How to Fight Phantom Debt

Illustration of a man running from a ghost, representing the concept of phantom debt.
Debt collectors, hungry for money, sometimes make up debts and try to get you to pay them. You don't have to pay these phantom debts. Photo:

CSA Images / Archive / Getty Images

Debt collectors aren't always honest about the debts they're collecting. So it shouldn't come as a surprise to hear that collectors sometimes make up debts to collect. These so-called phantom debts have never existed and though you don't have an obligation to pay, the debt collector will never tell you that. They're hoping you never ask.

Collectors trying to collect phantom debts are actually violating the Fair Debt Collection Practices Act, which is the federal law that governs third-party debt collectors. They are not allowed to "misrepresent" the amount you owe and saying you owe a nonexistent debt does just that.

We have so many financial transactions in a lifetime, it's hard to mentally keep track of them all. Dishonest debt collectors use that to their advantage. They're hoping that you'll believe you owe the debt and will pay them for it. If you're even a little bit unsure about the legitimacy of a debt, do not acknowledge it and do not agree to pay it.

Is it a phantom debt or real debt?

The FDCPA gives you the right to have a collector verify your debt through a process known as debt validation. You have 30 days from the date the debt collector first contacted you to request validation of the debt. Then, after you've requested validation, the collector has to provide proof that it owns the debt or has been assigned to collect it by the original creditor. If the collector can't provide this proof, it can't continue to attempt to collect from you.

Check your credit report. If the debt is legitimate, the original account may be listed on your credit report. Ask the collector to provide the name of the original creditor. With that information, you can check your report for the original account. Note that not all original accounts appear on your credit report. For example, if the alleged collection is for a past utility bill, it won't be on your report. Debts that have passed the credit reporting time limit may also not appear on your credit report because they're too old.

Make sure the collection agency hasn't listed the phantom debt on your credit report. If necessary, you can submit a credit report dispute to have it removed. Let the credit bureaus know the debt does not belong to you.

Contact the original creditor. Let them know a collection agency has been trying to get you to pay a debt and you have no record of the account. The supposed creditor will be able to tell you if the account is legitimate and if it's been assigned or sold to that collection agency.

Stop Collectors From Calling You

You can stop collectors from calling you about phantom debt (or any other debt) by sending a written cease and desist letter requesting them not to contact you. When the collector receives your letter, it can contact you one final time, in writing to let you know one of these things: that it won't collect the debt anymore, that it may take certain actions against you, or that it will definitely take certain actions against you.

Reporting Phantom Debt Collectors

It's illegal for debt collectors to make up debts. If you've been contacted to pay a debt that doesn't exist, report the collector to the Consumer Financial Protection Bureau, your state's Attorney General, and the Better Business Bureau. You can also file a lawsuit against the agency for actual damages and punitive damages. You can also report the collector if it continues to list the debt on your credit report, ignores your validation request and continues to collect the debt, or ignores a cease and desist letter. Make sure you acquaint yourself with ways with which you can prove a debt is not yours.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Consumer Financial Protection Bureau. "Can a Debt Collector Try to Deceive Me to Collect on a Debt?"

  2. Consumer Financial Protection Bureau. "Are There Laws That Limit What Debt Collectors Can Say or Do?"

  3. Federal Trade Commission. "Fair Debt Collection Practices Act," Pages 6-7.

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