When Debt Collectors Cross the Line - Bogus Threats and Illegal Tactics

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Long Term Debt - Problems and Solutions
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Debt management companies can offer an excellent service for large amounts of out of control debt. If you are having difficulties keeping up with any repayments, then do seek advice from a debt counsellor. They are professionals and know how the creditors work.

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Credit rescheduling - When finances get out of hand
Many people let their finances get a little out of hand at some stage. It's just a fact of life that today, with all the credit that lenders throw at us, and the amount of temptation out there to consume and buy more, that we end up spending more than we have. Indeed, with lenders advancing more and more credit to all types of applicants, no matter what they're situation, credit problems are one o... Read debt consolidation article



When Debt Collectors Cross the Line - Bogus Threats and Illegal Tactics
If you are behind on your bills and on the receiving end of collection phone calls, you will probably hear collectors make some very threatening statements. While most debt collection professionals try to stay within the boundaries defined by the Federal Fair Debt Collection Practices Act (FDCPA), many others cross the line on a regular basis. Last year, the Federal Trade Commission (www.ftc.gov) received more than 58,000 complaints about debt collectors, a figure which represents 17% of the total number of complaints received by the FTC. Consumers complain about the collection industry more than most other industries combined.

Collection professionals would probably respond that the enormous size of the industry and the sheer volume of collection activity accounts for the large number of complaints. However, only a small percentage of violations are actually reported by consumers, so the data collected by the FTC represents only a tiny fraction of the true scope of the problem. Even so, a pattern of abusive and illegal collection activity has been well-documented by the FTC, and it is getting worse instead of better.

Here are some common threats made by debt collectors:

"We're going to take your house unless you pay this bill immediately." This is a bogus threat. Unless the debt being collected is secured by the house in question (i.e., a mortgage or home equity loan), the creditor does not have the power to take your house away from you.

"If you don't pay this bill today, we're going to have a warrant issued for your arrest." Nonsense. Failure to pay a debt is a civil matter, not a criminal matter. Threatening a debtor with jail time or accusing them of committing a crime is totally against the rules.

"We don't care that you sent a cease communication notice. We're going to call you anyway." The FDCPA gives you the right to terminate contact efforts by a debt collector. Failure to respect a cease communication notice is a clear violation of Federal law.

"We're going to garnish your wages to recover this debt." A collector can only threaten action it has the legal authority to take, and the vast majority of collection agencies have zero legal authority. Your wages can only be garnished by a creditor after they have won a judgment against you in a lawsuit.

"We know where you live, so you better pay up." Yes, threats of violence still happen in this industry. Nearly 300 complaints against collectors received by the FTC last year cited the threat of violence as the cause of the complaint. This is absolutely illegal.

Aside from the usual bogus threats, collectors also use other tactics that are illegal. For example, discussing your debt with a third party is a clear violation of the FDCPA. Yet collectors routinely call neighbors, relatives, and employers to obtain information on debtors. So long as the collector does not discuss the actual matter of the debt, they still have their toes on the right side of the line. But as soon as they mention or even hint that they are calling about a debt, they have crossed the line.

Since many debtors have taken to screening their phone calls at home to cut down on the relentless barrage, debt collectors frequently call at work when they can obtain an office number. In theory, a consumer can get the collector to stop calling at the office simply by stating that they are not allowed to receive personal phone calls at work. That puts the collector on notice that such activity constitutes interference with the consumer's employment, which is not permitted. In practice, however, collectors routinely ignore this rule and continue to call at work.

There are many other techniques of harassment and intimidation that cross the line from permissible to impermissible collection activity. Use of obscene or profane language, shouting, constant and unrelenting telephone calls, failure to respond to written disputes, and publication of debtor information all constitute illegal activity as defined by the FDCPA.

So if you are on the receiving end of illegal collection actions, what can you do to protect yourself? First and foremost, it's important to know and understand your rights as a consumer. A description of your rights under The Fair Debt Collection Practices Act may be obtained directly from the FTC (http://www.ftc.gov/bcp/conline/pubs/credit/fdc.htm).

