By Gerri E. Detweiler
With the credit crunch in full swing, many consumers are receiving calls from debt collectors and would love to be able to stop debt collectors, and their phone calls and letters. At the same time, if no one paid their bills, the credit industry would quickly come to a halt!
But some collectors are so eager to get paid (often with a commission or bonus) that they will go to just about any length to collect past due consumer debts -- even violate the federal Fair Debt Collection Practices Acts. Consequently, complaints about debt collection agencies are on the rise according to government regulators and the Better Business Bureau. In fact, the Federal Trade Commission reports that in 2009 it received more complaints about the this industry than any other.
Here are the top complaints consumers report to the Federal Trade Commission about bill collectors:
1. DEMANDING A LARGER PAYMENT THAN IS PERMITTED BY LAW
The federal Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from misrepresenting the character, amount, or legal status of a debt. What does that mean? It means they cannot inflate a debt with fees or interest unless that is permitted under state law. It also means they can't hound a consumer over a debt he or she doesn't owe at all, or pursue a debt that a consumer got discharged in bankruptcy.
Tip: You have the right to ask a debt collector to validate in writing a debt that it is trying to collect from you that you - but you must request the validation within thirty days of when the collector contacting you for the first time about the debt. Put your request in writing and send it by certified mail, return receipt requested, keeping a copy for your files.
2. HARASSING THE ALLEGED DEBTOR OR OTHERS
Under the FDCPA, debt collectors may not harass consumers to try to collect a debt. Among other things, this means collectors cannot call consumers repeatedly, threaten them, or use profanity or racial slurs when talking to consumers. Yet, the FTC reports that thousands of consumers say that collectors harassed them by calling repeatedly or continuously, used obscene; profane or otherwise abusive language; called them before 8:00 a.m., after 9:00 p.m., or at other times that the collectors knew or should have known were inconvenient to the consumer; or used or threatened to use violence if they failed to pay the money they were trying to collect from them.
Tip: Keep detailed written records of every conversation you have with a debt collector. Your records will be invaluable if you decide to file a lawsuit against the debt collector.
3. THREATENING DIRE CONSEQUENCES IF A CONSUMER FAILS TO PAY A DEBT
Debt collectors cannot threaten to take action they don't intend to take, or don't have the legal authority to take. For example, one of my friends was eight months pregnant when a debt collector told her she would spend the weekend in jail if she didn't pay a past due debt! However, we don't have debtor's prison in America so the collector could not follow through on that warning. That collector was breaking the law.
Typically, a debt collector must sue a consumer, win the case and obtain a judgment against a consumer before he can garnish the consumer's wages or seize his or her property in order to collect a past due debt, for example. They cannot warn consumers they will lose their jobs or go to jail if they don't pay. Even warnings about ruining a consumer's credit rating may be illegal if the debts are too old to be reported to credit reporting agencies.
4. MAKING IMPERMISSIBLE CALLS TO A CONSUMER'S PLACE OF EMPLOYMENT
Under the FDCPA, a debt collector may not contact a consumer at work if the collector knows or has reason to know that the consumer's employer prohibits such contacts. But thousands of consumers have complained about receiving calls at work from debt collectors.
Tip: If you tell a debt collector not to contact you at work, he must stop doing so immediately. Follow up in writing, and if the debt collector continues to call you when you are the job, get in touch with a consumer law attorney.
5. REVEALING ALLEGED DEBT TO THIRD PARTIES
A consumer told us that a debt collector left a message about her debt on her brother's answering machine - and even included her Social Security number in the message! Under the FDCPA, debt collectors can contact other people about your debt only to locate you. If they already know how to find you, then calling other people is illegal. Even when they do contact your friends, relatives, neighbors or coworkers to find you, they cannot discuss your debt. In fact, the only people they can discuss your debt with are co-signers, your spouse or your attorney.
The FTC points out that a collector who discusses a debt with someone else is usually trying to pressure a consumer into paying the debt by embarrassing or intimidate her. Unfortunately this particular debt collection tactic may jeopardize a consumer's personal and work relationships, and even put the consumer's job at risk.
Tip: If a debt collector reveals your debt to someone else, contact a consumer law attorney right away.
5. FAILING TO VERIFY DISPUTED DEBTS
When you are first contacted by a debt collector, you have thirty days to request written verification of the debt. If you dispute the debt in writing, the collector must stop trying to collect the debt until he provides the written verification. (If the debt has been reported to the credit reporting agencies, the collector must report that it is being disputed.)
According to the FTC, many consumers complained that collectors ignored their written disputes, sent no verification, and continued their collection efforts.
Tip: If you aren't sure you owe a debt, or believe that the amount the debt collector says you owe is wrong, be sure to request written verification of the debt right away. Keep a copy of the letter for your records.
6. CONTINUING TO CONTACT A CONSUMER AFTER RECEIVING A "CEASE COMMUNICATION" NOTICE
You can send a letter to a debt collector asking him to stop contacting you about a debt. If you do, the debt collector cannot contact you again except to notify you if it's about to take legal action against you.
Tip: While a cease communication letter can be helpful in some cases - if the debt is too old, or you are confident you don't owe it, for example - it's not a good idea to send such a letter just because you don't want to deal with the debt. If you do, you may leave the collector with no recourse but to file a lawsuit against you.
Gerri Detweiler has been helping consumers find answers to their credit questions for more than twenty years. She is the author of four personal finance books including [http://www.DebtCollectionAnswers.com]Debt Collection Answers - How to Use Debt Collection Laws to Protect Your Rights. A free worksheet consumers can use to track their conversations with debt collectors is available at [http://www.DebtCollectionAnswers.com]http://www.DebtCollectionAnswers.com. She and her co-author Mary Reed answer consumer questions on their site as well.
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