Are you being harassed by creditors and collection agencies? Are they
calling you at all hours of the day? Have they threatened to file
criminal charges against you? Do they call your friends, family,
neighbors or even your boss? Do they do this in violation of law?
YES they do.The Fair Debt Collection Practices Act
(15USC1692 et seq).
is a set of laws that protect you from the unethical or deceptive
practices that are employed by many collection agencies. For example
a collection agency CAN NOT:
1) Call before 8:00 am or after 9:00 pm, or cause your phone to constantly ring.
2) Use vulgar language or threaten physical violence.
3) Threaten to take any action it does not intend to take or is not authorized by law to take.
4) Claim to be an attorney unless they are.
5) Communicate with you by postcard or display to the public that you owe a debt, or threaten to do so.
6) Contact your friends, family, or neighbors. Except to obtain contact information about you.
8) Claim to be a government or law enforcement official unless they are and are collecting a debt in there official capacity.( example: In the state of NY The Attorney General collects debts owed to State Universities of New York)
9) Represent that non-payment of a debt will result in imprisonment unless such action is lawful and the debt collector intends to take such action.
10) Communicate the false representation or implication that a sale, referral, or other transfer of any interest in a debt shall cause the consumer to - A) loose any defense to payment of the debt; or B) become subject to any practice normally prohibited by law.
11) Use or distribute any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by a court, official, or agency of the United States or any State.
The above list is an example of how you are protected but is by no means a complete listing. There are many other ways you are protected as you will see below.
DISCLAIMER: The following information is not offered as legal advice. The author is not an attorney an can not give legal advice. It is presented for the sole purpose of educating consumers. You should read the statues mentioned in this site and make sure you understand them and consult an attorney if necessary. If you act on any of the information contained in this site you alone are responsible for your actions and you agree not to hold the author of this site liable for any and all damages either compensatory or consequential. The Author makes no warranties either expressed or implied regarding the information contained in this site including fitness for a particular purpose. You are responsible for verifying the accuracy of the information contained in this site and for properly applying the law to your situation. Furthermore, the author assumes that anyone who reads or uses the information contained in this site is not engaged in the authorized or the unauthorized practice of law, or the rendering of any professional services, or of any services of any kind.
Most people who experience difficulties with collection agencies are in debt because they lost their job, have medical problems, were recently divorced etc... Most people don't plan to go into debt! They are forced into debt by circumstances they can't control.This does not make you a bad person. Many collection agencies will make you feel like the you committed a crime against humanity because you are in debt and you can't pay your bills. Don't believe them. They will try to degrade, humiliate, guilt and frighten you into paying them more than you can afford to send. So you pay them the amount they demand ( usually by neglecting other bills ) because you feel that you have no choice. Then the process starts all over again. Is there a better way? Yes there is. Collection agencies will make you think that there agency is god almighty and you are but a mere pawn on there chess board. They will tell you that you are completely powerless to do anything about your situation. THIS IS NOT TRUE! If you understand the Fair Debt Collection Practices Act you can turn the tables on the collection agencies and make them powerless to do you harm. You can make collection agencies afraid of you for a change.
Before we go on it's important to note that the protections outlined under The Fair Debt Collection Practices Act apply only to Collection Agencies, not the collections department of the original creditor. What if you are being harassed by the collections department of your original creditor( the person or agency you owe money to)? Are you out of luck? NO!! Many states have enacted laws that govern how the original creditors must conduct themselves when collecting a debt. For example,the General Business law of the state of New York Section 600 et seq affords protection to consumers against original creditors. You should check your local laws to see if you have such protections in your state.
1) Collection agencies don't care about you, your situation or your finances. Collection agencies represent themselves and the creditor. In my opinion collection agencies represent only themselves. That attitude is usually what makes people walk away from there debts. Most people who are in temporary financial trouble want to make good on there debts until they are confronted with the unreasonable tactics used by collection agencies. The collection agent doesn't care. If you give in to his demands he receives a good commission for him self.If you don't give it to his demands it still doesn't matter because he is not out any money. The creditor is. The collection agent simply moves on to the next account.
2) Collection agencies will not negotiate with you. They are trained not to. Remember truth #1 collection agencies represent themselves. Very rarely will a collection agent accept any kind of a payment plan. Usually they want all the money in a lump sum. If pressed they may accept a plan with high monthly payments for a limited number of months. Of Course if you could afford their terms you would not have gone into default in the first place.
3) You do not have to deal with a collection agency. You can hang up the phone and refuse to talk to them. You can cease communication by sending them a letter and telling them to stop communicating with you.( this is a powerful technique)
4) If you are talking to a collection agent on the phone always have a witness on the line. Do not volunteer any information. Do not agree to anything you can't follow-through on.The witness is absolutely necessary in the event that the collection agent engages in any prohibited practices. If this happens you can sue both the collection agency and the creditor. In the end they may owe you money or the creditor may agree to drop the matter if the violations are severe enough.
5) You do not have to send a collection agency a payment via federal express or wire transfer or via any other 24 hour service. This is completely unnecessary. Just send your payment via regular first class mail with a return receipt.
