Correcting the Motley Fool regarding debt collectors

Time and again I read articles that make me wonder either 1. whether the editors were just not paying attention and 2. the authors actually have experience with the topic at hand. This is especially true with debt and collections. Today’s attention is turned toward the Motley Fool and the article “Dealing with Debt Collectors the Right Way“.

I really wish these places would stop spreading misinformation. I’ve gotten on’s case in their comments sections quite a bit over stuff like this.

The FDCPA also protects consumers from deceptive practices, as well as harassment from debt collectors.

The former is true, but the latter is not. The Fair Debt Collection Practices Act isn’t what provides protection from harassment. That would be all of the other tort and criminal laws that have been on the books longer than the FDCPA. By the way, your State laws generally control in such matters, not Federal law.

There is some grey area here, but generally speaking, if a debt collector calls you more than once a day, it’s too much.


There is no “generally speaking” when it comes to harassment. Whether their actions rise to the level of harassment, and rise far enough to be actionable through the Court, depends significantly on the facts of your interactions with the debt collector and you should ignore any attempt at a hard definition such as the one above.

Debt collectors are not allowed to use profanity when speaking with you, nor are they allowed to call you at work if you’ve asked them not to. They can only call between 8 a.m. and 9 p.m. and are prohibited from making calls intended to “annoy, abuse, or harass you.

Let’s clarify this. They cannot call you at work only if you have told them in writing to not call you at work.

The same with the 8am to 9pm time limitation. You can state in a letter that they are to not call you at all. But again, it must be in writing to be enforceable. You can’t just tell the over the phone.

See my article on debt validation for a letter template providing details.

Similarly, the statute of limitations on debt limits collection efforts after seven years.

The statute of limitations actually varies from State to State. It’s not 7 years universally. In some States, it is as long as 10.

The clock starts from the date the original account (not the collection account) first became delinquent.

Unless State law says otherwise, the clock actually starts from the last payment, and a promise to make a payment may count as actually making a payment under the laws of your State. This is why debt that is beyond the statute of limitations can be “re-aged“, with the clock completely reset back to the start and the ability to enforce the debt through the Courts renewed.

When negotiating with debt collectors, it’s important to realize that you have most of the bargaining power — and you may be surprised how much of a “discount” you can get.

Don’t read too far into this statement. You do have a good amount of leeway in bargaining with the debt collector since they are concerned with getting the money so they can get paid. However, their ability to accept an offer is going to vary.

Many seem to forget that there are actually two types of accounts that debt collectors control: assigned and purchased accounts. There is a difference between the two and it is significant in terms of your ability to bargain.

If the debt newly crossed over into collections, chances are the debt wasn’t sold to the collector, but assigned to them, with the debt collector having full power of attorney over the debt in exchange for a fee. The collector doesn’t own the debt, however, but is merely collecting it on behalf of the original creditor. Don’t expect to have much leeway  here. Your bargaining ability is going to be limited to negotiating payments on the balance in full unless you are ready to write a check for a significant portion of the charged-off balance.

If the balance is lower — say, under $1,000 — then the collector will likely offer a settlement up front with the initial communication. Take it if you can afford it, or try to negotiate. But don’t anything until after you have exercised your right of debt validation.

And bear in mind that if you try to stonewall them, they will turn around and sue you.

Now a debt buyer — i.e. purchased accounts — is going to be easier to negotiate. They likely purchased the debt for a significant discount, so anything over the purchase price is profit. As such you’ll have a bit more leeway for negotiating payments and settlements.