Key Takeaways

A debt collector is an individual or company responsible for recovering payments on overdue accounts. They may be hired by a business or purchase the debt outright. Debt collectors can legally contact you through calls, texts, emails, and letters, and they will inform credit bureaus about the collection account. It is your right to dispute the debt, and the debt collector must provide proof that the debt belongs to you before attempting to collect it. A debt collection will have a negative impact on your credit report for seven years.

Definition and Examples of a Debt Collector

A debt collector is a person or agency that collects payments for overdue debts on behalf of the lender or business you owe money to. Businesses often work with debt collectors as they are more cost-effective than trying to collect payments themselves. Debt collectors may include medical offices, credit card companies, utilities, phone companies, loan servicers, and other businesses. Debt collectors may also include "debt buyers" who purchase past-due debts and attempt to recover them.

How Do Debt Collectors Work?

The timeline for when an account is sent to a debt collector varies among businesses. Debt collectors will attempt to contact you through calls, letters, and notifications to credit bureaus. They must follow the Fair Debt Collection Practices Act (FDCPA) when collecting debts, although complaints against debt collectors suggest that breaches of this law are common.

When and Where Can Collection Agencies Call?

Debt collectors can only call between 8 a.m. and 9 p.m. local time and are allowed to call multiple times a day. They are not permitted to harass or abuse you but may contact you at work if they have your work phone number. Debt collectors can also reach out via text or email, provided they include opt-out instructions.

Who Can Debt Collectors Contact?

Debt collectors may contact friends or neighbors to obtain your contact information but cannot disclose that they are collecting a debt. They must send payment notices to your address on file, including validation of the debt and your ability to dispute it within 30 days.

What It Means for You

Debt collectors can report accounts to credit bureaus, impacting your credit score for up to seven years. Paid collections may appear more favorable to lenders, but your credit score will not immediately improve. Ensuring timely payments for other bills can help your credit score recover from a debt collection, and after seven years, the collection should be removed from your credit report.