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Debt Collectors can Communicate...not Intimidate

Mike about Money | Debt collector tactics

​Mike, I'm getting hassled at work by collection agencies because I have debt on five credit cards totaling $13,000. I have sent each credit card company a letter explaining why I fell behind on my payments and asking for help, but I have not heard back from any of them. Since they have turned my accounts over to collection companies, is it too late for me to do anything?

I get this question a little less often these days as collection companies have been held accountable to following Federal and State Debt Collection laws. However, this type of intimidation still occurs on a regular basis. It pays to know your rights.

First, there is a difference between a creditor's internal collections department and an external collection agency. Generally, larger creditors will use their own internal operations to make initial attempts to collect on delinquent accounts. Your chances of appealing to the creditor's goodwill are best before your account moves to any collections department, internal or external.

Many consumers who find themselves in financial trouble choose to avoid calls and letters from their creditors, but that is a mistake. You want to talk to creditors sooner than later because the creditor has more flexibility in providing some breathing room before the account is sent to collections. The longer an account goes unpaid, the less likely the consumer will receive any kind of assistance.

Your goal should be to find ways to prevent your accounts from moving to collections. The creditor would prefer to keep the account in-house and accruing interest, and it will try to accommodate you, to a point. Many creditors will offer some sort of short-term assistance, such as accepting reduced monthly payments. But the consumer must be talking to the creditor early in the process to receive such help.

If internal collection efforts fail, however, the creditor eventually must write off the account as uncollectible, and it will place the account with an outside collection agency. The agency then begins its own efforts to collect on the debt. The consumer now must deal with a company whose only objective is to collect as much of the debt as possible, as soon as possible. The collector may try various tactics, including threatening phone calls and letters, to convince the debtor to act quickly.

The federal Fair Debt Collection Practices Act offers consumers protection from abusive behavior. For example, debt collectors may not use threats of violence or harm, publish a list of consumers who refuse to pay their debts (except to a credit bureau), use obscene or profane language, or repeatedly use the telephone to annoy or harass someone.

Debt collectors may not imply that they are attorneys or government representatives or that you have committed a crime or will be arrested. They may not misrepresent the amount of your debt or collect any amount grater than your debt, unless your state law permits such a charge. Debt collectors may not state that they will seize, garnish, attach or sell your property or wages unless the collection agency or creditor actually intends to do so.

The debt collector must not telephone you at your workplace if your employer prohibits such communication or at any place known to be "inconvenient" to the customer. Calls at home are permitted only between 8:00 a.m. and 9:00 p.m. local time.

You can stop a collector from contacting you by writing a letter to the collection agency telling it to stop. (Send all such correspondence via certified mail, return receipt requested.) Once the agency receives your letter, it may not contact you again except to say that there will be no further contact or to notify you that the collector or the creditor intends to take some specific action.

However, sending such a letter and stopping the phone calls does not make the debt go away. You may be sued by the debt collector or the creditor. You should formulate a plan to repay your debt in a reasonable time frame with a monthly payment you can afford, and offer your plan to the collection agency. Once it accepts a repayment plan - in writing, of course - stick to it and pay off that debt!

Learn your rights! Read the entire text of the Fair Debt Collection Practices Act at the Federal Trade Commission website: www.ftc.gov/os/statutes/fdcpa/fdcpact.htm#806