Are you dealing with a collection agency?

Most consumers when dealing with a collection agency think they can explain their dire circumstances and the collection agency will understand. Instead the consumer is belittled and humiliated. What happens next is the consumer tries to dodge the calls; avoiding the situation all together, in hopes it will just “go away”. Unfortunately life is not that simple. It’s best to learn how to deal with your creditors. Through education, you can arm yourself with the laws that were enacted to protect you.

Collection agencies are not allowed to:
When a collector breaks the law
What techniques debt collectors employ
What if I can't pay?
Debt Collection Law Firms/Attorneys
What tactics you can expect from an attorney collection firm

Collection agencies are not allowed to:

Call your office (especially if you are not allowed to receive calls at work);
Call your home before 8 a.m. or after 9 p.m.;
Address you in an abusive manner;
Call family or friends in an attempt to collect your debt (or relay you owe money);
Harass you (demanding you pay now or repeated calls);
Make false or misleading statements (such as taking you to court if they do not intend too); or
Add unauthorized charges – (usury law).

If you feel your rights have been violated you can take action. Start by checking out the Bud Hibbs website. It is an excellent resource. Bud Hibbs has gathered data such as CEO contact information, address, telephone, and fax numbers. For more information on agencies to avoid visit:

www.budhibbs.com/coll_to_avoid_list.htm

Information regarding the worst agencies visit:

www.budhibbs.com/am_worst_collection.htm

It is best to communicate with collection agencies in writing to avoid misconstrued information. You can write to any collection agency and request they no longer harass you. Make sure you send the letters certified return receipt mail. This may come in handy later should you have to file a lawsuit for violation of the FDCPA.

If the harassment continues, report it to the Better Business Bureau, the Federal Trade Commission or your state Attorney General office (http://www.naag.org). The federal Fair Debt Collection Practices Act also states that you can demand that the collection agency stop contacting you, this is called a Cease and Desist Letter (available free in our online store). A collector can then only contact you to tell you that collection efforts have ended or that the creditor or collection agency will sue you. However, a Cease and Desist Letter must be requested in writing.

Please note: The FDCPA applies only to bill collectors who work for collection agencies, not the original creditors. Therefore if you are dealing with the collection department within your credit card company the FDCPA does not apply.

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When a collector breaks the law!

The best way to prove that a bill collector has violates the FDCPA and your right’s is by attempting to record the illegal tactics on tape. You can record a call without the collector’s knowledge in all states CA, CT, DE, FL, IL, MD, MA, MI, MT, NH, PA, and WA. If you live in a state that will not allow you to record the call, use our free creditor log (online store) to keep a written form of the conversation. The Federal Trade Commission does not take lightly to collection agencies that feel they are above the law. You can always file a complaint with them in writing or online at:

Federal Trade Commission
6th Street & Pennsylvania Avenue NW
Washington, DC 20850
202-326-2222
www.ftc.gov

Next, complain to your state attorney general office at: www.naag.org. Then send a copy of your complaint to the creditor who hired the collection agency. Many times if the violations are severe enough and you have proof via recorded call or witness, the creditor may stop the collection efforts.

Lastly, you can sue the collection agency and the creditor that hired them for up to $1,000.00 in small claims court. If the violations are outrageous and you can prove your claim, you can sue in regular civil or small claims court.

What techniques debt collectors employ

Some important things to remember is that collection agencies are paid based on how much they get you to pay. Therefore they will employ collection methods involving false and misleading statements. They are worse than your high pressure salesman and should be treated as bottom feeders. Their goal is to get you to pay right then and there. Typical tactics:

Insist you pay by phone using your checking account information. Do you really want to you’re your private information to these scum bags? Read the section on ID Theft.
Tell you they checked your credit and noticed you have x amount available on another charge card and suggest you do a balance transfer. (this will leave you in the exact same rut – a vicious cycle of owing)
They will demand you to pay now because at the end of business your file is going to legal and your wages will be garnished or you home confiscated thus costing you more money. They may go on to mention the interest during the collection process. (BALONEY) The FDCPA does allows a collector to add interest if your original agreement called for such or it is allowable under state law but this does not mean you should fall for any of these methods.

