There are scammers out there who call people, claim that they owe on old debts, and then threaten to have them jailed if they don’t pay it. First, you need to know that you can’t go to jail for failing to pay a debt, even a payday loan. Second, under the Fair Debt Collections Practices Act, the collector must send you a notice within five days of their first contact with you, giving you an opportunity to dispute the debt within 30 days. You should ask them for the section 1692g letter. This will immediately tell them you know what you are talking about. It’s also a good idea to tell them you are recording the conversation for Fair Debt Collections Practices Act compliance. Chances are, once they know that you aren’t an easy target, they will hang up and move on to find another sucker.

If this is truly a fraudulent attempt to extort money and you want to have a little fun, you can tell them that you have a side job suing people who illegally collect on debts, and you need their address so you can sue them (which they won’t give to you if they aren’t legitimate) and when they refuse, just say that if they stay on the line with you for another couple minutes, you will have their position triangulated and you will be sending the authorities after them for trying to fraudulently collect a debt. (I wouldn’t waste my time doing this if it is a legitimate debt.)

This recent article summarizes scripts that even legitimate debt collectors use, buying old debt for pennies on the dollar, then encouraging people to take out more credit cards or home equity loans to pay off their old bad debt.