How to Deal With Mortgage Collection Departments

Three Parts:Understanding Your RightsAssessing the SituationMaking Payments

With the current tsunami of foreclosures in countries such as the USA, many homeowners are being intimidated by the Collections Departments at the various banks and mortgage companies. If your account goes through a collections process, make sure you know how to handle the situation safely.

Part 1
Understanding Your Rights

  1. Image titled Prioritize Your Debts Step 9
    Learn the statute of limitations on your debt. Debts come with statute of limitation, and mortgage has a statute of limitation from 3 to 15 years, depending upon your state. Creditors only have this timeframe to collect a debt before they can no longer take you to court over a delinquent payment.[1]
    • Note that if you make a payment on a debt after the statute of limitations has expired, you will effectively restart a new statute of limitations for that old debt. [2]
    • Statutes of limitations vary by state. You can go online to find the statute of limitations for mortgage debts in your state.
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    Understand who debt collectors can and cannot contact. Debt collectors usually work on commission and will try to pressure you into making a payment. Oftentimes, collectors threaten to call friends, family members, and employees. Understand who they can legally contact so you know which threats are empty.
    • For the most part, a collector can only contact you. They are not allowed to tell the person they're contacting they're from a collections agency or share the details of your debt. They also cannot send any mail to your friends, family members, or employers.[3]
    • A debt collector can only contact your place of business once. They can, however, send a letter to your employer asking for verification of your employment, but only if this is the first contact they've had with your employer.[4]
    • Collectors cannot ask anyone they contact for personal information about you of any kind.[5]
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    Watch out for fraudulent collections calls. Unfortunately, some collections companies are fraudulent in nature. Know the signs of a fraudulent call and know where to report them if they occur.
    • If the collector demands an immediate payment, especially if you don't know of any debts and have received no mail about owing money on a bill, the call may be fraudulent.[6]
    • A fraudulent collector will usually repeatedly demand payment without providing any further information and refusing to answer questions.[7]
    • If someone asks for a specific payment method, especially in the form of a credit card, this is a bad sign. The collector may be trying to get your credit card information. In general, if a collector requests any card information over a phone this is a sign of fraud.[8]
    • Threats of bringing in the police or other law enforcement agencies are also signs of fraud.[9]
    • Report fraudulent calls to local authorities first, who will know where to direct an investigation. If a scammer claims to be from a particular organization, such as your bank or the IRS, contact that organization as well and let them know.[10]
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    Learn more about your rights as a debtor. Review the information in the Fair Debt Collection Practices Act (FDCPA). Learn what the collections agency legally can and cannot do. By educating yourself, you can respond to intimidation by letting the collector know you are aware of your rights and will report any unlawful behavior. They are not allowed to:
    • Call you before 8AM or after 9PM, unless you've agreed otherwise.
    • Use any obscene or abusive language.
    • Accuse you of committing a crime.
    • Threaten to take your property without first going through the court system.
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    Talk with an attorney. Many people are hesitant to reach out to attorneys due to shame or embarrassment. However, it's always a good idea to talk to a consumer law attorney when dealing with a collections agency. You want to make sure any requests the agency makes are legal and that you safely negotiate a deal that can help get you out of a debt in a way that's manageable for you.[11]