If you believe that a collector has violated your rights in their attempt to collect from you, then you should not hesitate to file formal complaints with the Attorney General for your state (www.naag.org) as well as the Federal Trade Commission. If enough complaints are received about a particular collector, then these authorities are empowered to bring an enforcement action against them, which may result in expensive fines that will make the agency or collector think twice about using such tactics in the future. You also have the right to bring a lawsuit yourself against a collector that harasses or abuses you, or otherwise violates your rights under the law.

One final point. The FDCPA technically only applies to third-party debt collectors, which includes collection agencies and collection attorneys. It does not apply to the original creditor when collecting their own debt. For example, if you borrow money from a bank, the bank is not regulated by the FDCPA. However, numerous other public laws protect consumers from deceptive or abusive collection practices even by original creditors, and many states also have laws that parallel the FDCPA but go further and include original creditors in the definition of debt collector. So if an original creditor is harassing you or has crossed the line, you should still file a complaint with your state's Attorney General as well as the FTC. If a clear pattern of abuse emerges, the original creditor can be charged with unfair or deceptive acts or practices, either under state law or under the FTC Act that governs conduct of commerce in our country.

To sum up, if you are on the receiving end of collection harassment, don't just take it. Educate yourself on your rights as a consumer, vigorously dispute debts that you don't believe you owe, and take action yourself in the form of complaints to your Attorney General and the Federal Trade Commission. By standing up for your rights, you can put a stop to bogus threats and illegal collection tactics.

Charles J. Phelan has been helping consumers become debt-free without bankruptcy since 1997. A former senior executive with one of the nation's largest debt settlement firms, he is the author of the Debt Elimination Success Seminar, a five-hour audio-CD course that teaches consumers how to choose between debt program options based on their financial situation. The course focuses on comprehensive instruction in do-it-yourself debt negotiation & settlement designed to save $1,000s. Personal coaching and follow-up support is included. Achieves the same results as professional firms for a tiny fraction of the cost. http://www.zipdebt.com

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Consumer Debt Solution

You have several options to reduce your consumer debt. You can take the do-it-yourself approach by consolidating debts into a low rate loan. You can also find help through companies that management payments or negotiate debt elimination. Each option has pros and cons, and should be analyzed carefully before committing to a specific approach.

Do-It-Yourself Approach

Refinanced mortgages and home equity loans can help consolidate your short term debt into one easy payment while reducing your interest rates. Your interest is also tax deductible.

Consolidating loans can lengthen your payment period, increasing over all interest payments. There are also loan fees to consider, especially when refinancing your mortgage. Some home equity loans and lines of credit don't have opening fees in exchange for higher rates. Your credit score will also be affected having another open account.

Companies That Can Help

Companies can offer two different types of help for dealing with your consumer debt. Debt management companies handle payment for all your short term credit accounts. For a small monthly fee, they will pay your bills, negotiate lower interest rates, and close accounts. Depending on your creditors, your credit score may or may not be affected.

With a debt negotiation company, you can see 10% to 50% of your debt eliminated on some accounts. Such an approach can help you avoid bankruptcy, but there are long term affects on your credit. You will also have to report reduced debt as income on your taxes.

Comparing Options

Before you sign a contract for a loan or service, compare several different companies. Request their rates and terms, and compare them with others. Legitimate companies will freely provide you with information. You can also find information online through company sites. For detailed quotes, you will need to submit some basic financial information such as debt amounts.

Getting Advice

You can also find help with a credit counselor over the phone or in person. Certified counselors look over all your finances and help you come up with a plan to handle your debt and living expenses. They may recommend simply following a budget or using a particular service, such as debt management.

To view our recommended debt management companies, visit this page: Recommended Debt Management Companies Online.

Carrie Reeder is the owner of ABC Loan Guide, an informational website about various types of loans.


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When Debt Collectors Cross the Line - Bogus Threats and Illegal Tactics
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