Collections and Debt Settlement


If you use credit cards, owe money on a personal loan, have financed or leased a car, or are paying on a home mortgage, you are a “debtor.” Debt collectors are individuals tasked with collecting money owed by consumer debtors. Many debt collectors work for a collection agency. Some collection agencies operate ethically and within the law, but others engage in illegal behavior in attempts to collect debts. 

Typically, a debt collection company will purchase debt from the original creditor for cents on the dollar. The goal of the collection company is to collect a larger amount of money from consumers than the amount it paid to the creditor for the right to collect the debt. The collection company must adhere to the Fair Debt Collection Practices Act in its collection efforts.

The Fair Debt Collection Practices Act includes rules that debt collectors:

  1. May not contact you before 8:00 AM or after 9:00 PM.
  2. Must restrict all communications to your attorney if you are represented by one.
  3. May not contact you at work if the collection agent has been notified that your employer prohibits the receipt of such communications.
  4. May not contact third party individuals, such as friends and family, more than a single time, and the contact is limited to requests for your contact information.
  5. Must send a written “validation notice” telling you the amount you owe within five days after they first contact you. This notice must include the name of the creditor to whom you owe the money, and how to proceed if you don’t believe that you owe the money.
  6. May not contact you if you have informed the collecting agent that the debt is not yours.
  7. May not make threats of any kind; including arrest, garnishment of wages, and property seizure.
  8. May not make false statements in an attempt to collect a debt.

Collection Scams

There are companies that contact consumers claiming they are collecting a debt, when in fact there is no debt. They threaten lawsuits or arrest if payment is not made immediately.  If you do not believe you owe the alleged debt, or suspect that you may not owe it, request a “validation notice” or something in writing showing the source of the debt.  Scam collectors will seldom respond. Knowing your rights can protect you from this type of scam.

If you believe you have been a victim of unfair collection practices please contact the Attorney General's Office in Phoenix at (602) 542-5763; in Tucson at (520) 628-6504; or outside the Phoenix and Tucson metro areas at (800) 352-8431.

Consumers can also file complaints online by visiting the Attorney General's Web site at

Credit Repair and Identity Theft Protection:

Many companies target people who have poor credit histories with promises to clear their credit reports so they can get a car loan, home mortgage, insurance, or even a job. Unfortunately, no one can remove accurate, negative information from your credit report. Do not give your sensitive personal information to anyone offering to repair your credit.

Other companies target people who have previously been victims of identity theft or other scams, and attempt to sign them up for identity theft protection. Be sure to research as to whether the identity theft protection company is legitimate before giving out your sensitive personal information. The Better Business Bureau ( is an excellent resource with which to research companies.

Debt Settlement:

Many different kinds of services claim to help people with debt problems. Among them are “debt settlement” companies that say they will negotiate with your creditors to reduce your balances due to a mere fraction of what you currently owe.

There is no guarantee that debt settlement companies can persuade a creditor to accept partial payment of a legitimate debt, and the negotiation process may be lengthy and protracted. However, if you decide to hire a debt settlement company to negotiate debt relief on your behalf, make sure to keep a few things in mind:

  1. Debt settlement companies selling their services by telephone cannot charge or collect a fee before they settle or reduce your debt.
  2. Be sure to obtain a copy of and thoroughly review the debt settlement company’s terms, fees, and policies.
  3. If you set up an account to deposit funds for possible settlement and fees, make sure the account is administered by an independent third party.
  4. Debt settlement companies are required to tell you how many months or years it will be before making an offer to each creditor, and they must tell you how much money you need to pay into escrow before they will make an offer to each creditor.
  5. Beware any debt settlement program that touts a “new government program” to bail out personal credit card debt, or promises that you will only pay “pennies on the dollar.”
  6. Beware any guarantees that the company will “make your unsecured debt go away” or “stop all debt collection calls and lawsuits.”

Do not stop making payments to your creditors without first considering the additional late fees, interest, and damage to your credit that may occur.