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With the recent financial meltdown and subsequent employment crisis wreaking havoc on the economy, more Americans than ever are receiving calls and letters from debt collectors eager to collect on delinquent debts.  These collectors sole aim is to get you to pay them, so many have resort to using tactics that skirt or break the laws regarding how debt collectors must interact with the people they contact.  It is important for everyone to know how to deal with debt collectors and what actions the debt collectors are legally allowed to take to prevent yourself from being taken advantage of by an unscrupulous collection agency.

Some Collection Agencies Will Tell You Anything To Get You To Pay

Some debt collectors have resorted to telling lies to the debtors they are contacting to increase the chances that the person will pay the amount demanded by the debtor.  Threats of jail time, deportation, credit ruination, and other dire events are simply scare tactics to get the person on the other end of the phone to agree to pay them.  Using threatening remarks to collect a debt is illegal and Federal Trade Commission receives more than 100,000 complaints annually about this type of behavior.

You Can Stop The Harassing Phone Calls

Most debt collectors use your telephone as a weapon, calling frequently and at all hours of the day in order to continuously remind you of the debt they are attempting to collect.  You simply need to send the collector a written letter asking them to stop contacting you, and the collector must comply.  Under federal law, repeated calls, obscene language, threats of arrest, and threats of violence are all illegal.  If the debt collector ignores the letter and keeps calling, you can file a complaint with the Federal Trade Commission and your state attorney general.

You May Not Owe The Debt They Are Trying To Collect

Some bad debt collectors add fees or items that the debtor did not buy to the amount that they are trying to collect.  Others attempt to collect debts that the person never owed, have paid off, or that have expired.  If you are unsure about a debt, you have the right to request verification of the debt, which should include the name of the original creditor, the original account number, and the amount of the debt at minimum.  If you do not owe the debt or the statute of limitations has expired, you will have a successful defense if you are sued.

Debt collectors calling about paying a debt that is owed is a conversation that many people have experienced over the last decade.  Many individuals that work for debt collection agencies are respectful of the people they are contacting, but some companies abuse the trust of the people by trying to collect past debts that the individual is not legally obligated to pay.

Understanding Debt Expiration

Expired debts are debts that have been in existence for more than seven years without any type of activity on the account.  Legally, a person is not obligated to pay these debts because of a legal statute of limitations placed on collections of debts that are older than seven years. These laws were created to prevent collection agencies from collecting on debts that are impossible to validate.  Even though attempting to collect this type of debt is unlawful, there are debt collection agencies that try to collect these debts. They rely on a person’s lack of knowledge of debt collection laws to collect money they are not legally entitled to obtain.

Why Attempt To Collect These Debts?

The debt collection companies purchase debt from the original creditors for pennies on the dollar. If they can collect any portion of the original debt, it is pure profit for the debt collection agency.  Because of this, some debt collection companies use highly aggressive collection tactics to obtain as much money as they can. These unscrupulous companies want to get the individual to pay the debt more quickly without asking too many questions about what is owed.

What Is The Solution?

If a debt collection company is contacting you to try collecting on a debt that is more than 7 years old, you can inform the debt collection agency that you are fully aware of the laws and any further attempts to collect that debt will result in a report under the Fair Debt Collection Practices Act.  In some cases, alerting the companies is not enough as there have been cases where representatives of the company have changed dates to reflect current activity on the account to extend the period of time the debt is valid. The company should be reported under the Fair Debt Collection Practice Act and you can take the collection agency to small claims court to have them pay damages for harassing you about a debt.

In the past decade, the debt collection industry has changed dramatically, with many practices that would have been shunned in the past as unscrupulous becoming an everyday part of the debt collection process.  Once, the companies that were owed the debt used their in house debt collectors to collect monies that were owed to them, but now the companies collecting debts probably purchased the rights to that debt from some other company.  This separates the debt collector from the original purchaser and provides an incentive for the debt collector to collect the debt by any means possible.

Often, the debt that has been sold to a debt collection company is an invalid debt for any number of reasons.  It could be because the statute of limitations has run out for collecting the debt.  In other cases, the account has been paid or charged off, but the account is still listed as delinquent in the records purchased by the debt collection company.  People can protect themselves from being contacted by debt collection companies asking about invalid debts by asking for debt validation.

What Is Debt Validation?

Debt validation is the process of ensuring the debt is correctly reported and enforceable for collection.  The first step in the process is requesting the validation of the debt once you have been contacted by a debt collection company requesting the payment of the debt.  The debt collection company must inform you of the debt that they are requesting you pay in writing telling you the name of the original debtor and the amount that is owed on the account.  On this paperwork, the debt collection agency will inform you that you have thirty days from the receipt of the debt notification to ask for the validation of the debt.

