Can you remember the first phone call you received from a debt collector? I can, and it was no fun. It’s difficult to owe money and have little or no funds available to take care of the bill. The collector I dealt with was authoritative, unyielding, and simply put, obnoxious. No matter what amount I offered, although it was the best I could do, it didn’t seem to satisfy them. Unfortunately, I had to deal with a lot of these individuals throughout my 20s, but I learned a few things along the way. First, not all debt collectors are created equal. Some are actually very helpful. However, there are some debt collectors who are ruthless, and you have to know how to protect yourself.
Let’s face it, being a debt collector isn’t easy – especially in this economy. Some debt collectors make 300 to 500 phone calls a day to people who have little or no ability to pay. I don’t know about you, but if I had to make those phone calls I wouldn’t want to go to work. Most collectors empathize with people, and to be honest, they’re just doing their job. Other collectors take things to a whole new level. In 2010 the Federal Trade Commission received more than 140,000 complaints about debt collectors. The most common complaints involved calling a debtor repeatedly, misrepresenting the amount or status of a debt, and failing to notify consumers of their rights in writing. Sadly, the complaints lodged in 2010 painted a grimmer picture. According to the report, 49% of complaints alleged harassment, 16% reported abusive language, and 4% even claimed that the collector had threatened physical violence if they didn’t pay a bill.
Obviously, this behavior is unacceptable, but as I mentioned, this only represents a small number of debt collectors. If you’re unfortunate enough to get a call from a debt collector, I hope you’ll get someone who’s willing to work with you. If you don’t, let’s review the rights you have. According to the Fair Debt Collections Practices Act, bill collectors are not allowed to harass debtors by making repeated phone calls, use obscene language, or threaten you with arrest or violence. Furthermore, there are not allowed to contact you at inconvenient times. Typically, debt collectors are allowed to contact debtors between 8 AM and 9 PM, unless you have agreed to accept calls at a more convenient time, for example, if you work nights and don’t mind a call after 9 o’clock. You can direct the bill collector to stop calling you by sending them a cease-and-desist letter, but that won’t erase your debt. After receiving your letter, the bill collector is allowed to contact you to confirm your request and tell you the plan they intend to follow to recover the money you owe. This could include legal action, so be prepared.
When you begin your communication with a bill collector, you probably want to do a few things. First, get the debt collector’s name so you can research their agency. The Better Business Bureau reviews most collection agencies, and you can access this information by visiting www.bbb.org. It’s also important to verify the legitimacy of the debt. Let’s be honest, mistakes happen, and you don’t want to pay for a debt that isn’t yours. You have the right to ask for verification. This should include the name of the original creditor, the original account number, and the amount of debt in dispute. The bill collector should send those details to you within 30 days, and shouldn’t contact you until you’ve had a chance to review the information. You should use that time to review your budget and determine how much you can afford to send every month. Remember though, the collector is paid on commission, so they’re going to try to get you to pay more than you can afford. You have to negotiate, in every sense of the word. And, unless you’re willing to deal with the credit damaging consequences, you should avoid the collector’s offer to settle the debt for less than you owe. That mark will be visible on your credit report for prospective lenders to see for the next seven years, and there may be tax implications, as well.
If you find that your debt collector has violated your rights, or that you’re dealing with a scam artist, contact the Federal Trade Commission at FTC.gov to lodge a complaint. Until next time, when I hope to have better news, I’m Thomas Fox for Cambridge Credit Counseling.