Editorial Policy

Sorry, no refunds from credit collectors

Erica Sandberg

August 11, 2015

QHi Erica,

I paid $1,000 to a collection agency because they were calling me at work and calling my mom asking where I am when I'm not home. I just heard this is illegal. Can I get my money back? Thanks —Carson

ADear Carson,

I hate to disappoint you, but I don't see a refund in your future.

It doesn't appear that you're disputing the legitimacy of the debt, so you did exactly what the collection agency wanted and what you as the debtor was supposed to do: pay the amount owed.

But look on the bright side. You also got what you wanted! All those harrowing calls to your home and place of employment surely have stopped. No longer do you have to freeze with fright when the phone rings at work or explain to your mother who that gruff sounding person was and why he wanted to speak with you.Ask Erica

Additionally, your credit report and scores should look much better than they did before you sent the money. While evidence that the account went into collections will remain on your file for a total of seven years, a satisfied bad debt looks better than one outstanding. And the new version of the FICO score won't even use paid-up collections in its calculation, so those numbers are probably higher now, too. Not all lenders are using this FICO score yet, but it's something to look forward to.

As for the legality of what the person working for this collection agency did, it sounds as if his actions were probably within the Fair Debt Collection Practices Act (FDCPA) guidelines. This federal law limits the way third-party collectors can behave when communicating with debtors.

According to the FDCPA, collectors are prohibited from talking to anyone but you about the details of your account. However, they do have the right to contact other people to ask how they may reach you. The collector can only ask that person about your whereabouts once, but the situation gets complicated when multiple people live at the same residence.

Regarding calls at work, there's a pervasive myth that a collector is forbidden to call debtors there. Unless your employer prohibits this kind of communication, they can. Most employers do have policies against personal calls, but since the collector won't automatically know whether yours does or not, it's up to you to speak up. A simple, “You are not allowed to contact me at my work because my employer forbids these calls,” should do. Back it up with a hard copy in the form of a letter. They will be in violation of the law if they continue to call, so if they do, contact the Federal Trade Commission to file a complaint.

Now that the collection agency has been paid, there's no reason for them to contact you again, and you can begin to repair your damaged credit rating. How? By borrowing in a positive way from this point forward. If you have an active credit card or loan, make your payments on time and reduce any balances you may have. If you don't have one, apply and use it responsibly.

The idea is to add information to the reports that indicates that you're a financially responsible person. Eventually it will overshadow the marred past. Even better — you'll never have to worry about delinquent accounts being bought up by collection agencies, and then have to go through this mess again.

Got a question for Erica? Send her an email.