A request for debt validation must be received by the debt collection company (even if they are using a currency trading strategy) within the timeframe provided for them to investigate hether the debt is actually valid.  If the debt is contested, the debt collection company must retrieve records showing that the debt belongs to you and the total amount owed on the account as calculated by the original creditor.  This proof of debt will be mailed to the individual seeking debt validation.  This proof may include account statements from the original creditor or a copy of the signed agreement for the account showing that the account belongs to you.

If no proof has been provided showing that the debt is valid and you are the owner of the account, then that is a good indication that the debt collection agency is attempting to collect on a debt that is not valid.  If you refuse to pay the debt collector for this account, the company’s only recourse is to take you to court for the monies owed and no company will do this without proof that you are the person that owes the debt.  If no validation is provided, but the account still shows as a negative entry on your credit report, you can petition the credit reporting bureaus to remove the entry from your credit report due to the debt being invalid.

The Great Recession has brought out the darker side of some people, notably debt collectors that have been charged with getting delinquent payments from debtors.  As more and more people lose their jobs, have their hours reduced, or have to help out family members, payments for all types of debt are falling further and further behind, prompting companies to contact collection agencies to get the money that they are due.  As the collection agencies become overwhelmed with the number of individual accounts they have to handle, some debt collectors are getting nastier with the debtors they have been contracted to contact.

The Statistics

Debt collector harassment complaints have increased by more than 50% in the last year and are predicted to rise by another 13% by the end of this year.  The Federal Trade Commission, which handles debt collector harassment complaints, received nearly 68,000 complaints last year about the tactics being used by debt collectors to try and get money from people that don’t have it.  Complaints of harassing telephone communications, abusive or inappropriate language, and threats of physical violence are all on the rise.

Industry experts say that the actual collectors are becoming more and more frustrated as they struggle to dig up money from people that are in financial distress and are resorting to tactics that would not normally be used. Complaints of debt collectors using foul language rose 35% in the last year and complaints of threats and violence doubled.  Some debt collectors have even told debtors that they would come to their home and take the money from them in any way that they could.

Understandably, many debtors are scared.  They do not have the money to pay the debt collectors and they are receiving harassing communications on a nearly constant basis.  It is common for some debt collectors to initiate a barrage of phone calls to the debtors, calling back to back for days at a time for months or years.  Most of these techniques being used by the debt collectors are actually illegal under the Federal Trade Commission’s Fair Debt Collection Practices Act.

Actions To Take

If you feel that you have been harassed by a debt collector, there are actions that you can take to end the harassment and hold the debt collector accountable for their actions.  The most important thing is to keep an accurate log of the times and content of the calls and report the debt collection company to the Federal Trade Commission.  They will investigate the case and censure the company if it is found that the complaint is valid.  The debtor can also take the debt collection company to court and sue for harassment and if the debtor wins, the debt collection company will be required to pay any damages associated with the case, including attorney’s fees, court costs, and lost income.

Many people that are facing debt problems are in denial.  They avoid picking up their phones for fear there is a debt collector on the line, avoid opening bills, and do not do anything productive to correct their circumstances.  These people are making the worst mistake in finance – ignoring debt. 

There are many productive things that you can do to decrease debt and improve your credit rating, as ignoring debt obligations will only cause more problems.  Using these methods is not always easy, but they will make a difference in your financial stability.  Following this straightforward guide will help you reduce your obligations and ensure that your credit profile is not damaged further.

Avoiding Lenders Is A Big No-No

Avoiding the problem by refusing to open your bills and refusing to answer calls from lenders is not going to do anything but ruin your credit and increase the amount of debt you are carrying.  To get out of the circumstances that you are in, you will need to know the amounts that you owe to each lender and create a plan for paying each of these financial companies the money that is owed.  There are many different types of financial products that can help you make these repayment plans, including budget log books, financial planning software, internet websites geared towards reducing debt, and debt reduction programs and classes.

Cut Spending

The first thing that you should do when facing debt problems is to cut spending on non-essential items.  If you are having trouble paying your bills, you should not be paying for lattes at the local coffee shop or gym memberships.  Cut excesses from your life and reapply the money saved to your debts.

Talk To The Financial Companies

If you are facing unexpected debt problems, such as the loss of a job or medical issues, talk to the financial companies and explain your current circumstances.  Many lenders have procedures in place to help people facing these types of issues and they can work out an agreement with you to help you until you can get back on your feet and make full payments again.
 
Avoid Overusing Credit Cards

Many people begin using credit cards to pay for everyday purchases when they are facing a large amount of debt.  Placing purchases on a credit card is not going to solve the issue and the interest rate on the balance carried on the credit card will only drive you deeper into debt.  Instead of using a credit card, you should start paying cash for everything and marking it in a notebook as soon as the money is spent.  This will help you get a handle on your finances and show you exactly what you are spending your money on so that you can make more informed financial choices.

