In a tough economy, one group of employers who seem to do okay for themselves are debt collectors. That’s because companies start reducing their own staff, which means they don’t have the means to contact customers for money owed to them, and they’ll turn over significant portions of it to collection agencies to collect on their behalf.
There are two ways this can be done. One, a collection agency can work on the accounts of clients, in some way acting as an extension of the client, but the claims are still owned by the client. Two, the parties owed the money can write off the debt, collect some insurance money against it, then sell the debt at a drastically reduced rate to collection agencies, sometimes as low as 15%, who will then work those claims to collect as much as possible, sometimes more than the amount originally owned.
It’s this second type where consumers need to know their legal rights against collection agencies. When an agency owns the accounts, they’ll usually get more aggressive in their collection efforts, often to the point of breaking the law. Across the country, people are claiming that they’re being threatened with legal action, and in some cases physical threats. In some areas of the country, representatives of the collection agency have shown up at the doorstep of a debtor demanding payment.
These are illegal tactics, and consumers need to know when it might be time to get some legal representation. The Fair Debt Collection Practices Act has established rules that state what collection agencies can do and say to try to collect a debt. For instance, they can’t call before 8AM or after 9PM. They can’t call your neighbors. If you tell them you can’t receive calls at work they can’t call you. As a matter of fact, if you tell them not to call you anymore, they’re not allowed to call you. They can write you and they can sue you, but they’re legally not allowed to call you.
And one last thing; you’re only legally responsible for addressing the actual debt, not the increased amount because of finance charges. Therefore, if you defaulted on $500, even if your credit limit was $3,000, and even if finance charges bumped that amount up, you only have to negotiate from the original $500.
The collection agencies won’t tell you that, however, which is why it’s imperative that every person know their financial rights.
