Archive for the ‘debt collection’ Category
Thursday, July 22nd, 2010
There’s been some clamor in the news recently about some of the abuses in the debt collection industry. A recent article from CNN Money profiles ten people who used to work as debt collectors, and some of the behavior they attribute to their coworkers and companies is appalling:
- Many former debt collectors were reportedly encouraged to belittle or demean the debtors they called, and often ended up yelling and swearing as part of their collection tactics.
- Even when no repossession action was legally allowed, some collectors reportedly threatened to repossess a debtor’s possessions in lieu of payment.
- Some collectors allegedly threatened physical violence to debtors and even contacted family members and friends about their debts.
Significantly, one woman profiled said that she believed the debt collectors got away with the above and other illegal collection techniques because many consumers simply don’t know their rights.
In fact, federal law strictly limits the methods debt collectors can use to get their job done. The following techniques are illegal (see a complete outline here):
- Phone contact outside the 8 am – 9 pm window
- Phone calls intended to harass, annoy or abuse (including repeated phone calls)
- Threat of legal action or arrest when none is legally permissible
- Deceit or misrepresentation in order to collect a debt (e.g. a debt collector claiming to be a law enforcer or lawyer)
- Communication with third parties about a consumer’s debt
- Contact at work after being asked to avoid such contact
Debts You Don’t Even Owe
As if such blatant misbehavior on the part of creditors as that reported by CNN weren’t enough, The New York Times recently reported that some automated court systems have been allowing collectors to collect on debts that consumers do not legally owe (such as debts discharged in bankruptcy)
The problem is complex, but it largely boils down to the fact that most consumers (about 10 percent of those contacted) apparently do nothing in response to court summonses about debts owed. And, according to sources, only about one percent of consumers contact a lawyer about their lawsuits.
In other words, this system reportedly allows collectors to sue consumers for debts and go to court without input from those consumers. This is worrisome, especially considering that as many as 94 percent of cases are allegedly dropped when proof of the debt is requested.
So what can you do to protect yourself from illegal creditor contact and legal action? Consider contacting a bankruptcy lawyer in your area if you think you’ve been wronged by the collection industry. It could save you from paying money you don’t owe.
Additional Resources
Fair Debt Collection Practices Act
Posted in Creditor Harassment, Financial Literacy, collection calls, debt collection | Comments Off
Thursday, July 22nd, 2010
There’s been some clamor in the news recently about some of the abuses in the debt collection industry. A recent article from CNN Money profiles ten people who used to work as debt collectors, and some of the behavior they attribute to their coworkers and companies is appalling:
- Many former debt collectors were reportedly encouraged to belittle or demean the debtors they called, and often ended up yelling and swearing as part of their collection tactics.
- Even when no repossession action was legally allowed, some collectors reportedly threatened to repossess a debtor’s possessions in lieu of payment.
- Some collectors allegedly threatened physical violence to debtors and even contacted family members and friends about their debts.
Significantly, one woman profiled said that she believed the debt collectors got away with the above and other illegal collection techniques because many consumers simply don’t know their rights.
In fact, federal law strictly limits the methods debt collectors can use to get their job done. The following techniques are illegal (see a complete outline here):
- Phone contact outside the 8 am – 9 pm window
- Phone calls intended to harass, annoy or abuse (including repeated phone calls)
- Threat of legal action or arrest when none is legally permissible
- Deceit or misrepresentation in order to collect a debt (e.g. a debt collector claiming to be a law enforcer or lawyer)
- Communication with third parties about a consumer’s debt
- Contact at work after being asked to avoid such contact
Debts You Don’t Even Owe
As if such blatant misbehavior on the part of creditors as that reported by CNN weren’t enough, The New York Times recently reported that some automated court systems have been allowing collectors to collect on debts that consumers do not legally owe (such as debts discharged in bankruptcy)
The problem is complex, but it largely boils down to the fact that most consumers (about 10 percent of those contacted) apparently do nothing in response to court summonses about debts owed. And, according to sources, only about one percent of consumers contact a lawyer about their lawsuits.
In other words, this system reportedly allows collectors to sue consumers for debts and go to court without input from those consumers. This is worrisome, especially considering that as many as 94 percent of cases are allegedly dropped when proof of the debt is requested.
So what can you do to protect yourself from illegal creditor contact and legal action? Consider contacting a bankruptcy lawyer in your area if you think you’ve been wronged by the collection industry. It could save you from paying money you don’t owe.
Additional Resources
Fair Debt Collection Practices Act
Posted in Creditor Harassment, Financial Literacy, debt collection | Comments Off
Friday, January 29th, 2010
The Federal Trade Commission announced this month that it has settled charges with three debt collectors accused of various types of abusive debt collection. The settlement, which reportedly includes the largest civil penalty ever levied on a debt collection agency, comes in conjunction with future restrictions for the defendants.
Fair Debt Collection Practices Violated
According to the case, the defendants violated terms of the Fair Debt Collection Practices Act, which outlines acceptable behavior for agencies responsible for collecting on debts. These guidelines prohibit a variety of actions, including:
- Contacting a debtor before 8:00 am or after 9:00 pm local time
- Contacting a debtor after receiving a written request not to do so
- Contacting a debtor at her place of work after being told not to
- Calling the debtor with the intent to annoy, harass or abuse
- Contacting the debtor directly when he is known to have an attorney
- Misrepresenting a debt or using deceit to collect money
- Threatening arrest or legal action when neither is an option
- Seeking more than a person legally owes
- Publishing a person’s name on a “bad debt” list
- Reporting information incorrectly to a credit reporting bureau
- Contacting a third party about a consumer’s debt
- Contacting a debtor by embarrassing media (like a post card)
In this case, the men were charged with threatening arrest and legal action when none was warranted as well as using harassment and abusive contact to collect debts. The men in question were senior managers at debt collection agencies and as such either participated in the illegal actions or were responsible for such actions among their employees.
The Settlements
One of the three defendants, Keith Dickstein, owner of Academy Collection Service, Inc., apparently paid a $2.25 million settlement in 2008. The two defendants who settled early this year, Edward S. Bastian and Edward Hurt, were saddled with fines of $375,000 and $300,000 respectively for abusive collection practices.
The fines were suspended after each man paid $7,500, based on their ability to pay; payment of the remainder will depend upon their future compliance with debt collection laws.
Your Consumer Rights
Federal law outlines many protections for consumers. Make sure you have an idea of what consumer rights you have so you can take legal action, if necessary, should they be violated.
Additional Resources
Fair Debt Collection Practices Act (PDF)
Posted in Creditors, FTC, Financial Literacy, debt collection | Comments Off