Debt collectors calling to say you must pay a debt that you owe is a call that many people have experienced in the last few years.  Most of the people that work for debt collection agencies are very respectful of the people they are attempting to collect from, but some companies are abusing the trust of people that they are contacting by trying to collect on past debts that the individual is not legally obligated to pay because the debt has expired.

Understanding Expired Debt

A debt that has expired is a debt that has existed for more than seven years and has not any type of activity on the account throughout that time.  Legally, a person is not obligated to pay these debts due to a legal statute of limitations placed on collections of debts across the nation. These laws were put in to place in order to prevent the collection agencies from attempting to collect on debts that are virtually impossible to validate.

Even though this type of debt collection is illegal, there are some unethical debt collection agencies that still try to collect on these debts anyway. Why do they do it? Simply put, they are relying on a person’s lack of knowledge of the laws surrounding debt collection to collect money that they are not legally entitled to. These companies have nothing to lose due to the fact that all they have invested in the account that they are attempting to collect on is time, nothing else. 

The debt collection companies do not have any affiliation with the original account holder as they have typically purchased the debt from the original company for pennies on the dollar or have been assigned the account from another company. This means if they can collect any portion of the original debt it becomes nearly 100% profit for the debt collection agency.  For this reason, many of these companies use highly aggressive collection tactics that a legitimate collection agency would not use for fear of being held accountable for the tactics in court. These unscrupulous companies want to achieve a level of fear that would get the individual to pay the debt more quickly without asking too many questions about the transactions.

Can I Do Anything About It?

Yes.  If you know a company is trying to collect on a debt that is more than 7 years old and there has been no activity on the account, you can simply inform the debt collection agency that is attempting to collect the debt that you are fully aware of the laws surrounding the debt, and any further attempts to collect that debt will cause you to report them under the Fair Debt Collection Practices Act.  Sometimes alerting these companies just is not enough, as there have been cases where they have actually changed dates to reflect current activity on the debt, so they can extend the period of time to make the debt valid. If you find this to be the case, report them under the Fair Debt Collection Practice Act without hesitation. If you need to you can even take the collection agency to small claims court and have them pay you damages for harassing you about an expired debt.

The collection industry has changed a great deal in the last ten years.  Where companies used to assign a debt to their collection department or to a collection agency and paid them after they has collected the debt, now companies are selling their debt to the debt collection agencies at a fraction of the balance of the account.  If the collection agency is able to collect the rest of the debt from you, then they get to keep the difference between the money that they paid to the company and the money that you paid to them.

This trend has resulted in some debt collection companies using some unscrupulous practices in order to collect a debt that they think that you owe.  They attempt to collect debts that they are not legally entitled to, add additional fees to bump up their profit percentage, or use deceptive practices to get you to pay money that you do not owe.  But there is a way to ensure that you are only paying debts that the collection agency is entitled to and that is by asking for debt validation.

There are several things that the debt collection agency can provide for debt validation.

Proof Of Debt – the debt collection agency can provide you with proof that the creditor has assigned or sold the debt that you owe to the creditor to the collection agency.  The debt collector would not be able to legally require you to pay the debt without this paperwork and any court would throw out the case without it.  If the debt collector refuses to provide proof of debt to you, it is a good indication that the collector has no legal right to collect the money for the debt.

Account Statements From Original Creditor – the debt collection agency can provide you with account statements from the company that the account was opened with or the debt was originally owed to in order to prove their right to collect the debt.  This will also ensure that excessive fees have not been added by the collection agency to the total amount that was owed to the original creditor.

Copy Of Original Signed Credit Card Or Loan Agreement – if the debt collection agency can provide you with a copy of the signed original agreement between you and the original creditor, then they have a legal right to collect the debt on behalf of the original creditor.  It does not matter whether the debt was assigned or sold.

If the company cannot or refuses to produce at least one of these documents for you to prove that they have a legal right to pursue you for collection of the debt, then you should not send them any money regardless of whatever threats they make.  Without at least one of these documents, their case for collection will never hold up in court and they know this, which is why they will make dire threats and lie to you about the consequences of your actions if you do not pay them the money.  Do not be fooled and do not pay any debt collector money without first having the debt validated.

There are many people across the nation that are deeply in debt and many of these individuals have had to deal with a debt collection agency at some point in the last several years.  The debt collection industry has repeated come under fire in recent years for aggressive debt collection practices and many individuals are aware that they can report aggressive collection agents and agencies to the Better Business Bureau to document the harassing actions.  What many individuals do not know is that the Federal Trade Commission of the United States Government has passed a Fair Debt Collection Practices Act that specifically details the rights of the individuals being contacted by the debt collection agency and lists the actions that debt collectors are not allowed to take.

