How can I stop a collection agency when I don owe?
The legal action you describe is an action for declaratory judgment. Generally speaking, a “dec” action asks the court to hear evidence and resolve a matter before it leads to extended litigation. If you file such an action (lawsuit), it will require the creditor to come into court and actually prove that the debt is valid. If the creditor fails to respond after a certain period of time (probably around 3 to 6 months) or can’t prove the validity of the debt, the court will issue a judgment indicating that there is no debt. The judgment could then be used to clear things up with collection agencies and credit reporters. Depending on the amount of the debt, it probably wouldn’t be too difficult to handle the issue in small claims or city court, with only minimal legal assistance and/or diligent library research.
Speaking as someone who has worked in debt collection before: Write a dispute letter and demand proof that you owe what they say you owe. “Put up or shut up”. Of course, if it turns out you actually do owe it, pay it. Not all debts are created equal. The size of the debt is important. Who the creditor is is important. And whether there is collateral, a UCC filing, etc. is important. When a debt goes out to a collection agency, the effort spent to collect on it should be proportional to the size of the debt. Let’s say the agency gets to keep 25% of whatever they collect. If the debt is for $4000, the agency won’t want to spend over $1000 in personnel time, court filing fees, etc. to collect on it–or they will lose money. (Note that $1000 could be a lot of two-minute phone calls and/or 37-cent letters, before it even gets to court.) Now, in theory, it’s not worth anyone’s time to chase after a $25 debt. However: Many agencies, big retailers, etc.
Speaking as someone who has worked in debt collection before: Write a dispute letter and demand proof that you owe what they say you owe. “Put up or shut up”. Of course, if it turns out you actually do owe it, pay it. Not all debts are created equal. The size of the debt is important. Who the creditor is is important. And whether there is collateral, a UCC filing, etc. is important. When a debt goes out to a collection agency, the effort spent to collect on it should be proportional to the size of the debt. Let’s say the agency gets to keep 25% of whatever they collect. If the debt is for $4000, the agency won’t want to spend over $1000 in personnel time, court filing fees, etc. to collect on it–or they will lose money. (Note that $1000 could be a lot of two-minute phone calls and/or 37-cent letters, before it even gets to court.) Now, in theory, it’s not worth anyone’s time to chase after a $25 debt. However: Many agencies, big retailers, etc. have ways of consolidating big reams of
Look into the Fair Debt Collection Practices Act. The “Federal Citizen Information Center” says: Can you stop a debt collector from contacting you? You can stop a debt collector from contacting you by writing a letter to the collection agency telling them to stop. Once the agency receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.
If you are concerned about your credit reporting company (experian or whomever), then you file a dispute with the credit report and then work with the creditor to resolve the dispute. This involves contacting the creditor and asking for all documentation proving you owe said monies. Then you produce evidence why you do not owe said monies. It is advisable to get an attorney for this process since they are familiar with the law and the process of dispute resolution based on contracts which is what you have in the first place if you owe anyone money.
