Law restrains debt collector at your heels


Dollars & Sense

January 27, 2002|By AILEEN AMBROSE

THE ECONOMY is in a recession, unemployment is up and more consumers are behind on their bills.

Being forced to miss a mortgage payment - or two or three - is traumatic enough. Getting harassed by a collection agency adds even greater pressure, and it's against the law.

Many consumers are unaware of their rights when dealing with a debt collector. But knowing those rights can help them stop abusive collection tactics.

The Fair Debt Collection Practices Act, enacted in 1977, protects consumers against abuse and deception by third-party debt collectors. The federal law doesn't apply to creditors collecting their own debts.

Under the law, debt collectors:

Can contact you only between 8 a.m. and 9 p.m., unless you tell them to call at another time.

Can't harass or threaten you, your family or employer.

Can't lie, such as falsely saying you have committed a crime, and can't threaten action they don't intend to take.

Can't contact you at work if they know your employer doesn't approve.

Can't contact your friends, employer, co-workers and neighbors to reveal your debt. A collector can contact others, though, to obtain your home address, home telephone number and your place of employment.

Must send you a written notice within five days of first contacting you that discloses the amount owed, the creditor's name and how to dispute the debt. If you dispute the debt in writing within 30 days of getting the notice, the collector must stop trying to collect from you until providing proof of the debt.

Must stop contacting you if you tell them in writing you don't want to be contacted. The collector can contact you once more to tell you what action will be taken, such as it will go to court to seek permission to garnish your wages. Requesting a collector to stop contacting you does not erase debt owed, however, and the collector or creditor may still sue to collect.

Maryland law also protects consumers against abuses from debt collection agencies and creditors.

Among the state's protections, creditors and collection agencies can't threaten violence or criminal prosecution if the debtor hasn't committed a crime. They can't reveal or threaten to disclose knowingly false information that could injure your creditworthiness. And they can't use a communication that gives the appearance of being authorized by the government or a lawyer when it's not.

After identity theft, the most gripes the FTC receives are about third-party debt collectors. Though the numbers have yet to be tallied, the agency estimates that last year's complaints against collectors will top 15,000, up from nearly 14,000 the year before.

"We believe that the complaints the commission receives are just the tip of the iceberg," said Thomas Kane, an FTC attorney.

"We believe some consumers choose not to complain because they are embarrassed and that they are in default on payments, which, of course, is no reason not to let us know if they are being mistreated by debt collectors," he said.

Among the common complaints is that a debt collector has harassed the consumer or revealed a debt to an employer, relative or neighbor in perhaps an attempt to embarrass the debtor into paying, Kane said.

The federal law allows consumers to file a lawsuit against a debt collector for violating their rights. Consumers can collect up to $1,000 in damages for the violation, plus legal fees and other costs, such as lost wages or medical care, that might have resulted from the trauma of dealing with the collector, Kane said.

To find out if a collector's actions are illegal or to file a complaint with the FTC, call 1-877-FTC-HELP. More information on consumers' rights is available at

Marylanders also can contact the Maryland Department of Labor, Licensing and Regulation at 410-230-6079 to investigate and mediate complaints against collection agencies operating in the state. To file complaints against creditors, contact the Maryland Consumer Protection Division at 410-528-8662.

If you have financial troubles, you're better off letting the creditor know right away so you can work out a repayment schedule before the unpaid bill is sent to a collection agency, said Nina Heck, a staff supervisor with Consumer Credit Counseling Service of Maryland and Delaware. Too often, people ignore the problem and quit answering the phone when they think creditors are calling, she said.

"As a rule, the account has to be 90 to 120 days delinquent, then they start to see the collection agencies pop up around them," Heck said. Most collection agencies will negotiate a repayment plan, but some will demand immediate full payment, she said.

Don't make promises to a debt collector you can't keep, such as saying you'll send in a payment you can't make, Heck said. "State what you can do and not do," she said. "If they are persistent, it's better to hang up than become intimidated and then just say anything."

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