6) When ever you communicate with a collection agency via writing, send a payment etc.. Send it via return receipt. Follow this rule without exception.
1) Report you to a credit bureau and ruin your credit rating. The truth of the matter is:If your account has been turned over to a collection agency the original creditor has probably noted that on your credit report. This is especially true if the original creditor is a bank or other financial institution. Additionally all of your late payments have also been noted. This isn't as serious as it sounds especially if this is the only account you are in default on. First, credit bureaus must remove any information that is even slightly inaccurate, out dated, or can't be verified. If you can't have the notation removed you can add a statement that tells your side of the story. Second, many people obtain loans and credit with derogatory information or even bankruptcies on there credit report.
2) Threaten to sue you.The truth of the matter is: If the debt owed is unsecured and for a nominal amount of money and/or you have limited assets this is pretty much an empty threat. Furthermore, a collection agency has no standing to sue you. Only the original creditor can make that decision. Some collection agencies are operated by attorneys and can represent your creditor in court but they can not make the decision to sue you.In most cases this is cost prohibitive. Attorney fees and court costs are high.
3) Threaten to garnish your wages.The truth of the matter:They have to sue you first and obtain a judgment against you. Then if you don't pay they can go to court again to garnish your wages. Threatening to do this before they obtain a judgment would be illegal. As you can see this is probably also cost prohibitive depending on your circumstances.
4) Threaten to call your boss, family, friends, neighbors etc... The truth of the matter is:If they do this or threaten to do this it's illegal. They can only contact these people to find out how to locate you. Even then they can not tell these people that you owe a debt or that they work for a collection agency. If they are threatening you with this directly they know how to contact you and there fore have no legal right to contact any one else about you, except your attorney if you have one.
5) They can not have your children taken away. If they threaten to do this call an attorney as soon as possible. This is an absurd threat and is extremely abusive and illegal.
6) Threaten to have you arrested.The truth of the mater: failure to pay a debt is a civil matter not a criminal matter. If they threaten to do this call an attorney. This is also abusive and illegal.
7) Many collection agencies will demand that you send them post dated
checks. This is a bad idea! They can cash those checks early so they
bounce then threaten you with criminal charges for passing a bad check
unless you send them the full amount owed immediately. This is illegal
under the Fair Debt Collection Practices Act but, it may not give you
a defense to criminal charges for passing a bad check. If you decide
to send a collection agent post dated checks please check with a
Well that depends on your circumstances. How much do you owe? Who do
you owe it to? Has your account been sent to a collection agency?
Do you have any assets? What are they? et...........
(Option 1) You can try to negotiate with the original creditor. See
if they will agree to remove any derogatory information on your
credit report in exchange for paying on time. If they wont do this
they may be willing to re-age your account.
(Option 2) Not For Profit Debt Counselors: This is a Billion Dollar
industry don't let theNot For Profit title mislead you!
These Counselors are paid by YOUR CREDITORS. They are
nothing more than glorified collection agencies. They take all your
credit cards and negotiate with your creditors to COLLECT
the money you owe and send it directly TO YOUR CREDITORS.
They are then PAID BY YOUR CREDITORS! Some will
even claim to guarantee credit or loans after you graduate from the
program. I have received many E-mails from people who claim that these
agencies did not live up to there promises. furthermore these programs
can hurt your credit more than not paying your creditors at all.
I can do this for you but, only if it makes sense for you to do it.
My loyalties are to you not your creditors.
(Option 3) Debt consolidation: I have one word to say about debt
consolidation-DON'T.Debt consolidation companies will
take what little money you have left, pay SOME, NOT ALL,
of your creditors. Then they will take the rest of your money for them
selves in the form of "consolidation fees" or you will pay exorbitant
interest rates. These companies do nothing to help your financial
situation. In fact they make it worse. Most debt consolidation
companies are just fronts for loan sharks. Most states have strict
regulations regarding debt consolidation, in fact debt consolidation
is prohibited in 34 states.
(Option 4) File bankruptcy. This should only be done as a last resort.
When every thing else fails. Alot of Attorneys and Bankruptcy
preparer's will make you think that this is your only salvation, but
that may not be true. You may have other options. Most people choose
this option because collection agencies leave them no other choice.
People who are willing to pay there debts are blocked by the
ridiculous demands of collection agencies. As a result more people
are filling bankruptcy each year. Don't loose hope. We will clobber
the collection agencies.
Good question. The first thing you do is e-mail me at firstname.lastname@example.org We will talk about your situation and together we will decide what your best option is. Be as specific as you can about your situation. If you wish you can e-mail your: Name, Mailing Address and Phone number along with the specifics of your situation so that I can send you some paper work you will need. You will find that my fees vary and are fair. Or you can handle the situation on your own. I have many books below that will help you. I wish you the best of luck!!
Credit Repair Kit Gurrilla Guide to Credit Repair
The No-Nonsense Credit Manual
Debt Free Your Guide to Personal Bankruptcy Without Shame
Nolo's Law Form Kit, Personal Bankruptcy