Dealing with Pesky Collection Agencies
Debt collectors want you to think that they can harass you whenever they want, and often in whatever way they want. Some of them will even outright lie to you, or try to scare you, in order to get you to pay off the debt or make a payment. There is good news for you – you no longer need to put up with it. Here is what you can do about those pesky collection agencies.
Collection Agencies Fall Into Two Categories
You will likely get a call from the first type of collection agency, after your payments start running late. This is the collection department of the company you owe the money to, and you may get calls from them up to about 180 days. They will often try to work with you as long as you are cooperative. It is possible with some companies to be able to get lower payments (at least temporarily) and possibly even get lower interest rates.
At some point between 90 and 180 days, the company may turn your debt over to a collection agency of the second type. This company will pay the original company a few cents on the dollar for your bill, and then they will proceed to try and get the money from you.
When your bill is given to a collection agency, a mark is made on your credit report. When that happens, your credit score begins a downward trend – at least until you get caught up in the payments, pay the entire debt or are able to have it removed.
The Good News About Collection Agencies
A few bill collectors like to be able to give you the impression that they can basically treat you the way they want – which is oftentimes like dirt. This can leave you afraid to do anything but what they tell you, but the truth is that the government has put them on a leash, when it created the Fair Debt Collection Practices Act (FDCPA).
This Act was created as a reaction against the many abuses that some bill collectors were using at the time. One large collection agency, the Expert Global Solutions, USNews reports, was fined $3.2 million because of their harassment.
The Type of Debts Covered
The FDCPA does not cover every type of debt you may have. It will cover most personal debts, such as personal loans, car loans, medical bills, personal credit card accounts, and your mortgage. It will not cover you, the FTC says, for any debts you accumulated to run your business.
Eight Limitations of Debt Collecting Agencies
The FDCPA sets forth some specific things that they can and cannot do. An important thing to know, though, is that these laws only apply to third party debt collectors, and not to the original creditors. Some of the limitations include:
- A validation of the debt. Credit agencies must be willing to verify that you indeed have an actual debt and they must provide written information about it when asked for it. This includes the company that you owe money to and how much is still owed.
- They cannot threaten you. A collection agency is not allowed to threaten or harass you. They may try to do this by threatening legal action, have you arrested, or just harass you with constant phone calls. If they do, you can report them to the Federal Trade Commission.
- Give you the right to dispute the debt. Within 5 days of their initial contact with you, the collection agency must give you notice that you can dispute the debt. Once this notice is received, the 30-day period begins in which you can ask for verification of the debt.
- Have Limited Hours of the Day to Call. A debt collector can only call you between the hours of 8 A.M. and 9 P.M. at your location. They also cannot call you while at work if they know your boss does not permit such calls. Using profane or abusive language is also not permitted.
- Cannot threaten legal action without actual intent. It is illegal for them to threaten you with a legal action, such as taking possession of property, if they do not actually intend to do it.
- Lawsuits must be local. Although a debt collector can threaten to file a lawsuit, remember that a lawsuit against you can only be made in one of two places: in the place where you live, or in the place where you signed the agreement with the creditor.
- Cannot talk to your family or friends about your debt. One practice that was becoming more common was that collection agencies would contact friends or family members and then put pressure on them to pressure you to pay the debt. This cannot be done any longer. In fact, they can’t even tell others who answer the phone that you owe money.
- Must stop calls after being told to do so. Collection agencies are notorious for persistently making calls. The law now states that they must stop after you tell them to, but you must tell them in writing. This could be good or bad. After they receive the letter, they can only call to tell you that they are either cancelling the debt, or to inform you that a lawsuit has been filed.
Your Credit Score and Collection Agencies
In general, debt collectors cannot hurt your credit score as long as you are making payments regularly. If you make late payments, or miss several of them, then they will make a note on your credit report.
Collection agencies often swap bills with other agencies. This can hurt your credit score even more because each new company may then make a bad reference on your credit report if you continue to be behind in payments. Once this happens, it is doubtful that you will be getting any new credit for some time.
Garnishing Your Paycheck
One of the threats that bill collectors may use is where they threaten to garnish your paycheck. The truth is, according to ConsumerFinance.gov, that some states do allow garnishment of your wages, but there are some restrictions. Other states will not permit it. The amount of money eligible for garnishment will vary by state, but enough money will be left so that you have money to live on.
Also, if certain types of funds get deposited into your bank account, such as Federal funds, they may not be taken as garnishment. There are some circumstances, though, where Federal funds can be garnished, such as in the event you owe child support, have unpaid taxes, alimony, or student loans. The garnishment of wages can only happen after a court order is given to do so.
Some Things to Not Do When Collection Agencies Are Calling
If you are not sure you really owe the money to the company calling you, you do not want to admit that you owe anything. Do not agree to make any payments on the debt, either. Instead, be sure to get proof you owe the money before doing anything else.
Do not provide personal information. This includes information about your bank accounts, your job, or about any property or assets you own.
Filing a Complaint
The online legal company, Findlaw, provides some steps you can take if you are a victim of harassment from a collection agency. You should record the contact information on a log. Include a list of dates, time of calls, names of witnesses, and keep copies of all written communications. If legal in your state, you may also want to record the conversations.
Once you have sufficient evidence, file your complaint with the Federal Trade Commission. Send your letter to:
Federal Trade Commission
6th and Pennsylvania Ave. NW
Washington, DC 20580
You may also go to their website at: http://www.ftc.gov/ftc/complaint.htm.
The Federal Trade Commission also offers customizable templates so that you can edit them and send them to debt collectors to stop all communication. You need to realize that it will not cancel any legitimate debt. The goal of the letter is simply to stop the harassment.
Taking a Collection Agency to Court
The legal agency Findlaw reports that if you are being harassed by a debt collection agency, that you do have the right to sue them for harassment. There are, however, two considerations that you need to be aware of before you take this step.
- You will need to have good evidence of the harassment.
- Realize that if you lose your case, you may be required to pay the court costs for the collection agency.
Once the debt collection agency becomes aware that you have hired a lawyer about the case, they are not allowed to contact you directly. All of the company’s communication from that point must be directed to the lawyer. The exception is if the lawyer does not respond within a reasonable period of time.
You do not need to let debt collectors harass you anymore. Stay within the law and follow these steps to put an end to it. If you are sued by the collection agency, be sure to respond by the court date, or you are apt to lose your rights. Be aware that some states have variations from the laws in the FDCPA, and you will need to know what they are for best results.