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What to Know About Debt Collectors and You

In Debt? Don’t Let Bill Collectors Bully You

By Gerri Willis

Publication Date: 09/21/2008

In any economic times, even the most aware people can fall behind on their bills

Bad times spell opportunity for debt collectors, who take over debts from businesses and then profit by making debtors pay up. Here’s what you need to know if you’ve missed a payment or two and feel like you are under siege.

Don’t reveal personal information

A phone conversation with a debt collector is not the time to share your job history or family circumstances. Don’t try to defend yourself or justify your debt. Instead, stay calm and focused. Ask for details of the debt and written proof of the collector’s claim. Remember that you aren’t talking directly to the company with whom you ran up the debt but rather to a bounty hunter trying to earn pennies on the dollar. Although they can damage your credit, debt collectors do not have legal authority. You are not obliged to reveal your place of employment, the name of your bank, or your checking-account number.

Know what to expect 

Debt collectors may contact you in person or by mail, telephone, telegram, or fax at home or at work between the hours of 8 a.m. and 9 p.m. If they don’t get you to pay up, they can ruin your credit by informing credit bureaus of your unwillingness to pay. They may take you to court and garnish your wages or slap liens on your property.

Don’t be intimidated 

Debt collectors may seem to be in complete control, but they are required to meet standards set by the Fair Debt Collection Practices Act. Still, says Thomas Pahl, an assistant director in the division of financial practices at the Federal Trade Commission, some debt collectors cross the line of propriety. The best way to defend yourself is to know your rights. For example, one consumer with a Latino surname reported being threatened by collectors with deportation if he didn’t pay. It is illegal for collectors to threaten to hurt you physically, to say you’ll be arrested or deported if you don’t pay your debt, or to use obscene language while trying to collect a debt. Nor can debt collectors threaten to take your property unless the collection agency can win a legal settlement in court.

Don’t pay money you don’t owe

Because debt collectors often are working with old data that have been through many hands, their records are sometimes wrong. If you don’t believe you owe the money or if the amount claimed by the debt collector is incorrect, dispute the claim in writing. The collector is obligated to show you some proof that you owe the money—at least a statement from the original creditor attesting that the information is correct. If the collector is calling about a debt you incurred long ago, be aware of the statute of limitations. Like a gallon of milk with a “sell by” date, debt can become too old to be useful to collectors. The statute of limitations differs from state to state but typically runs three to six years. After that, a debt collector can’t sue to collect a debt. If a collection agency states or implies that you have to pay a debt whose age exceeds the statute of limitations, it has broken the law. Always check the date of your debt: Paying even a small portion of an expired debt may reaffirm the debt and trigger the obligation to repay it in full.

Know where to turn for help 

If you believe that you are being harassed or otherwise mistreated by a debt collector, you can file a complaint with the Federal Trade Commission or your state attorney general’s office. If a debt collector has broken the law in his dealings with you, you have a right to sue him in state or federal court within one year of the date the law was violated.

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