The recession has put debt collectors under added pressure, too. Some are reacting by cutting legal corners.
For the first time in your life, you’re being pursued by debt collectors. You don’t know what your rights are — or if you have any at all.
You’re not alone.
|5 WAYS TO PROTECT YOURSELF|
FROM BAD ACTS BY DEBT COLLECTORS
|1.Know your rights.|
2.Understand negotiation tactics.
3.Unsatisfied? Move up the ladder.
4.Check out credit counselors.
5.Expect consequences if you’re silent.
For more on debt collection, check out this video:
Charges of illegal tactics by debt collectors ranked second in the amount of complaints received by the Federal Trade Commission in 2008. In the first six months of 2009, consumers filed 45,050 complaints with the FTC about debt collectors. That figure is 19 percent higher than the same period in 2008.
Beyond the illegal tactics, there are also tricks of the trade that collectors will use on unwary consumers. In this recession, many consumers are new to collections and may not be aware that although they may owe, they don’t have to put up with abusive collection practices.
The Fair Debt Collection Practices Act, or FDCPA, outlines what collectors may and may not do to legally collect a debt. While most abusive tactics are addressed in the act, some collectors will push the envelope as far as they can without crossing the line. You still don’t have to take any form of abuse, even if the abuse isn’t covered by the law.
Here are five things a bad collector might do, or won’t disclose — and what you can do about them:
Tactic No. 1: A collector refuses to send you a statement or proof that you owe the money. Maybe the collector even makes threats of bodily harm or jail time. All of these actions are forbidden. A creditor attempting to collect a debt must send you written proof that you owe the debt. Also, collectors may not threaten you. Debtor’s prisons do not exist. You cannot go to jail for not paying a debt.
Just a situation happened to Aubrey Jacobsen, a consumer who lives in Sacramento, Calif. “My purse was stolen, and I wasn’t even sure the charges a bank was calling about were mine,” says Jacobsen, who says she didn’t know she had the right to request proof that the charges were hers. “I just paid it off so it wouldn’t be reported as delinquent.” Jacobsen had the right to request proof that the debt was legitimate. (Download a sample proof of debt letter) Giving in didn’t work, says Jacobsen. “The bank is still reporting it 30 days past due, and it’s been about four months since it was paid in full.”
Solution: Knowing your rights gives you power. Collectors will not advise you of your rights, says Alexis A. Moore, founder and president of Survivors in Action, a victim’s advocacy group based in California. “Obtain a copy of the Fair Debt Collection Practices Act,” says Moore. In addition, many states have their own laws in place. If a collector is breaking these laws, you can file a complaint with your state attorney general’s office or the Federal Trade Commission.
Collectors are trained to go for the total amount due, but you’ve told them time and time again that you can’t pay the total amount due. You’ve made an offer and the collector refuses to back down. Refusing to negotiate isn’t illegal but may violate the company’s policy for which the collector is working. Collectors are often paid on commission, which is their motivation for collecting as much as possible. Some collectors will refuse to negotiate for anything less than the total due until the very last minute — sometimes hours before an account is set roll into yet another month past due, which can add on another set of late fees.Tactic No 2:
Solution: “Try to stay off of the defensive,” says Robert Markoff, president of the National Association of Retail Collection Attorneys. “Explain what you can pay. Most collectors know that the economic situation has made the payment plans of old not applicable anymore. Try to work out something that is reasonable to both you and the creditor.” What do you do if the collector will not listen, or the tone of the call gets abusive? “Say goodbye and hang up,” says Markoff. “Maybe it’s best not dealing with it that day if the call goes bad.”
Tactic No. 3: Instead of hanging up, you decide you’ve had it with this particular collector and you still want to try to work something out. You ask to speak with a supervisor. You are repeatedly told that a supervisor is not available. This is also not illegal, but it may well violate the policy of the company.
Solution: Don’t give up, says Ryan Neuweg, founder and CEO of CollectionTree.com, a company based in Kansas City, Mo., that pairs businesses with reliable collection agencies. Ask the collector for the full name and location of his company, as well as the supervisor’s name. “If you’re still dealing with the company to which the debt is owed, and you can’t get a supervisor on the line, hang up and call the customer service number and ask for a supervisor there,” says Neuweg. If the debt has been transferred to a collection agency, you still have a chance of reaching a supervisor by calling the number of the original creditor and asking to speak to a supervisor there. They can provide you the name and number of a supervisor at the agency to which the debt was referred.
Tactic No. 4: A collector has referred you to a debt counseling agency. Sometimes, rogue collectors might be taking kickbacks from fraudulent agencies for the referrals they send. Some collectors will not even talk to you about legitimate nonprofit debt counseling groups such as the National Foundation for Credit Counseling (NFCC) and the Association of Independent Consumer Credit Counseling Agencies (AICCCA). Enrolling in the program might cause them to lose commission on your payments.
Solution: “Nonprofit debt counselors will not charge exorbitant monthly fees to put you in a debt management program,” says Markoff. “If you do go with such a company, make sure to find out the implications to your credit.”
One way to ensure you’re dealing with a legitimate nonprofit agency is to make sure it is a member of the AICCCA or the NFCC. (Tip: Those that meet the NFCC’s standards are known as Consumer Credit Counseling Services (CCCS) agencies).
Tactic No. 5: You haven’t been answering the phone or responding to collection letters. They are now calling your neighbors and your employer and leaving messages. Calling to verify a person’s location is not illegal, but calling a neighbor or employer to harass or disclose personal information about your debt is.
Solution: “It’s not proper for a collector to call a neighbor unless it is only to verify a debtor’s location,” says Markoff. “If a collector calls a third party and reveals any of your personal information, it is an illegal practice.” In this instance, you can file a complaint with your state’s attorney general’s office or the Federal Trade Commission.
The one last piece of advice to remember is that it is beneficial to both parties to have an open line of communication, either on the phone or in writing. If you can do nothing about the debt, it is your right to cease all communications. Markoff adds that while you have that right, you should also be aware of the consequences. “If we’re told to cease communications, we will, but I can guarantee they will probably be sued,” says Markoff. “Ceasing communication altogether draws its own consequence, so be careful how you use that option.”
The ultimate solution to dealing with bad debt collectors is to only communicate with them in writing. “I just don’t answer my phone, I communicate with them in writing and that works too,” says Jacobsen.
Kerri Fivecoat-Campbell has a degree in business and spent nearly two decades working in credit and collections for some of the largest mortgage, retail, and bankcard companies in the U.S. as an account manager and service quality specialist.