Every day, thousands of Americans get calls from debt collectors.
If you’re in the middle of settlement, debt consolidation, or even in the early stages of seeking debt relief, you don’t deserve unwanted and harassing calls; and you don’t have to let them disrupt your life.
Today, we’ll discuss facts and resources to help you use existing consumer credit protection laws to your advantage and cut through the climate of fear that a small minority of abusive debt collectors create for hard-working people.
The Basic Facts on Debt Collection
Many major banks and other firms have their own debt collection wings which may be empowered to help you work with your creditor and develop payment plans and other strategies for getting your accounts current. However, depending on factors like your creditors’ policies and the age of the debt in question, many businesses “outsource” debt collection to a third-party agency.
“Debt buyers” may even purchase your debt from a legitimate creditor at a fraction of the debt’s value, in the hopes of profiting by collecting it. These agencies are less motivated to adhere to ethical standards in dealing with you; you are not their customer or client. Confusion or misrepresentation between creditors, third-party agencies, and payees can result n “zombie debts” that payees may be coerced to pay repeatedly. More on that later.
What Are Your Rights?
Under the Fair Debt Collection Practices Act, you can file a complaint against a collector for several violations. Here are some of the most common:
1) Repeated or continuous phone calls;
2) Use of abusive or vulgar language or threats;
3) Calling before 8 AM or after 9 PM, regardless of their own timezone;
4) Informing a third party about your debt;
5) Calling you at work after one warning against this behavior;
Furthermore, you have the right to request, in writing, verification of the amount that you owe and the name of the creditor. It’s advisable to send these requests via registered mail or care of a law firm; debt collection cannot continue after receipt of your verification request until after the information is provided in full. Making indisputable, written requests is a first step toward preventing “zombie debt.” You also have the right to request all communication in writing rather than by phone; but as individual collectors can often claim they were “not informed”, this should also be certified in writing.
A final option is a “cease and desist” letter, which requires the debt collector to cease communications after a final written notice that informs you of actions the collector may or will take. Written correspondence is the most direct way to deal with collectors; but if you are not ready to move to “cease and desist” or still need to gather more information by telephone, remember that in many jurisdictions you are permitted to record phone conversations as long as you inform your calling partner. Debt collectors, like many other businesses, often record calls for analysis; there is no reason you cannot gather information this way as well. If debt collectors refuse to speak to you “on the record” (and you should always be gathering records that will protect you against unlawful abuse!) they cannot continue harassing you, either. Be sure to get advice on the relevant laws, and be clear and upfront about your intentions.
How Widespread is Debt Collection Abuse?
Figures are hard to pin down, but it’s widespread enough to provoke revolt against unethical debt collectors. Over 8,000 violations of the Fair Debt Collection Practices Act were alleged in federal lawsuits over the course of 2009, and according to a recent Supreme Court decision, ignorance of the law is no excuse: collectors cannot be shielded from lawsuits by claiming they erred in interpreting the law. Plus, if a debtor wins a lawsuit under FDCPA, the debt collector may be obligated to pay court costs. More information and resources on the “debtor revolt” movement can be found in this recent CNBC article: “Learning How to Fight Back Against Debt Collectors.”
In Conclusion …
No one claims that consumers should be exempt from legitimate debt. But debt collection is now a profit industry, with more involvement by “middlemen” than ever before, and more complex relationships between the parties affected. Don’t get taken advantage of: protect yourself with a vigorous understanding of your rights, and the services of a financial adviser and legal counsel where necessary.