6 Common Lies Debt Collectors Will Tell You

And how to spot them a mile away...plus know the truth about your rights as a consumer


(Image: Thinkstock)

If you’ve ever had to deal with debt collectors, you know that many of them can be extremely persistent, rude and even downright obnoxious. But how do you know if a debt collector is flat-out lying to you or misrepresenting the facts just to get you to fork over some cash? It’s not always easy to separate truth from fiction when it comes to aggressive bill collectors.

Debt collection agencies train their collectors do everything possible to collect a debt and close out an account as rapidly as possible. Sometimes, unfortunately, the unscrupulous ones will even tell you bald-faced lies in an effort to scare you or quickly squeeze money from your wallet.

Debt collectors are typically well-trained individuals who deal with hundreds of cash-strapped consumers every single month. Consequently, they know what questions to ask, how to intimidate you, and what buttons to push, in order to get what they want.


In light of these facts, it’s important to be aware of the tactics debt collectors often use, including the lies that many are trained to tell.

Here is a look at some of the most common lies bill collectors will tell you:

Lie #1: “Paying off your debt immediately will improve your credit rating.”

The Truth: Negative references such as “was in collections” or “was 90 days past due” will still stay on your credit report, even after you pay off an account in collections. Under the Fair Credit Reporting Act, negative information such as late payments generally remain on your credit files for seven years from the date of the last payment. So paying off your debt after being prompted by a bill collector will not automatically have a positive effect on your credit rating.

The exception to this rule: You may be able to boost your credit rating if you get an agreement in writing upfront from the creditor or debt collector that they will remove all negative information from your credit reports. Sadly, most consumers don’t negotiate for this when dealing with debt collectors. And once you’ve paid what you owe, you’ve lost a lot of leverage to get the debt collector to delete negative information from our credit files.

Lie #2: “If you just send me a post-dated check, this issue will quickly go away.”

The Truth: Any “agreements” you’ve made over the phone where the debt collector says he or she will accept a post-dated check rarely work out in your favor. You just don’t know what’s going to happen with that check, and you’re also revealing your bank information and address by sending them the check.

Debt collectors have been known to cash post-dated checks earlier than agreed to, to change the amount of a payment on a check, and to later tap into people’s bank accounts once the bill collector has someone’s account information. So don’t agree to forward any post-dated checks. Send payments using a money order or certified check, return receipt requested – not via your personal checking account.

Lie #3: “Maybe I can help you explain your situation to a family member or friend who can loan you the money?”

The Truth: Debt collectors who use this tactic are not trying to “help you out.” Rather, they’re arming themselves with very personal information. They’re trying to find out your closest relatives and friends in case they ever need to contact these people to track you down.

Additionally, by asking questions like: “Don’t you have a relative who can loan you the money?” debt collectors are trying to pressure you into paying money you simply don’t have.

Refuse to engage in this type of dialogue altogether and simply state: “I’ve exhausted all my resources and have no other available funds from any sources whatsoever.” Avoid revealing any details about your current financial situation. Don’t answer questions about where your bank accounts are, how much you have in the bank, whether or not you’re working, or how much you earn.

Lie #4: “If you don’t pay immediately, we’re going to take you to court or garnish your wages.”

The Truth: Under the Fair Debt Collection Practices Act, bill collectors can’t legally threaten to take you to court if they have no intention of doing so. They also can’t haphazardly garnish your wages. Wage garnishment only comes about by a structured legal process.

If a debt collector does pursue a court judgment against you, you will be given notice about the court date and will have the opportunity to present your side to a judge. So if you dispute a debt, or simply don’t have the cash to pay, don’t get overly worked up by legal threats. In many cases, these are empty threats and pure posturing on the part of debt collectors.


Lie #5: “I don’t have to prove anything. I’m calling because you owe a debt – and you know it!”

The Truth: If a debt collector calls you out of the blue claiming you owe a debt and you’re not certain that you do, you should dispute it within 30 days and ask them to validate the debt.

Under Section 809 of the Fair Debt Collection Practices Act, you have the right to send a bill collector a “debt validation” letter requesting more information about the debt you are being told is still outstanding. This is essentially a dispute letter that prompts the bill collector to send you proof of debt in the form of a complete payment history, a copy of the initial loan agreement or credit card application, and proof that the company contacting you actually owns the debt or has been assigned the debt.

While many bill collectors will send this information out to you within five days of receiving your letter, some may send you inadequate or incorrect information. Others will flat out disregard the law and fail to provide proof of the debt. If a debt collector tells you “I don’t have to prove anything!” simply hang up on him and cease all contact with that individual.

According to the Federal Trade Commission, any creditor who can’t validate a debt:

  • Is not allowed to collect the debt,
  • Is not legally permitted to contact you about the debt, and
  • Is not allowed to report it to the credit bureaus. Doing so is a violation of the Fair Credit Reporting Act and gives you the right to sue for $1,000 in damages for each violation of the Act.

Lie #6: “We’re going to embarrass you by letting your family members, friends and even your employer know about your unpaid debt.”

The Truth: Again, the Fair Debt Collection Practices Act provides you with 10 different rights in order to protect consumers. One of them is the right to be free from harassment, intimidation and embarrassment by debt collectors. So debt collectors do not have the right to spread your personal business publicly, or share information about your debts with family and friends or your employer. If they do, report them immediately to the FTC and the Better Business Bureau.

Lynnette Khalfani-Cox is a weekly money and finance columnist for BlackEnterprise.com and founder of the free financial advice blog, AskTheMoneyCoach.com. Follow her on Twitter @themoneycoach and see her column every Tuesday on BlackEnterprise.com.