If you do have the monies and decide to pay, try to negotiate a settlement. Be sure to get everything in writing before you ever part with your money.

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What if I can't pay?

Of course it is best to settle your debts as soon as possible, if you have the funds available. However if you are unable to pay/settle your debts, it is in your best interest to use the debt validation techniques outlined in our credit repair guide. Otherwise you may be faced with a court judgment. Collection Agencies will demand payment by continued calls and threatening letters. If they can’t get you to pay the collector generally has no other option short or suing you. If this happens, you can expect more aggressive collections actions such as:

Garnish up to 25% of your net wages.
Seize any bank or other deposit accounts you have.
Record a lien on your property, which will have to be paid when you sell or refinance your property.

Please note: These states accept settlement as payment in full and forgive the remaining balance of the debt.

Arkansas Colorado Connecticut Georgia Kansas Louisiana Maine Michigan Nebraska New Jersey North Carolina Oregon Pennsylvania Texas Utah Vermont Virginia Washington Wyoming

Other states have modified this rule. A creditor that endorses a check with the following “under protest or without prejudice” retains the right to collect the difference between the settled amount and the actual outstanding balance

Alabama Delaware Massachusetts Minnesota Missouri New Hampshire New York Ohio Rhode Island South Carolina South Dakota West Virginia Wisconsin

There is a loophole for California residence. The procedure has to be followed exactly:

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The first step is to write a letter regarding the disputed amount.

April 16, 2007
Account Number: XXX-XX-9990

Dear Mr. Creditor

You have attempted to collect $1,800 for a grill that broke and the warranty expired one day prior. Because of the inferior quality of the merchandise I have received, I don’t feel I owe you more than $360. My effort here is in good faith as I dispute this bill.

To satisfy this debt, I will send a restrictive endorsed check in the amont of $360. By cashing this check you will constitute this account as settled in full. The check you receive will state “cashing of this "cashing of this check constitutes payment in full” and will take care of what I owe you.

Sincerely,

Ms. Educated Customer

Second, you will want to wait 15-90 days to give the creditor time to respond

Third, once the time has expired, send the check with the following letter

June 16, 2007
Account Number: XXX-XX-9990

Dear Mr. Creditor:

This check for $360 is in accordance with the letter I wrote to you on April 16th. If you cash this check you are bound by the terms of payment in full; my debt with you will be satisfied.

Sincerely,

Ms. Educated Customer

Remember: At the bottom of the check, along the top or bottom to write the exact language you used in the second letter. “This check for $360 is in accordance with the letter I wrote to you on April 16th. If you cash this check you are bound by the terms of payment in full; my debt with you will be satisfied”.

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Debt Collection Law Firms/Attorneys

The same law under the Fair Debt Collection Practices act binds attorneys who engage in the collection of debts and the collectors that work for them. They are no different than collection agencies. They may however suffer from "big head syndrome".

They try to impress you with titles and use intimidation and legal terms to force payment with such classics as, "the paperwork is ready to send to court for suit." Or "You better send the money today!” These jerks are power hungry cowards. They love to use the phone as a weapon of terror.

You usually are not allowed to speak with the attorney who sent you the collection letter or are told they don’t talk to debtors. If an attorney has signed their name to a letter you received, you have every right to speak with that attorney and they better have knowledge of your case. Don't be intimidated by these money hungry jerks. Most of them are junk debt buyers; they are no better than Uncle Guido who runs a racketeering enterprise. The only difference is they found a way to buy debt for a cheap price and make it legal to collect 4x the amount of the original debt. For instance:

You owed Citibank $2500. A junk debt buyer purchased your debt with many others in portfolio for $.10 on the dollar. They paid $250. They begin calling you for the full face value of $2,500. You don’t have the money therefore they decide to move forward with arbitration. The National Arbitration forum awards them $10,000. Now the law firm turns the award into a judgment.

HOLD ALL ATTORNEY DEBT COLLECTORS ACCOUNTABLE UNDER THE LAW! If you feel that your rights are being abused by a debt collection attorney/law office, follow the process above and you can also file a complaint with your State Bar Association.

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