You just sat down to dinner when the phone rings. As frustrating as a call in the middle of a meal can be, it’s nothing compared if you’re told you owe money. A collector’s call demanding you cough up or they’ll sue is stressful, and it’s made worse when you don’t remember owing on the account in question.
Do you have to buckle to their demands? Not if it’s phantom debt, a term to describe an old account you paid off or an account you never owned in the first place.
Scroll down to find out how it happens and what to do if it happens to you.
1. Scams
Some enterprising criminals will call pretending to be a financial institution or collection agency, informing you of an overdue balance on a line of credit or an outstanding personal loan. If they’re demanding payment on an account you have no memory of opening, it may be an elaborate ploy to defraud you.
2. Identity Theft
If a legitimate collection agency or financial institution gets in touch about an account you don’t recognize, it may be the result of identity theft. Identity theft occurs when a fraudster uses your personal information to open a personal loan or line of credit in your name.
Of course, this is the least of your worries if your personal information has been compromised.
Did you know bad credit can affect your life in more ways than just your finances? It might make it harder to find a new job, place to live, or insurance policy. That’s why disputing these errors right away is crucial.
3. Inaccuracies and Misinformation
The financial world has a lot of moving parts, especially when it comes to accounts that go into collections. Usually, a financial institution sells your account to a collection agency, and one of their reps will track down payment.
But in some cases, an account might change hands from one agency to another several times over, and details about the account may get lost in the shuffle.
The final agency to wind up with your information may be collecting on a line of credit that you’ve already paid or never had in the first place because of these errors.
What to Do if You’re Haunted
First thing’s first, if a collection call ever seems suspicious, trust your instincts. Don’t immediately fold into their demands, no matter how intimidating they may be.
1. Find out Everything You Can about the Debt
While you have the collection agent on the phone, ask them for their company information, including the name, address, and phone number. Then move onto the account in question: find out what it is, how much you owe, and when.
After confirming it over the phone, ask for a debt validation letter. This is an official document that outlines the amount owed. This won’t phase a legitimate collection business, but it may scare off con artists.
2. Build a Case to Support You
Your next step is to prove that the debt is fraud or simply incorrect.
You may use the follow:
- Proof of payment
- Original financial institution acknowledging you’ve paid off your balance
- Credit report to show you’ve paid the account.
Face Your Phantom Debt
Doing the financial equivalent of pulling the sheets over your head and hiding won’t make phantom debt go away. The only way you may say goodbye to your unwanted guest is by exorcising it. Address these accounts, so you can escape of the clutches of phantom debt.