63 Responses to 6 Common Lies Debt Collectors Will Tell You

  1. Joseph says:

    Thats good and all, but just like every other financial situation in this country the business is always at an advantage. Assuming you can gain legal council or afford it, the advantages must out way the cost of obtaining said lawyer to fight a debt maybe not even legally valid yet still costing you a loan. Then the $1,000 cap on rewards, how unfair is this? Say you dont get a job because of a false debt, what is 1k to the lost career? Change is coming, the upside down pyramid of wealth and power does not work. We need to be able to call and harass these companies and ruin their loan and advancement opportunities. Look at the middle east, we can take the power back.

    • robert petersen says:

      Commie Pinko!

    • Will says:

      Yes the award amount is caped at 1k, but you are also entilted to legal fees and court cost if the debt collector loses. You still have to come up with the fees upfront. There are how ever lawyers who take your case with either a small upfront fee, or no fee at all. They often will want to see the details of your case first to ensure it is a legit case, and win able. I don’t blame for wanting this. It is only ligical. Many feel they have a case when in fact they do not. Add to this if the violations were egregious enough, or the individual debt agent went above and beyond company pratice, you may have a case to not only sue the debt agent individualy but the company for failure of the employee. Often when an employee gets cought it’s not the first time. If a track record can be proven you have a larger case with a much higher award cap. Some times it pays to look at potential law suits from different angles of legal liability. After all the debt agency will do the same to you if they decided to sue.

  2. robert petersen says:

    this was really kind and informative. Thanks.

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  4. ladyboss2011 says:

    Another great article, Lynnette. I have learned so much about debt management, and will be subscribing to your blog and reading your books! Thanks so much for the valuable advice. I went through ever lie on this list, and when I tried to negotiate with a few debt collectors to remove all the negative info from my report in writing BEFORE I paid the debt, they balked. Although I only have $23,000 of unsecured debt that will be removed from all my credit reports in 3 more years, and $44,000 in satisfactory student loan debts I am making interest payments on while in school deferment, moving forward, over the next 3 years, I will use these tips to protect myself against the lies from debt collectors. Thank you.

  5. Brandi says:

    I had a new tactic pulled on me yesterday–a debt collector called my mom and told her they are trying to serve a subpoena on me and needed my new address and my work place address. They told her I was being sued for fraud because of a “financial agreement I entered into with Wells Fargo in 2007.” That was actually a credit card I’d taken out in 2005 that was active used and current and had paid on for at least three years before I was laid off an could no longer pay. They terrified my mother and told her all the details. My poor mother is in her 70s and was scared for me. When I called this debt collector back, he hemmed and hawed about being a bill collector and said this is an attorney’s office and you are being sued for fraud. I know he was lying. Also, to top all this off, I filed for bankruptcy a year ago, and debts were discharged last September. They also knew this, but were violating federal law by attempting to collect the debt anyway, using new scare tactic words such as fraud, subpoena, work place, court, etc… Be advised and don’t be afraid!!!

  6. yvonne says:

    well a debt is a debt..just make sure before you get into it you can handle it. Kinda ashamed to have multiple debt collector calling asking you to pay a delinquent a account. Besides interest accrued already and its our credit rating that were messing up so just be careful in dealing w/ credit cards, loans and bills. also regarding on post dated check you run to the company of the debt collector if you were overcharge and complain because that’s not the deal you had agreed w/ the rep. just be responsible if you dont want to deal w/ the collector.

  7. guest says:

    sounds all good but the truth is that most collection agencies will ignore if you send validation letters, most likely the can’t validate it but they will not remove it, they will just ignore your letters, I tried this several times. yes my last option would be take them to court for violation but I heart that it doesn’t work either

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  60. The collector says:

    I am a debt collector, have been one for years. I can tell you that most of this article’s information is either outdated or just doesn’t apply to majority of collection agencies nowadays. (Especially not collection agencies that represent banks) If someone processes a payment early, then you can be reimbursed for all fees (this only occurs when an error took place and is likely not going to happen to you). Collection agencies are getting away from intentionally calling third parties (speaking of 3rd party collections) nor do we speak to credit rating. We do advised that we can have it reported paid in full, but we as an industry do not speak to one’s credit score.

    Now collectors may allow you to believe there is more urgency then there actually is. We are very skilled at such, but if you have assets (or have large amounts of total debt with one bank) and you choose not to work with a collection agency we do have ways of “speeding up the process for review”

    • James says:

      I do want to respond to your answer that you gave here. I have dealt with many debt collectors over the year’s and 1 fact has always remained true with every one of them, THEY SIMPLY DON’T CARE WHAT YOUR FINANCIAL SITUATION IS, and will typically use every tactic to make you feel like crap for not paying your bills. I had one just today say to me, and I quote, “you haven’t even attempted to make even a $25 “good faith” payment since we’ve received your account”. Ummm, it’s kinda hard to make even a $5 payment when a person hasn’t worked in almost 4 years and doesn’t have any income. My wife works full time and we live off her income. FYI, we weren’t married at the time of incrude debt, and in my state, you can’t go after the spouses money unless the debt became valid after the 2 parties were married. So, with all do respect to you and your job, I’ve NEVER worked with any collection agencies that didn’t use shady tactics to collect for their clients and any that weren’t rude, so forgive me if I come off as a a**hole. No matter what the state and federal laws are, I believe these agencies get away with scare tactics and harassment constantly, and truth be told, I don’t believe we, as the debtors, are protected from any of it, regardless of what we’re told. And I’m not about to waste my time reporting them because it doesn’t do any good.

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