How to Win the Debt Collection Game with Dignity
When debt collectors call, hang up
My father was recently disturbed by some calls he was getting regarding debt collection. Why are they calling me, he wondered?
At first, he was worried because he was unsure if he had forgotten to pay a bill or had co-signed on a loan for a sibling. I told him that debt collectors can’t call you for something you don’t owe. If there was something due, they would have to send you something in writing. It was probably a scam. He ignored the calls and they stopped.
Debt harassment is a perennial problem, yet most people get intimidated when they get these calls, particularly this time of year. You have many rights, but most people don’t understand what they can do to protect themselves.
The Fair Debt Collection Practices Act is actually one of the better consumer protection laws on the books. Policed by the U.S. Federal Trade Commission (FTC), it has a number of safeguards that are designed to prevent harassment.
The FTC logged almost 120,000 debt collector complaints in 2009, which was up slightly from the previous year. Most of the inquiries involved in-house or third-party collectors, who make money on getting consumers to pony up.
You don’t have to endure abuse from collectors. Here are some of the major ways that they try to hound you and what you can do:
Nearly half of the complaints filed with the FTC involved repeated calling at odd times. Some collectors even used threats of violence. Under the debt collection act, they are not allowed to call you at inconvenient times, use obscene language or threaten you in any way. If you are being threatened, call your state attorney general’s office.
Collecting a debt that is not due.
Many collectors have the wrong information or want a payment that is overbilled. You have a right to review and challenge all claims against you, but get the written documents. Don’t do anything over the phone.
Calling your workplace.
They can’t call you at work. Again, tell them to submit any claims by mail.
Disclosing debts to third parties.
The only thing collectors are allowed to do is to use other people to locate you. They can’t discuss your debts with neighbors or family members.
Failure to send written notices.
As I mentioned earlier, they have to send you exactly what the claim is, the amount owed, to whom it is due and whether it’s been verified. Of course, you can dispute any of this information. You need the paperwork to deny their claims.
Failure to stop calling you.
Once you submit a dispute in writing, they are not supposed to call you anymore. You can also request that they “cease all communication” or refuse to pay the debt, but this won’t stop creditors from taking you to court. If you can’t pay the debt, it’s best to talk with them directly to work out a repayment plan. Bankruptcy is another option.
Still being hounded? You can cite them the law or complain to the FTC. A good guide to battling unjust debt collectors is Fred Williams’s “Fight Back Against Unfair Debt Collection Practices” (FT Press, $21.99).
Whatever you do, don’t sign up for a debt reduction or repair service. These firms will charge you money to do something you can do yourself. You can usually negotiate with creditors and don’t need a third party.
Even if you are just now going through a stack of December credit card bills as I am (yikes), what should you be looking for?
Check for unwarranted fees that are tacked on or changes in your finance rate. Were you over the limit on your charges for the month? Did the bank wrongly assess a late fee?
Keep in mind you can dispute all fees and ask that they be removed. If you don’t get satisfaction, take your business elsewhere — after you pay your bill.