I am often asked, “what is the best way to respond to a collection letter?”
As an attorney, the answer is always “it depends,” but most of the time the way to respond to a collection letter is…not to respond at all, at least with respect to credit card debts and similar unsecured debts. Responding to collection letters — even if only to dispute them — can, paradoxically, increase the probability that a debt collector will accelerate collection efforts and maybe even sue you for the debt.
You may have received a collection letter from any number of debt collectors who practice in California. Common sources of such letters are Hunt & Henriques, Mandarich Law Group, Midland Credit Management or Midland Funding, and Portfolio Recovery Services. Of course, there are also many others.
Below, I will first acknowledge the conventional wisdom about how to respond to a collection letter. Then I will explain why I disagree with that conventional wisdom, and why I contend that the best response to a collection letter is usually no response at all. I’ll also quickly cover a couple of exceptions to this rule.
The Conventional Wisdom
Most people who have written about this issue suggest that, upon receiving any kind of collection communication, you should quickly respond with a written dispute, embracing the consumer rights defined by section 1692g of the Fair Debt Collection Practices Act.
The main point embodied by that law is that if a consumer makes a timely written dispute in response to a debt collector’s assertions, the debt collector has to cease its collection efforts until it mails certain information about the debt to the consumer.
More specifically, the law reads, in part, as follows:
[The debt collector must, in conection with certain debt collection communications, provide a written] statement that if the consumer notifies the debt collector in writing within the thirty-day period [following the initial collection communication] that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt…[and mail it to the consumer].FDCPA Section 1692g(a)(4)
If the consumer notifies the debt collector in writing within the thirty-day period described in subsection (a) that the debt, or any portion thereof, is disputed…the debt collector shall cease collection of the debt, or any disputed portion thereof, until the debt collector obtains verification of the debt … [and mails it to the consumer].FDCPA 1692g(b)
Be aware that I’ve edited some important stuff out of the statute in order to keep things simple for this article.
This law is designed to protect the consumer, and it is easy to understand why people who have written on the subject advise consumers to use these rights. They reason that, when a consumer sends a dispute letter, the debt collector will probably fail to properly verify the debt, and then the debt collector will be barred from further collection efforts.
Unfortunately, in my experience, that is often not the way it pans out. Instead, when a consumer disputes the debt, the debt collector often responds with a form letter and some fragmentary documentation of the debt and then continues trying to collect. Worse still, the consumer has an even bigger target on his or her back because an actual human being has bothered to touch the file, which brings it to the top of the stack.
It’s All a Numbers Game
Consumer debt collection is a numbers game. There are lots of bad debts out there, and only a limited number of collection firms and collection attorneys. The debt collections dragnet is imperfect and you have reasonably good odds of slipping through. Even though collection letters are often computer-generated mail merge documents, ultimately, there is a human collection agent or attorney associated with those letters, and he or she has far, far too many accounts to work on — from your perspective, that is a good thing.
Sit in the Back of the Class and Keep Your Head Down
Remember your school days, when there was one lonely teacher at the front of the class, and a whole bunch of rambunctious kids for the teacher to contend with? There were always a few kids who monopolize the teacher’s time by being pains in the ass? Remember what happened to those kids? They got in trouble. Metaphorically speaking, don’t be one of those kids. Sit in the back of the class, and keep your head down.
If you’re lucky, the bell will ring without the teacher ever noticing you. In case the metaphor isn’t landing, what I’m suggesting is that if you let the collection letter go unanswered, there is a good chance the statute of limitations will simply expire on the debt before your account gets any special attention, leaving the debt collector unable to take your money.
Remember, I’m talking about an unsecured credit card debt here — other factors can be in play for other types of debt. Also, there are a few exceptions where consumers should exercise their rights under FDCPA section 1692g. I’ll touch on the main ones towards the end of this article
Of course, ignoring the collection letter does not guarantee that collection efforts on an account will remain dormant. Far from it, there remains a decent chance that you will be hit with a collection lawsuit, but not raising one’s hand usually improves one’s odds of slipping through the cracks.
