Navigating My Debts

Navigating My Debts

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Navigating My Debts

This section describes how to work with a debt collector about your debts.

A debt can be considered delinquent as soon as one day past the due date. Your agreement with the original creditor and applicable law will determine the date of delinquency.

It depends.

First, as a professional, the debt collector wants to help you resolve the debt.

When those calls come in at random times, it can be disruptive or inconvenient. It’s far better to let the debt collector know when and how to contact you. Perhaps you’d prefer to communicate via email—if so, let them know! But one thing’s for sure: Avoiding or ignoring a debt collector will not make the debt go away.

If you owe the debt and don’t resolve it, the debt may end up on your credit report, potentially affecting your access to credit, assuming that the debt collector or creditor reports debts to a credit reporting agency like TransUnion, Experian, or Equifax.

Additionally, if you don’t resolve it, the debt may ultimately end up as a legal judgment taken against you, assuming that the debt is one upon which you can can lawfully be sued and the creditor wants to take a judgment against you to enforce the debt.

If you believe you don’t owe the debt or don’t owe the amount sought, find a way to communicate with the debt collector and let them know! The professional debt collector’s role is to collaborate with the consumer and the creditor to find solutions and aid in the resolution of defaulted debts. This can include resolving disputes about debts that may not be owed for one reason or another and negotiating payments or settlements of defaulted debt where the circumstances call for it.

Whether you believe you owe the debt or not, arrange to speak with the debt collector at a time when you have access to your relevant records and have time to have a meaningful conversation with the debt collector. By discussing potential disputes, questions, and resolutions with the debt collector, you’ll do your part to limit the consequences of collection activity, help resolve any potential errors, reduce or eliminate the debt collector’s need to contact you in the future, and resolve the outstanding alleged debt.

The Do Not Call (DNC) Registry exists to stop unwanted telemarketing sales calls. Debt collectors are not telemarketers; the DNC Registry does not apply to their debt collection calls.

For more information about the National Do Not Call Registry, visit the Federal Trade Commission’s DNC information page.

Some state laws do require notice to the consumer prior to the reporting; these state laws vary, however, and some states do not require such notice.

Generally, seven years, unless the debt has been discharged in bankruptcy, in which case it may be reported for up to 10 years. Again, state and local laws may affect this federal reporting period.

Under the federal Fair Credit Reporting Act, any individual or organization with a “permissible purpose” may obtain a copy of or review your credit report. Typically, debt collection constitutes a permissible purpose. Of course, you’re entitled to a copy of your own credit report, too. For more information about how to obtain your free credit report, visit the Federal Trade Commission’s guide.

Also known as credit repair organizations (CROs), these businesses claim they can “repair” your credit or increase your credit score.

CROs should not be confused with credit counseling services. (A credit counseling agency works to educate consumers and, in some cases, assist consumers with debt consolidation or negotiating a debt settlement with debt collectors, which can include reduction or waiver of interest, late fees, and even the principal due.)

It’s important to note that certain credit repair practices are illegal.

Some states’ attorneys general have warned consumers that restoring credit is a lengthy procedure, and CROs’ claims to quickly “repair” credit may involve identity theft and other illegal practices.

For more information about protecting yourself from abusive or illegal CRO activities, check out this CFPB article and the FTC’s webpage about the Credit Repair Organizations Act. In most cases, when a delinquent debt has been placed in collections, you can resolve the debt yourself and negotiate mutually agreeable resolution by communicating with the collection agency.

If you believe you’ve found inaccuracies or discrepancies on your credit report, you can notify the relevant consumer reporting agencies (CRAs) online, by mail, or by phone.

Federal law requires the CRAs to contact the “data furnisher” (i.e., the company that reported the account or debt) to investigate the dispute.

Alternatively, you can reach out to the data furnisher directly. When you submit your written dispute, be prepared to present supporting information or documentation, such as paid receipts and/or cancelled checks, along with a description of the information you believe to be incorrect and why you believe it’s incorrect.

Every year millions of Americans fall victim to identity theft, costing individuals and businesses millions of dollars. We all pay the cost for identity theft in the form of the higher prices business have to charge for goods and services to cover losses and the increased cost of obtaining credit. Debt collectors are on the front lines of the identity theft resolution process. Often, the first notice consumers receive that they have fallen victim to identity theft is a collection call regarding a debt about which the consumers were not aware.

