Friday, March 07, 2008

What Debt Collectors Can't Do, Posted by Robert Paisola

What Debt Collectors Can't Do

By Michelle Singletary
Thursday, March 6, 2008; D02

One business is going strong in this flagging economy: debt collection.

And with a growing number of collectors chasing down debtors, complaints are also rising about how debts are being collected.

The Better Business Bureau expects the number of complaints to rise once 2007 figures are calculated. The trend has been upward in the past few years. In 2006, complaints about debt collectors were up 21 percent from the previous year, according to Edward Johnson, president and chief executive of the Better Business Bureau in the District.

"With the current state of the U.S. economy, we are forecasting an all-time high in the number of complaints against the industry," Johnson said.

The Federal Trade Commission said it received 69,204 debt collection complaints in 2006, more than the agency received against any other industry.

After reviewing some recent consumer complaints, Johnson said people have been upset that collectors were contacting neighbors, friends and employers, and making disparaging remarks in an effort to shame the debtors into paying up. "Consumers should accept responsibility for their debts," Johnson said. "However, they do not have to accept abusive collection tactics. They need to know their rights."

Under the Fair Debt Collection Practices Act, debt collectors are required to treat you fairly and are prohibited from using certain methods.

A federal court recently entered a final order against a Florida debt collection agency that used misleading dunning letters and abusive telephone calls to falsely suggest that consumers would be sued, their property seized and their wages garnished if they did not pay what the company said they owed. The collectors were accused of shouting and using abusive language.

The case was brought by the FTC, which held that the company had violated the Fair Debt Collection Practices Act. The act applies to those who collect on personal, family and household debts, including car loans, mortgages, charge accounts, and money owed for medical bills.

Here are some of your rights as outlined by the Better Business Bureau:

¿ Debt collectors may not contact you at unreasonable times or places unless you agree, or at work if you tell them that your employer disapproves. That means no calls before 8 a.m. or after 9 p.m.

¿ Collectors generally cannot contact you after you write a letter to the collection agency telling it to stop. The agency may still inform you if the debt collector or creditor intends to take some specific action. And by the way, this letter does not absolve you from the debt if you actually owe it. You could still be sued by the collector or the original creditor.

¿ Collectors cannot contact your friends, relatives, employer or others, except to find out where you live and work.

¿ They can't tell the people they call or contact that you owe money. And collectors generally are prohibited from contacting such third parties more than once.

¿ They aren't allowed to harass you. This means no threats of harm to you or your reputation and no profane language. They also can't harass you by inundating you with telephone calls.

¿ They cannot make any false statements, including that you will be arrested.

¿ They can't threaten to have money deducted from your paycheck or to sue you, unless the collection agency or creditor actually intends to do so and such collection is legal.

Certainly many debt collectors abide by the law. Many adhere to a code of conduct mandated by ACA International, the Association of Credit and Collection Professionals.

"We do not believe the debt collection industry is out of control," said Rozanne Andersen, executive vice president and general counsel for ACA International.

Andersen said the industry has a great deal of communication with consumers and just a fraction of all those dealings lead to discontent.

"Our mantra is to treat consumers with integrity and respect," she said.

If you are contacted by a debt collector, you have a right to a written notice, sent within five days after you are first contacted, that lays out the amount you owe. The letter should include the name of the creditor, and what action to take if you believe you don't owe the money. If you think you have been falsely accused or don't owe the amount claimed, contact the creditor and collection agency in writing.

When debts are collected honestly and fairly, it holds down prices for all of us. But if you feel you are being harassed by a debt collector, you should contact the Better Business Bureau, which may be able to help mediate the situation. Also contact the ACA.

If you're having financial trouble, don't accept harassing behavior from a debt collector. Just because you're a debtor doesn't mean you shouldn't be treated with dignity.

If you are a victim of debt collection abuse, please send a detailed letter outlining exactly what happened, including the name of the company, the collection agancies informtion and contact info to

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