Dear Lifehacker,
I got a bogus charge on my cellphone bill, called to have it removed, and got a call from a collections agency two months later claiming I never paid it. My cellphone service provider refuses to help, claiming it's out of their hands, and the collections agency won't absolve the charge. I honestly don't owe this money! What can I do?
Sincerely,
Falsely Indebted
Dear F.I.,
You're not alone. This actually happened to me as well when I was overcharged for my rent. I've been fighting it off for over two years now and still haven't managed to get rid of the debt collector. I'm responsible and pay my bills, but my credit score is lower than it should be because of this blemish. I, and likely many others, know how you feel. So what do you do about it? I didn't know the answer, so I contacted Rod Ebrahimi of the debt-elimination service ReadyForZero to get some advice. Here's what I learned.
Know Your Rights
First things first, you have rights which are summarized in the Fair Debt Collection Practices Act (FDCPA). Collections agencies are prohibited from calling you during certain hours, using foul language, making threats, and doing lots of other horrible things that many have fallen victim to over the years. Negative tactics are wrong even if you owe money, but as many people don't it's just pure harassment. Know your rights under the FDCPA so that when you do speak with collections agencies you can report them for any malicious behavior. If you have bogus debt you didn't actually do anything to incur, getting harassed can help make your case to stop the claim entirely.
Call the Reporting Agencies
If your debt is completely bogus, put in a call to reporting agencies like Experian, Equifax, and TransUnion to tell them as much. The process can take months before the collections notice is removed from your account, and persistence can be necessary, but you should try this approach first. I did, and it didn't work for me with every agency, but I have a particularly complicated situation. If all you have is a tiny bogus charge on your cellphone bill (or something like that), chances are you can get it removed with just a phone call.
Ask for Written Proof
Third-party collectors can't actually collect your debt without first sending you written proof. They need to be able to demonstrate that the debt is actually yours, as debt scams can easily take place over the phone. Rather than give out your address, ask them what address they have on file. Be wary of providing any information to a third-party collector until you know they're a legitimate establishment. Once you get the written notice, you can verify that the amount and determine that it's definitely not yours. Using Annual Credit Report (our top pick for a free credit report), get your up-to-date credit report and see if the collections exists and is for the same amount. Verifying everything will help keep you safe as you try to fight off your bogus charge.
Find Out Your Supposed Debt's Age
The option to collect on a debt expires in some states. For example, the statute of limitations in California is four years for credit card debt. If a collector is after you for a debt long in the past, they may not be able to collect whether it's legitimate or not.
File a Complaint
The government can help when you're falsely accused. Visit the Consumer Finance Protection Bureau (CFPB) and file a complaint. The site is remarkably simple to use. You just choose the kind of problem you're having, answer a few questions, and wait for a resolution. You even get a tracking number so you can stay on top of what's happening. While there's no guarantee the CFPB will solve your dilemma, they're certainly a resource you don't want to ignore.
Just Pay It
Although it may be damaging to your pride, sometimes it's easier to just pay the fee. You shouldn't do this if you supposedly "owe" a significant amount of money, but if the charge is only $10-20 you might find your time is worth more than that amount of money?especially because you may end up paying more over the long term in higher interest rates because of its effect on your credit score. Yes, this doesn't make the problem any better, and the system is screwed up if you have to pay when you don't actually owe anything, but try to forget your anger and weigh your options. If the money is meaningless, compare it to the hours/days/weeks/months/years of frustration that fighting the collections agencies will take. Make sure it's not worth letting them win this one battle before you decide to fight back.
That's not necessarily the highest note to end on, but hopefully everything here will help you keep your credit score in a positive range. Good luck, and good luck fighting off the debt collectors!
Love,
Lifehacker
Special thanks to Rod Ebrahimi for his help with this post. You can find him on Twitter @innovatebig and check out his debt-elimination webapp ReadyForZero.
Photo by Dmitriy Shironosov (Shutterstock) and R. Gino Santa Maria.
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