debt collection scam.


What is the best way to negotiate a settlement with a debt collector?

To get ready to negotiate a settlement or repayment agreement with a debt collector, consider this three-step approach:

  1. Learn about the debt
  2. Plan for making a realistic repayment or settlement
  3. Negotiate a realistic agreement with the debt collector

Be wary of companies that charge money in advance to settle your debts for you. Some debt settlement companies promise more than they deliver.

Learn more about negotiating a repayment agreement that’s right for your situation.


What should I do if a creditor or debt collector sues me?

If you’re sued by a debt collector, respond to the lawsuit. You can respond personally or through an attorney, but you must do so by the date specified in the court papers.

When you respond to, or “answer,” the lawsuit, the debt collector will have to prove to the court that the debt is valid and that you owe the debt.

If you ignore a court action, it’s likely that a judgment will be entered against you for the amount the creditor or debt collector claims you owe. Often the court also will impose additional fees against you to cover collections costs, interest, and attorney fees.

Learn more about what can happen if you don’t respond to a debt collection lawsuit.


What is a statute of limitations on a debt?

A statute of limitations is the limited period of time creditors or debt collectors have to file a lawsuit to recover a past due debt.

Most statutes of limitations fall in the three- to six-year range, although in some cases they may vary due to:

  • State laws
  • What type of debt you have
  • Whether the state law applicable is named in your credit agreement

Learn more about statutes of limitations for debts you may owe.

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