1.  You Can Stop The Collector From Contacting You
Many individuals being contacted repeatedly by aggressive debt collection agents do not know that they can legally have the harassing phone calls stopped by submitting a request in writing that the collection agency stop contacting them.  Once the request has been received by the debt collection agency, they cannot contact you for any reason other than to tell you that your letter has been received and they will no longer contact you.  Stopping the collection agency from contacting you does not erase the debt that is owed and the collection agency may decide to sue you in court to recoup the funds that they are owed.

2.  Collection Agencies Are Not Allowed To Contact Debtors After 9pm Or Before 8am.
The hours in which the debt collection agency is allowed to contact you are explicitly spelled out in the Fair Debt Collection Practices Act.  Debt collection agencies must adhere to these time constraints unless they receive permission from you to contact you outside of these times.

3.  Debt Collectors Must Send You A Written Notice Describing The Debt.
If a debt collection agent contacts you to tell you that you owe money to the company, within five days of the initial contact, the debt collector must send a written notice describing the debt, listing the amount owed, and disclosing the steps that can be taken by the debtor if they believe that they do not owe the debt. 

4.  Many Aggressive Debt Collection Practices Are Prohibited.
Debt collection agencies and their agents are expressly prohibited from the following:
- Using obscene or profane language when talking to the debtor
- Threatening violence or harm
- Misrepresent who they are by claiming to be an attorney, from the credit bureau, etc.
- State that you will be arrested for not paying the debt
- Collect any amount greater than the debt owed
- Misrepresenting documents sent to you as legal documents when they are not
- Publish the names of individuals that they are attempting to collect a debt from

5. Debt Collectors Cannot Repeatedly Contact You At Work If Your Manager Disapproves.
The actions of the debt collection agency are not allowed to interfere with your employment and this includes calling you at work when your boss disapproves of the contact.  If collection agency repeatedly contacts you at work knowing that it could affect your employment, they could face sanctions from the Federal Trade Commission.

A more complete list and description of debtor’s rights are listed in the Fair Debt Collection Practices Act released by the Federal Trade Commission.  If a consumer has experienced any of the prohibited or harassing tactics listed in the Fair Debt Collection Practices Act, they may report the debt collection agency to the Federal Trade Commission or to the Attorney General of their state for investigation.

One of the newest and more questionable practices used by collection agencies today are the use of Collection Triggers to attempt to collect on the debts that they hold.  Never heard of Collection Triggers?  Well, neither have the other thousands of individuals whose personal information is being sold by the credit reporting bureaus to collection agencies across the nation.

What Is “Collection Triggers”?

Sold under the name Collections Triggers by leading credit reporting agency Experian, this software program is designed to take the information about a collection agency’s list of collection accounts and monitor those accounts in Experian’s system for any activity on the account.  Once activity on the account has been detected, the collection agency is notified and any new contact information given to the credit reporting agency is then given to the collections agency.

This allows the collection agency to find you every time something is reported on your credit report as they now have your address, phone number, and the fact that you are paying an account or have opened a new account recently.  Regardless of whether the collection account that the agency has on you is valid or not, for as long as they wish they can access your personal information and can harass you for accounts that you may or may not owe.

Other Issues Arising

“So what?” you may say, “I don’t owe any creditors any money so this does not apply to me.”  Well, you couldn’t be more wrong.  The technology used to create Collection Triggers is already being modified to be applied to other industries. 

For example, if an individual begins the procedure to obtain a mortgage and their credit is pulled to determine whether or not they can afford the mortgage, the credit reporting agency is alerted that you are shopping for a mortgage.  The credit reporting agency then sells your information to competitors of the mortgage company you applied with so that they know that a potential customer is looking for a mortgage.  The result is that the consumer is swamped with phone calls, solicitations, and mailings that offer alternates to the mortgage company that they initially chose.

For some individuals, this competition would be welcome but many others are alarmed that their personal information would be sold to companies without their consent.  There are no conditions put into place to ensure that only reputable companies are able to obtain consumers personal information and the threat of identity theft or being signed up for programs that you did not agree to is high. 

When a company misuses a consumer’s information, which can cost the consumer a great deal of money, the burden of proving that the information was misused is on the consumer.  Even if the consumer wins their case, they still may be on the hook for hundred of dollars in charges, have negative information reported on their credit report, and there is no guarantee that the issue will not occur again if their information is sold to another company.  There is currently no way for a consumer to opt out of the system and in reality, your information has probably already been sold to any company that was willing to pay for it.