Collection agencies use letters in conjunction with phone calls and, occasionally, legal action to obtain payments from consumers. Collection notices can carry either a gentle or hostile tone, depending on the collector that purchased your account. Notices from collection agencies typically mean that you neglected to pay off a previous debt, but it is not always the case.
Legal Requirements
Debt collectors must adhere to the Fair Debt Collection Practices Act, which places certain requirements on collection letters. The company's initial letter must contain the amount you owe and the collection agency's contact information. It must also notify you of your right to dispute the debt's validity and notify you that any information you choose to disclose will be used to further the company's collection efforts against you.
Old Debt
Collection agencies are not always successful in their debt recovery efforts. If all efforts to collect a debt prove futile, letters from the company may slow down and eventually stop altogether. Like original creditors, collection agencies sell nonperforming accounts to other debt buyers. When a new debt buyer purchases your account, it immediately begins collection activity. Even if the previous collector had long since given up trying to collect from you before selling the debt, this has no impact on the new debt owner's efforts. Thus, if you start receiving collection notices out of nowhere on an old debt, there's a good chance it was recently purchased by another collection agency.
Collection Errors
If you begin receiving collection notices but are certain you do not owe any outstanding debts, you may be the victim of the collection agency's error. Collection agencies sometimes possess no information on a debtor other than his name. If you and the real debtor share a name, the company may assign the debt to you by mistake. Should this occur, you must contact the collection agency and dispute the debt to prevent further collection activity and possible credit damage.
Identity Theft
Victim of identity theft often receive collection notices from debt collectors. When another individual steals your identity, she uses your name and information to apply for credit cards or make purchases. Because the account is in your name, you are the one stuck with the bill---something you may not discover until the first collection notices arrive.
Stopping Collection Letters
The law does not require you to communicate with---or accept communication from---debt collectors. According to the FDCPA, consumers can stop collection notices altogether by ordering the collection agency to cease its communication efforts. The FDCPA requires that consumers taking advantage of their legal right to privacy put their demands to collectors in writing. Not only does this method stop collection letters, it also eliminates the incessant collection calls many debtors receive.
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