Let’s face it. Debt collection is a necessary evil.
It keeps money flowing through the economy. It allows the rich to get richer. And it allows small businesses to avoid getting shortchanged by people who never intended to pay for what they bought.
It also causes a goodly amount of stress and anxiety to the people who bought something with a variable rate credit card. When once they could make their payments, they now cannot because the card company arbitrarily decided that their rate should go from a manageable percentage, to a barely legal percentage in the high twenties.
In some cases, people in this and similar positions have ended up in jail because debt collectors have gone out of their way to do something improper.
[As an aside, debtor's prison is illegal, but failure to appear in court can be sufficient grounds for a bench warrant, which can mean indefinite jail time if the judge is persuaded that your failure to pay is an act of contempt of court. If an official looking piece of paper shows up in the mail, run to a lawyer. The clock has already started on your answer.]
Part of the reason why debt collection is such a strenuous process for debtors is the collection practices employed by debt collectors. They call at all hours of the night, make threats, say that they’ll sue you, etc.
At some point, however, debt collectors inevitably cross the line.
To give a personal example, I had an American Express student card when I was in college. As a student, I did not always have the money that I needed to keep up with all the other cool kids, among other things, and so I occasionally put things on my card that I should just not have bought. When I skipped paying my bill just one time so that I could keep money in my pocket, the calls started.
Five times a day, every day. Every. Single. Day.
Then they started calling my mother.
Then, finally, I got enough money to pay the bill and the calls stopped. Just like that.
The thing is, while American Express was generally within bounds on the way they went about attempting to collect the month’s payment, they still broke the law. They broke it in two ways: first, they called multiple times per day, and second, they called late at night.
According to the Fair Debt Collection Practices Act (FDCPA), debt collectors are not allowed to:
Cause…”a telephone to ring or engag[e] a person in telephone conversation repeatedly and continuously with intent to annoy, abuse, or harass any person at the called number.” Section 806(5) FDCPA
“a debt collector may not communicate with a consumer in connection with the collection of any debt… (1) at any unusual time… which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstances to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o’clock antimeridian (sic) and before 9 o’clock postmeridian, local time at the consumer’s location…” Section 805(1) FDCPA
So, there you have it. By calling multiple times a day and calling after 9 p.m. American Express violated my rights as a consumer and debtor, and this is a large company with what people would assume are well thought out and researched collections policies. As a company that otherwise has the Federal Trade Commission all over it, you would think that American Express would be able to keep to the script.
Imagine the third-party debt collectors that are not automatically on the consumer protection agencies’ radars.
So, what do you do when your phone starts ringing, and there’s a debt collector on the line? Are there ways to avoid becoming another horror story?
First and foremost, take the first call. This can set the tone of the interaction with the collectors. With primary debt holders, like American Express, often you can negotiate a way out. With third-party collectors, you may have less success, but at least you can find out what it is about. You’d be shocked how often they have the wrong person.
Get the debt verified in writing. Remember, most of the time you’ll be getting a customer service person on the phone who only knows what is on the computer screen that he or she is looking at. As often as not, that will lead to their persistence, frustration, and eventual abusiveness: they were shown the debt and given a name and phone number and they just want payment from the person on the phone or to find someone who will pay. Getting the debt verified in writing will at least let you know if the debt is legitimate. Also, even if the debt is legitimate, if it is old it may be beyond the time when you must pay, as debts generally have statutes of limitations attached to them.
Request/Demand that the collectors stop contacting you. The ability to get the debt collector’s address is one of the best reasons to take the first call (you can also make sure that they have your correct address, which will be important later). You may make a written demand on the collector and they must stop contacting you. If they do not, then they are asking for trouble.
Record conversations, keep all correspondence. Remember, it becomes very difficult to prove you’ve been harassed without evidence. If you record the calls you have that evidence. Plus, if you tell the collector that you are recording them, they are likely going to be more inclined to be civil. Also, keeping all of the correspondence (letters/emails) from the collectors ensures that you will not miss something important.
Always respond to summons/legal papers. The last thing you want is a default judgment against you. Technically, a debt collector must prove that the debt he/she/they are pursuing is genuine and that the defendant had an opportunity to respond. However, courts have been guilty of rubber stamping judgments recently, because collection attorneys usually show up with stacks of suits and the judge wants to run through the calendar. Granted that the collectors have your proper address you should have the chance to respond and avoid a default judgment.
Lastly, be realistic. Many times collectors are going after a legitimate debt, and they are not harassing you. Sometimes you just need to bite the bullet and pay what you owe. Confronting the collectors early will help you do things like get into a payment plan and avoid black marks on your credit. You should know that for many lawyers, the cost in time spent defending small matters may not be worth it, which is a shame. However, you may be able to get a free consultation from some lawyers that could include pointers on how to proceed as an individual. If you are persistent they should be willing to give you at least that much.
No really, be realistic. Having said that, if the debt the collectors claim that you owe is not genuine, do not just give in. Sometimes, people will pay just to make the calls stop. If one takes the proper staps, it is possible to make the calls stop, and if there is a genuine claim, to punish the debt collectors.
Remember, this is not an all-inclusive guide to avoiding debt collectors. Please look into the laws of your state, and if you find yourself hounded by debt collectors, talk to a lawyer.
And speaking of the laws of your state, there are so many things that could be done to strengthen the laws that goven debt collection practices. Please write your state congressmen and women and ask them to help regular people like you and me avoid some of the horror stories by changing the laws; and maybe tell your local #OWS group to protest debt collection practices too!