Debt collection agencies make their profits by collecting money from consumers, hopefully collecting from consumers who actually owe the money. While a collection agency is supposed to prove that the consumer owes the bill before starting collections activity, this may not happen. Zealous collectors may use aggressive techniques to sometimes collect nonlegitimate bills, and the consumer may believe that it is easier and faster to simply pay the bill than to dispute it.
Reasons for Collecting Disputed Debt
A collection agency may continue collections efforts on disputed debt for many reasons. The consumer who actually owes the debt may have the same name as the targeted consumer. The agency may believe that the consumer is lying, as can happen with people who are trying to avoid debts. Some collections agencies may be dishonest and will gain their fee for collecting money from anyone, even the wrong person.
Verify the Debt
A debt collector must notify a consumer within five days of his first contact of the amount of the debt that he owes, the name of the original creditor and what steps the consumer may take if he feels that he does not owe the debt. The consumer must notify the collector in writing, by certified mail with a return receipt of his dispute. The collector must provide proof that you owe the debt when contacted. If it cannot, the collector is supposed to stop contacting you concerning the debt.
Continued Collections
Often, a collections agent will continue to pursue collections activity against the alleged debtor, not paying attention to the person's dispute of the debt. In some cases, the collections activity rises to the level of harassment, including verbal threats and other illegal actions. A consumer has recourse in these cases. He can file a complaint with the Federal Trade Commission, but this may not yield quick action due to the amount of complaints that they receive. He may also file a complaint with his state attorney general's office. A consumer is also permitted to sue a collections agent in civil court for damages due to illicit collections activity.
Credit Report Listing
Collectors may stop calling when a consumer disputes a debt but still list the debt with the credit-reporting agencies as delinquent. Many consumers do not know that this has happened until they are trying to get approved for a loan. In this case, the consumer should follow the dispute process with the credit-reporting agencies. If the amount is small, the consumer may feel pressured to just pay the debt to get the collection entry removed from his credit report, citing this as a quicker solution than following the dispute process.
Sold Debt
Collections accounts are often sold to another collections agency, possibly many different times. If one collections agency deems the debt uncollectible, it may decide to sell the debt to another agency who may try again to collect it. This will start the collections cycle all over again. Debt like this is often called "zombie debt" because it will disappear, or "die" for a time, and reappear, or come "back to life" later, maybe several years in the future. A consumer should stand firm if he does not owe the debt and follow the dispute process each time.
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