Part 2
Assessing the Situation

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    Look up information on the collections agency. As soon as you receive a phone call from a collections agency, you should look into the details of the agency to make sure they're legitimate and not trying to cash in on nonexistent or already paid debts.
    • Even if you know you owe a debt, check out the collector anyway. You want to make sure they're a legitimate company and working on behalf of an entity you owe money to.[12]
    • Ask for the agency's name and address while on the phone and write this information down. Ask for information about the debt in collection — how much, owed to whom, when incurred, etc. Ask for printed copies to be sent. Once the phone call ends, look up their information on the Better Business Bureau's website. You should also call your state's attorney general's office to see if the collector is licensed to practice in your state. You may also be able to find this information on the attorney general's website.[13]
    • If the collections company refuses to provide details, look up their phone number online if you have caller ID. This way, you can learn the name of the agency and get a sense of their legitimacy.[14]
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    Contact the original creditor. Once you've checked out the collections agency, call the original creditor and look into the nature of your debt.
    • The original creditor is the company to which you owe a debt. In the case of mortgage collections, this would be the bank where you took out your mortgage. You should be able to contact them fairly easily as you probably put their contact information in with important papers regarding your mortgage. You also might have a copy of your mortgage agreement in your e-mail or on your computer that includes their contact information.[15]
    • Your mortgage company may tell you they've sold your debt to an agency. Ask them the name of the agency. If it's the collections company that called you, you'll know the call was legitimate and you need to work on paying your debt with them.[16]
    • If the agency your bank claims to have sold the debt to is not the company that called you, this does not necessarily mean the call was fraudulent. That company may have since sold the debt. In this case, call the agency your bank gave you and ask them about your debt.[17]
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    Check your credit reports. When you get a phone call from a collections agency, you should look into your credit report.
    • Many websites offer free, confidential credit reports. This is the fastest and easiest way to assess your credit. You are entitled to a free copy of your credit report every 12 months and three agencies in the US give out reports: Experian, TransUnion, and Equifax. You should get request a report online from all three agencies to get the most detailed look at your credit history.[18]
    • Sometimes, information is slightly inaccurate, so look closely for spelling errors. Your last name or first name may have one or two different spellings and sometimes account numbers are scrambled or omitted to protect your privacy.[19]
    • Your credit report will contain a list of any kind of debt you owe, from your mortgage to credit cards to student loans. In addition to including this information, the report should include the amount of the loan, how much you owe, and how well you've kept up with payments.[20]
    • Your credit report will likely list any contact you've had with debt buyers or bill collectors. If you don't see anything listed, this does not necessarily mean the call was fraudulent. However, if you do not have any known debt and your bank did not mention you owing any debts this can be a bad sign.[21]
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    Ask for a validation of your debt. Legally, you're obligated to get a validation of your debt in writing. Call the collections company back and ask for this information.
    • You may have to submit the request in writing as well. Be prepared to do so. Also, keep copies of any paperwork you receive from the collections company as you may need them later on. One of the biggest consumer complaints about collections companies regards such companies charging you more than you truly owe.[22]

Part 3
Making Payments

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    Negotiate with collector to settle bill. When it comes to collections, mortgage ranks high in bills that should be dealt with immediately. Only family-related or personal medical costs rank hired than housing related debts in terms of importance.[23] However, you may still have room to negotiate. Get an agreement in writing that the account will be returned to good standing if you are repaying your debt in full. If you are not paying in full, consider if other options are available.
    • If you find you do owe a debt, and the amount the company is asking for is correct, the best thing you can do is pay immediately. The absolute best option is to pay the full amount right away.[24]
    • Obviously, this is not always possible. Oftentimes, people end up in debt because they do not have all the money they need available at once. If this is the case, you can negotiate your debts and set up a payment plan. However, before doing this pay as much as you can afford immediately.[25]
    • Take stock of your income and personal expenses to figure out the maximum amount of money you can put down immediately. Hopefully, you have enough to pay off a decent chunk of the debt.[26]
    • Don't make or agree to any payment or payment schedule unless you are certain you can meet the terms.
    • If you can only pay a small amount on a very large debt talk to an attorney. You attorney can advise you on your best options.
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    Take precautions when making payments. You want to make sure you take a number of precautions when striking a deal with a collections agency. You do not want to end up owing more than you originally agreed to or accidentally committing yourself to a higher payment plan.
    • Get any agreements you make in regards to payment plans in writing and don't make payment until you have the agreement in writing. Keep physical and electronic copies of these documents in case the collections company tries to change the payment plan at a later date.[27]
    • Always keep bank statements, receipts, and paperwork from the collections agency as proof of payment. Use a certified check from your bank to pay or use an online billing system so you leave a record of payment.[28]


  • Always keep a record of everything in writing. You can ask an agent to send you brief e-mail summaries of phone calls explaining what you discussed.

Sources and Citations

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Categories: Mortgages and Loans