Top Debt Collection Problems…And What To Do About Them

By: Gerri Detweiler, Debt.com Financial Fitness Trainer

Complaints filed about debt collectors in 2010 totaled 88,190.

– Federal Trade Commission Report 2010: FDCPA

Consumers file more complaints with the FTC about debt collection agencies than any other industry. In fact, they filed 88,190 complaints about debt collectors with the Federal Trade Commission (FTC) in 2009.

Of course, many people never speak up. They don’t even know they have rights under the federal Fair Debt Collection Practices Act (FDCPA) and often under state law as well. I’ve heard them tell about collectors who threatened their children; or who told them that if the debt wasn’t paid immediately they’d tell their employer, or their neighbors, or the sheriff. Years so, a friend of mine was several months pregnant when a debt collector told her she would spend the weekend in jail if she didn’t pay up.

Here, I’ll describe the most common types of debt collection complaints, and give you strategies for dealing with them. The top complaints about debt collectors, as reported by the FTC:

Harassment. This includes calling repeatedly or continuously; using profanity, or racist or obscene language; or threatening violence. It also includes calling before 8 am or after 9 pm or at inconvenient times. The FDCPA prohibits harassment by debt collectors.

Demanding a larger payment than allowed by law. It’s not uncommon for debts to be inflated with interest and/or fees. And it’s often impossible for consumers to tell whether the amount they are told they owe is valid. Debt collectors aren’t allowed to charge more than the amount allowed under the original contract and/or state law. In addition, debt collectors aren’t allowed to try to collect debts that have been discharged in bankruptcy.

Threatening to take action the debt collector can’t take, or doesn’t plan to take. A debt collector who threatens to garnish the debtor’s wages, take their home or other property, or even sue them may be breaking the law. Unless the debt collector intends to take that action and can do so, the threat is illegal. In most states, the collection agency must first sue the consumer and get a judgment before trying to garnish wages, place a lien on property etc. It’s also illegal for a debt collector to threaten to contact a consumer’s employer so they will lose their job (not to mention stupid, since a consumer can’t pay the bills if there is no income coming in); or to say the consumer will be arrested if they can’t pay the debt.

Calling debtors at work after they are told to stop. Under the FDCPA, consumers can tell collectors not to contact them again at work. Once they do, the calls at work must stop immediately. Collectors who ignore this request are breaking the law. (In any case, a debt collector cannot discuss a debt with the debtor’s coworkers.)

Contacting third parties about a debt. The FDCPA strictly prohibits collectors from discussing a debt with neighbors, employers, friends, or relatives who are not cosigners or joint accountholders. (Collectors typically can discuss a debt with the consumer’s current spouse.) Collectors may only contact a third party to locate a debtor, but can’t reveal the debt to that person. Once the collector has found the debtor, calls or contact with third parties must stop.

Not sending debtors specific written notices. Within 5 business days of initial contact with a debtor, the debt collector must send a written notice of the debt that includes specific information. Collectors who neglect this, or refuse to send the notice, are breaking the law.

Ignoring “cease communication” letters. The FDCPA gives consumers the right to ask a debt collector not to contact them again. Once the collector is notified to cease communication, all calls and letters – except a confirmation and any legal notices – must stop.

For the past twenty-two years, Debt.com guest columnist Gerri Detweiler has been on a mission to help individuals find reliable answers to their credit questions. She has coauthored five books. Her most recent titles are Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, Reduce Debt, Reduce Stress, and Business Credit Success: Get on the Financing Fast Track. Gerri serves as personal finance advisor for Credit.com, has been interviewed in thousands of news stories, and has testified before Congress.