Aggressive Debt Collectors: How to Respond
How to Deal with Aggressive Debt Collectors
With the economy in a tailspin, individuals and small businesses alike are falling prey to aggressive debt collectors. Complaints against debt collectors has risen. The Better Business Bureau and The Fair Trade Commission have recorded massive increases in the volume of complaints they receive from unhappy debtors. According to the Better Business Bureau, complaints rose 20% in 2006 and 26% in 2007. As you have probably already guessed, the 2008 figures could be off the charts.
There is always some industry or business that cashes in when others are having a crisis. Debt collection agencies are one such business. There is now an unprecedented number of debt collection firms operating in the US – roughly 6,500 companies. Debt collection is big business and it’s never bigger when a recession strikes. More....
Who Hires Debt Collection Companies
Debt collection companies buy up debt from creditors – such as banks, credit unions, credit card companies and stores – for a fraction of the amount on the basis they will retrieve whatever they can. Creditors usually sell the debt at a knockdown price because chasing debtors is a drain on resources and money from a debt collection agency is better than nothing from a debtor.
While they have their critics, debt collectors were credited (excuse the pun) with returning almost $4bn into the economy in 2005.
Debt Collection Regulation
With upwards of 6,000 debt collection companies operating within the United States, regulation is tough task, just as the Federal Trade Commission (FTC), whose job it is to ensure agents adheres to strict guidelines. Naturally, this isn’t always possible and some unscrupulous debt collection companies have been using threatening behaviour to intimidate debtors.
The most common complaint made by people pursued by collectors is telephone harassment. It is not unusual for debt collectors to call six or more times a day from 6am to midnight – which is a flagrant breach of the FTC guidelines.
Some immigrant complainants have claimed they received threats of deportation if the debt was not paid. Others have simply been threatened with arrest.
Debt Collector Rules
Collection agencies must abide by the following rules:
- They cannot yse obscene language.
- Debt collectors cannot call before 8 a.m. or after 9 p.m.
- Within the first five days of receiving your account, collection agencies are required by law to contact you and “verify the debt”—provide documents that prove the debt belongs to you.
- If a customer requests verification, a debt collector cannot continue to try to collect until verification is provided.
- Collectors are only allowed to contact a consumer at home between the hours of 8 a.m. and 9 p.m.
- A collector cannot contact you at work, but they can legally contact your current employer to verify that you work for the company. They cannot ask for your work phone number, supervisor’s name, dates of employment or other information.
- If, after a prescribed amount of time, a collector is unable to contact you, they can conduct Internet searches. They can then contact friends, relatives and neighbors to try and reach you.
- The collector is not allowed to disclose anything about the debt to your associates, family or friends unless you have authorized it in writing.
How to Complain About a Debt Collection Agency
In 2007, the Federal Trade Commission received around 71,000 complaints about debt collector harassment – twice the 2003 figure. It didn’t end there – a little over 14,000 people complained to the Better Business Bureau (BBB) while thousands more filed protests with state authorities. If those figures are high then things are only going to get worse, something the BBB is already bracing itself for.
David Polino, a Better Business Bureau expert on collection agencies and president of the BBB chapter in upstate New York, warned. “With the recession, with the horrible credit problems, this is going to be off the charts.”
According to the Federal Reserve, US consumers now owe around $969 billion in revolving debt – the credit card kind – compared with $770 billion in 2003.
If you feel you’re being unfairly treated, incorrectly linked to a debt or harassed by a collector, file a complaint with Better Business Bureau or The Fair Trade Commission.
Fair Debt Collection Practices Act
Knowledge is power, so you must know your rights when dealing with debt collectors. The FDCPA applies to agencies that collect debts for others parties, ie creditors. You can read the Act in its entirety here.
The FDCPA prohibits harassment and misrepresentation in cases of collections on the following types of debt:
- Personal – automobile financing, basic loan, charge cards
- Family – medical care
- Household – mortgage
Some of the features of the FDCPA cover limitations on phone contact and rules about written correspondence. See Debt Collector Rules for more information on what debt collectors can and cannot do.
The FDCPA also states debt collection agencies must provide written notice within five days of contacting you stating the amount you owe, whom you owe, and what action to take if you believe you do not owe the money.
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