If you have been a victim of identity theft, you can report it and start a recovery plan by going to the Federal Trade Commission’s dedicated website:

Yes. When you co-sign on a debt, you’re assuming responsibility—along with the other signer or signers—for satisfying the terms of the agreement.

Any co-signer can be held liable for a breach of the agreement, e.g., non-payment. As a result, if a delinquency or default occurs, it can be reported to the consumer reporting agencies for placement on any of the co-signers’ credit reports.

It depends on the circumstances and state law. If you believe you’re no longer liable for a marital debt or a debt incurred during marriage, contact the attorney who handled your divorce for more information. Note that some states have laws that provide relief for victims of economic or financial abuse.

Your options may vary depending on whether you have delinquent or defaulted federal student loans or defaulted private student loans, including federal loans that have been consolidated via a private lender. If you have outstanding federal student loans, your options may include rehabilitation.

Rehabilitation removes your loan from default status after you have made a series of payments (generally, nine) subject to certain rules.

  • For direct loans, these payments will be 15% of your annual discretionary income divided by 12;
  • For Perkins loans, your loan holder will determine your required monthly payment.


You can successfully rehabilitate a loan only once. Rehabilitation will remove the record of default from your credit history, but your credit history will still show late payments that were reported by your loan holder before the loan went into default. If you go back to school after rehabilitation, you’ll be eligible for federal student aid after you’ve made six of nine required monthly payments. In addition, if the government had been collecting your unpaid debt by garnishment or withholding tax refunds, those actions will end, and you’ll no longer receive communications from collection agencies that the Department of Education contracts with to recover defaulted loans. For more information, visit the Department of Education’s loan rehabilitation information page.

Other options:

  • Consolidation. Through consolidation, your defaulted loans will be paid off by a private lender who originates a new loan with new repayment terms. If you want to get your loan out of default but can’t afford to repay it in full, you might consider consolidation. Your consolidated loan will permit you to enroll in one of the U.S. Department of Education’s alternative payment plans. If you can’t afford to pay off your loan in full, it’s also the fastest way to get out of default and be eligible for federal student aid again. But consolidation will not remove the history of default from your credit report. For more information about consolidation, visit the Department of Education’s consolidation information page.
  • Dispute. If you’re concerned that you never borrowed these loans, check the National Student Loan Data System. Or contact your student loan servicer. If you’re not sure who services your loan, find more information on this Department of Education webpage to figure it out. Or inquire with your collection agency to inquire and, if appropriate, to submit a dispute or request for original creditor information. Note that a debt collector may be contacting you about a private student loan, a student loan owed to the federal government, or a debt owed directly to educational institution, e.g., for books, courses, or student fees.
  • Repayment. If you can afford to pay off your defaulted federal loan, repayment represents the fastest way to resolve your debt. Under certain circumstances, your debt collector may be authorized to waive some of your outstanding fees and collection costs. For some borrowers, this can be the cheapest way to bring a federal student loan out of default. Even after you’ve repaid, however, the debt will remain on your credit report as a defaulted loan that was repaid, although paying off a defaulted loan will help rebuild your credit history and will improve your credit score. For more information about repayment, visit the Department of Education’s repayment information page.


If you have outstanding private student loans, your options may include:

  • Negotiated resolution for full repayment. Depending on how much you owe, you may be able to work with your collection agency to negotiate a payment with the loan holder. Negotiated resolutions can include waiver of accrued interest and fees.
  • Negotiated payment plan. If you can’t negotiate a full repayment, you may be able to negotiate a payment plan similar to those offered for federal student loans.


Note that for private student loans in default, remember that a debt collector engaged to recover a private student loan does not work for, represent, or collect on behalf of the U.S. Department of Education or any other branch of the federal government. A debt collector trying to collect payments on a private student loan generally may not:

  • Garnish your wages without a court order.
  • Intercept your federal or state tax refund.
  • Garnish your Social Security or Social Security disability payments; or
  • Prevent you from receiving federal student aid to go back to school in the future.

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