Collection Agency Harassment

Your rights when dealing with a collection agency

You owe money, and a debt collector or collection agency is calling you night and day. Collectors are applying the thumbscrews — often illegally — as recent issues to the Federal Trade Commission bear out. In this particular situation, it’s important you know your legal rights.

Collection agencies are not allowed to:

• Call your office;
• Call your home before 8 a.m. or after 9 p.m.;
• Address you in an abusive manner;
• Call family or friends in an attempt to collect your debt;
• Harass you;
• Make false or misleading statements; or
• Add unauthorized charges.

If any of the above is happening to you, tell the collection agency to stop annoying you. If this continues, ask for the agency’s name and address and report it to the Better Business Bureau, the Federal Trade Commission (see below), or your state’s attorney general’s office. The federal Fair Debt Collection Practices Act (FDCPA) also states that you can demand the collection agency stop contacting you, other than to tell you that collection attempts have terminated or that the creditor or collection agency will sue you.

However, you have to put your request in writing.

Please note: The FDCPA pertains only to bill collectors who work for collection agencies, not the initial creditors. You won’t have the ability to get the collection department in your credit card company to stop calling you with a letter. For example, only New York City has a local consumer protection law that requires the original creditor to quit calling you following a written request.

What happens if the collector breaks the law?

If a bill collector violates the FDCPA, try and see if you can get the illegal behavior on tape. Taping is allowed without the collector’s knowledge in all states except CA, CT, DE, FL, IL, MD, MA, MI, MT, NH, PA, and WA. At the very least, record everything the bill collector says in some kind of a written log. Make sure to include the dates of the conversations. The next step is to file a complaint in writing. You can also file a complaint if you don’t have a witness to these conversations, but a witness will help. The correct agency to submit your complaint with is the FTC. You can also file a complaint online:

Federal Trade Commission
6th Street & Pennsylvania Avenue NW
Washington, DC 20850
202-326-2222
http://www.ftc.gov

Next, complain to your state consumer protection agency. Then, mail a copy of your complaint to the creditor who hired the collection agency. If the infractions are serious enough, the creditor may stop the collection efforts.

In the event the infractions are on-going, you can sue the collection agency (as well as the creditor that hired the agency) for up to $1,000.00 in small claims court for violating the FTC laws (note: you probably won’t win if you’re able to prove only a few minor violations). If the infractions are outrageous, you can sue the collection agency and creditor in regular civil or small claims court.

Common Collections Tactics and Rebuttals

Some debt collectors do employ collection methods involving the use of false and misleading statements. As with every other high pressure salesman, these people will make lots of “helpful” tips to help you to close the sale NOW. They will always try to have you pay up immediately. A few examples:

• Persist you FedEx your check directly to them (can you really afford to add $12 to the debt you already can’t pay?)
• Charge it on your credit card (sure, charge up the old card – isn’t this how you got into trouble to start with?)
• They will attempt to get you to pay by “telecheck”. This implies you give them your bank account number, and they subtract the amount electronically. Are you crazy? NEVER give out your checking account and check routing numbers.
• While the FDCPA permits a collector to include interest if your original agreement calls for adding interest during collection proceedings, or the addition of such interest is allowed under state law, it’s not important to spend the money or risk your bank account for any of the previously mentioned techniques. The three or four days it may take to mail a transaction with a 1st class stamp, should they do decide to come after you for interest, won’t break your budget.

What if I cannot pay?

It’s generally to your advantage to settle your debts as soon as possible, or make use of the debt validation techniques discussed here, or by paying off the money you owe. Before receiving a court judgment, a bill collector usually has only a single strategy for getting money: Demand payment by calling you and sending you threatening letters. If you refuse, the collector cannot do much else short of suing you. When the collector (or creditor) does sue and gets a judgment, however, you can anticipate more hostile collections actions:

• If you do have a job, the collector will try to garnish up to 25% of your net wages.
• The collector may also try to seize any bank or other deposit accounts you have.
• If you own real estate, the collector will likely record a lien, which will has to be paid whenever you sell or re-finance your property.

Some collection agencies will agree to negotiate with you for far less than your debt and then turn around and hire another collection agency to recover the difference. However, in numerous states this is illegal. Once a creditor deposits or cashes an entire payment check, even if she strikes out the words “payment in full,” or writes “I don’t agree” on the check, she cannot come after you for the balance. The states where this law is enforced include:

Arkansas, Colorado, Connecticut, Georgia, Kansas, Louisiana, Maine, Michigan, Nebraska, New Jersey, North Carolina, Oregon, Pennsylvania, Texas, Utah, Vermont, Virginia, Washington and Wyoming.

Some states have altered this rule. In the following states, if a creditor cashes a full payment check and clearly maintains his right to sue you by writing “under protest or without prejudice” along with his endorsement, he then may come after you for the balance. But those exact words must be used. If he writes “without recourse,” talks to you separately, informs you verbally, or writes on the check that it is partial payment, it is not enough. This applies in these states:

Alabama, Delaware, Massachusetts, Minnesota, Missouri, New Hampshire, New York, Ohio, Rhode Island, South Carolina, South Dakota, West Virginia, Wisconsin.