Responding to a Collection Letter Makes It Personal – Not in a Good Way
Hypothetically, let’s say you respond by writing a letter disputing the debt. You’ve thrown down the gauntlet, and a person at the collection company has to decide whether to drop everything and accept your challenge.
People who work at collection firms are a self-selecting bunch, and they are likely to feel self-righteous about collection issues. So now, rather than being one anonymous collection account amongst hundreds of thousands, you’ve separated yourself from the pack. Debt collectors don’t have time to look into every account that they are trying to collect. But it is only a relatively small fraction of people who send in a dispute letter. Congratulations, somebody is now paying special attention to your account. Exactly what you probably do not want.
Knowing Your Rights Is Great, But Acting On Them Puts You on the Wrong Side of Social Psychology
As you now know, when you send a timely dispute under Section 1692g, the FDCPA prohibits debt collectors from suing you or taking further collection action until they appropriately respond to your dispute. Ironically, this choice of “put up or shut up” can goad an otherwise lethargic debt collector into taking action on your account. Your dispute letter has created a sense of urgency for the debt collector to research and respond to your dispute. They know that otherwise, they will lose the opportunity to collect from you.
It is as if you have used the old sales technique of creating a “sense of urgency” in order to persuade the debt collector to act on your account.
Creating a “sense of urgency” is a wonderfully persuasive sales technique and social psychologists have done lots of interesting studies about it. However, it was probably not your intention to persuade some debt collection attorney to dive into the details of your collection account. Even worse, once they start working on your file to respond to your dispute, it is easier for them to keep the inertia going on your file, rather than paying the psychological task-switching cost of digging into anybody else’s file. The next thing you know, some debt collection attorney has adopted your account as the project de jour, and you end up being served with a collection lawsuit.
There Are Some Instances Where You Should Respond
If you have already been sued (instead of just receiving a regular letter in the mail), then you definitely need to respond to the lawsuit or bad things will happen.
If you are legally and factually certain that you do not owe the debt, you might want to take advantage of your section 1692g right to dispute, in an effort to put the whole issue to bed.
Conversely, If you are pretty sure you really do owe the debt and you are ready and willing to pay it off right this minute and it has not already been sold to a debt buyer, you could contact the other side to arrange to pay it off. If this is your situation, proceed carefully, and make sure you know what you are agreeing to and that it is in writing.
If you are sure that the statute of limitations has expired and you want to tell the debt collector to shut up and leave you alone, you could write to them, and tell them to stop contacting you. (Do not acknowledge the validity of the debt and be careful not to say anything that might start the clock ticking again. Resist the temptation to argue or explain anything to them. Just tell them to stop contacting you. Any extra words will get you in trouble).
Finally, remember to only apply the wisdom of this article to credit card collection matters or something very similar. The analysis of other debts is different. For example, if you are receiving debt collection notices for your home mortgage or your car loan, you don’t want to ignore those, because you might wind up facing foreclosure, or having your car might be repossessed. If it’s your electric bill, the power might be cut off, and so on.
Life is Short — Pick Your Battles Wisely
I’ll close with this analogy from an awesome video game I use to play in my youth (back in the days when, if you wanted to play a computer game you had to go to the arcade at the mall with a pocket full of coins).
The game was Atari’s Missle Command.
As the player, it was your duty to defend a row of cities at the bottom of the video screen. In keeping with the existential anxiety of the time, nuclear missiles began to rain down from the top of the screen, as depicted by pixelated blobs trailing dotted lines in their wake. The player would try to destroy the incoming missiles, with his own ground-to-air missiles. As the screen became increasingly crowded with projectiles, it was only a fool or a rookie that would seek to knock every single warhead out of the sky. Eighty percent of the incoming missiles were destined to land someplace between the cities instead of scoring direct hits, and if you wasted your time eliminating those inconsequential missiles, you would not have time to save your cities from the ones that were actually going to hit their targets.
Similarly, don’t waste your time, your energy, your life force, etc. on responding to debt collection letters that are completely inconsequential. It will drain you. Respond to the stuff that matters. Ignore everything else.
The final takeaway: In response to a collection letter, usually you should do nothing. Good luck, Missile Commander!