Don't stand for debt collector's abuse

Best approach: Quickly set up a payment plan

Your Money

April 29, 2008|By Pamela Yip | Pamela Yip,The Dallas Morning News

DALLAS - Many industries are hurting these days, but not the debt-collection business.

A look at the numbers tells why:

*Consumer bankruptcies were 38 percent higher in 2007 than in 2006, according to the American Bankruptcy Institute and the Administrative Office of the U.S. Courts.

*Consumer credit delinquencies in the fourth quarter of 2007 reached their highest levels since 1992, according to the American Bankers Association.

Many of those late on their bills have gotten calls from debt collectors and have had less-than-pleasant experiences.

Consumer complaints to the Federal Trade Commission about debt collectors have consistently ranked No. 1 among all industries for several years in a row.

The FTC enforces the Fair Debt Collection Practices Act, which prohibits deceptive, unfair and abusive practices by third-party collectors.

The law "permits reasonable collection efforts that promote repayment of legitimate debts."

The act doesn't apply to a company's in-house debt collectors, but the FTC can go after in-house collectors by wielding a provision of the Federal Trade Commission Act that prohibits "unfair and deceptive acts in commerce."

"It's a great catchall," said Thomas E. Kane, senior attorney in the FTC's Division of Financial Practices.

No one likes to be dogged by a bill collector, and there are steps you should take to ensure that you resolve your situation quickly and aren't bullied by unscrupulous collecting firms:

*Don't ignore calls or written communications from collectors.

"As long as the collector is not being abusive, it's a good idea to communicate with the collector, because if you don't owe the money, you'll be able to convince the collector to go away," Kane said.

"If you do owe the money, you may be able to work out some partial payment or long-term payment, which you may not be able to do if you don't maintain some line of communication with the collector."

*Make the collector prove that you owe the debt.

Within five days after you're first contacted, the collector must send you a written notice telling you the amount you owe, the creditor to whom you owe the money and what action to take if you don't think you owe the money.

*If a collector calls about a bill you have paid, show proof that you have met that obligation.

Respond in writing and provide documents showing the account has been paid or settled in full.

Keep documents that prove you have paid a debt for as long as you think a debt collector can come after you.

A company that has purchased your debt might call and say that its records show you have paid only part of the bill. If you don't have the records, you can dispute the debt or try to get proof from the original creditor.

*Don't tolerate abuse from debt collectors.

Collectors are barred from threatening violence, from publishing a list of consumers who refuse to pay their debts (except to credit bureaus), from using obscene or profane language, and from repeatedly using the telephone to annoy you.

Collectors may contact you in person and by mail, telephone, telegram or fax. However, the law says they may not contact you at "inconvenient times or places," such as before 8 a.m. or after 9 p.m., unless you agree.

A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.

Collectors are prohibited from revealing the existence of your debt to any other party unless you have given consent or a court has given permission.

A collector may contact a third party to find out your whereabouts. It can find out where you live, your home phone number and where you work. It is not entitled to your work number, although it can easily obtain it once it knows where you work.

*Take action if collection calls go over the top.

You have the right to send a debt collector written notice to cease communications in connection with the debt, or you may send written notice that you refuse to pay it.

You must send the notice directly to the debt collector, not to the creditor.

Once the collection firm receives your notice, it must stop contacting you, other than to tell you that the collector or creditor may invoke further specified legal steps to collect the debt. Collectors aren't obligated to comply with an oral cease-communication request.

The best way to deal with debt collectors is to communicate with them quickly and to try to work out a payment plan. Don't let them abuse or disrespect you.

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