Don’t Fall for These 5 Collection Agency Tricks

Now that the U.S. is in an economic downturn and experiencing record unemployment numbers due to COVID-19, your chances of a brush with a collection agency over a bill you couldn’t pay are higher than ever.

That’s because if you lose your job or get furloughed for months, you could eventually have a debt you can’t afford to pay. When that happens, a collection agency – some of them crossing the line of legal debt collection practices – could enter your life.

1. Threatening violence

Is a debt collector threatening to beat you up and kick your dog while he’s at it unless you pay your debt? Using threats of violence to collect a debt is illegal, so don’t fall for it.

The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from making threats of violence to prompt you to pay up. They’re also not allowed to use obscene or profane language or call you repeatedly to annoy, abuse, or harass you.

If you can show proof that a debt collector broke the law with threats of violence, you may be able to sue the collection agency for violations of the FDCPA.

2. Trying to collect on an old debt

Just because you owe a debt doesn’t mean it automatically follows you to the grave if you don’t pay. So, don’t just take a debt collector’s word that you have to pay a debt that’s several years old, since an old debt becomes “time-barred” when it’s aged out of your state’s statute of limitations.

State statute of limitation laws vary but average from three to six years, according to the Federal Trade Commission (FTC). Debt collectors can still pursue a debt that is outside the statute of limitations, but you’re under no legal obligation to pay it.

Caution: If you make a payment of any amount on the debt, the payment in some states breathes new life into the time-barred debt, restarting the clock on the statute of limitations.

3. Falsely claiming to be an attorney

It’s illegal for a collection agency to falsely claim to be a law firm or allow agents to falsely represent themselves as attorneys in phone calls, letters, or other communications when trying to collect a debt.

If a collection agency falsely claiming to be an attorney contacts you, report the agency to the Consumer Financial Protection Bureau to investigate and possibly impose a penalty for violating the FDCPA. Also contact your state Attorney General’s office to file a separate complaint.

4. Making false threats of legal action

Just as a collection agency can’t falsely represent itself as an attorney or law firm, the collector also isn’t allowed to threaten legal action that it can’t legally take such as having you arrested if you don’t pay.

The debt collector is also prohibited by the FDCPA from threatening things that it has no intention of doing such as filing a lawsuit when the agency has no plans to do so, according to the Consumer Financial Protection Bureau.

5. Threatening to garnish all your wages

If a debt collector obtains a court judgment against you for a debt, it may be able to garnish a portion of your paycheck or bank account, but don’t believe a debt collector who threatens to garnish all your wages if you don’t pay the debt.

Federal and state laws impose limits to ensure that you still have some money left after garnishment. Exemptions and procedures for claiming those exemptions vary by state.