Debt Collectors: Going Beyond Letters and Phone Calls
As a mortgage broker, I become very familiar with the financial pictures of my clients. Most expect me to give them feedback on their credit history and often ask for direction if they have a credit issue. More and more I’m hearing stories of extreme tactics some collection companies are taking in pursuing unpaid debt.
Phone calls, threatening letters and the like have long been the bane of consumers pursued by collection agencies. Since the newest breed of debt collectors purchase other companies’ debt for pennies on the dollar, they turn the collection of the unpaid debt into an almost “abusive process”. Caroline E. Mayer, a staff writer for the Washington Post recently delved into the issues with these companies in two articles published on July 28, 2005.
Harassment in the form of phone calls at all hours, threats of seizure, lawsuit, jail and even voilance are the new tactics taken by these firms which have created an entire industry of “debt buyers”. They only make money if they can make the debtor pay so they will go to extreme lengths to do so, often making as much as five times what they paid for the original debt.
Cited in Ms. Mayer’s Post article, is the Federal Trade Commissions’s suit against one such company, CAMCO based in Rockford, IL. Complaints from over 2000 consumers were made against CAMCO, according to the FTC. The FTC’s suit was primarily driven by issues with CAMCO’s attempts to collect what is referred to as “zombie debt” or debt so old that the statue of limitations on collection has expired. CAMCO was even alleged to have found people with similar names living in the general geographic area of the actual the debtor and trying to collect the debt from them.
Consumers have rights and should understand there are rules of debt collection. Most individuals harassed by collection companies are unaware of these rights.
The following guidelines on consumer rights, outlined in Ms. Mayer’s Washington Post article, are from regulators, plaintiff attorneys and consumer advocates:
Debt collectors can’t call you at either unreasonable times or places. Example: calls prior to 8 am or at your job are against the rules.
Misleading implications of crime, arrest, seizure, violence or harm are not permissible. Nor may collection companies present themselves as attorneys. Inappropriate or obscene language may not be used.
Collection companies cannot contact members of your family, friends or neighbors and tell them you have an outstanding debt. If they do call on someone you know, they may do so only once and only to ask how to reach you.
If they contact you initially by phone, they must provide written notice within 5 of the name of the original creditor and amount owed. You have 30 days to respond in writing if you don’t owe the debt and the collector cannot contact you again without sending proof of the debt. At that time they can also notify you of any specific court action or arbitration proceeding.
If you receive a legal notice from a collector, you should respond as failure to do so could result in a default judgement. If a judgement is issued, your wages can be garnished. If a consumer challenges a claim’s validity, cases are frequently dismissed.
When dealing with valid claims, consumers should be careful of providing specific information to the collector. Don’t provide information such as personal account numbers.
The statue of limitations on debt collection can be different from state to state. Know the limits of your state as collectors can pursue you if the time limit is expired. Even if you owe the old debt, be careful of paying even a portion as, in doing so, you may revive the original claim.
For additional guidelines, information or to file a complaint against a collector, contact the Federal Trade Commission at 877-382-4357 or click on the following link: www.ftc.gov
To read Ms. Mayer’s complete articles click on the following links: As Debt Collectors Multiply, So Do Consumer Complaints and To Protect Their Rights, Consumers Should Know the Rules of Debt Collection