What Collection Agencies Can and Cannot Do
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What Collection Agencies Can and Cannot Do

Dont fall for intimidation from any collection agency. Know the laws.

Debt collectors, collection agencies and bill collectors are all the same. With the current recession and job losses going on, the complaints against collection agencies have increased dramatically. For some reason, either due to bad training, ignorance or they just don’t care, collection agencies will try all kinds of things to get you to pay them, many times when you don’t even owe them the amount they claim. There are federal and state laws that cover this and there are many things you as a consumer can do to stop the bill collectors from harassing you and breaking these laws.

This factoid is a basic outline that you, the consumer, have rights with strict laws governing the actions of debt collectors and you don’t have to put up with their abuse.

Who and what is a debt collector

There are definitions as to who and what are and aren’t considered as debt collectors. A debt collector or a collection agency is someone or a business that collects debts for others. A creditor, the person you owe the money to is not considered a collection agency, for example your landlord.

There has been confusion and a gray area as to when is a lawyer a lawyer and when is a lawyer acting as a collection agency. It appears now that if a lawyer does even a minor portion of their business collecting debts for others, they are considered a collection agency and that means they have to follow the federal and states collection laws. Some courts have ruled that if the law firm did 4% of their business as collections, then they have to follow the collection laws. If the creditor has hired the lawyer for a court case, then the lawyer is not considered a debt collector.

Fair Debt Collections Practices Act (FDCPA)

This is the law that governs what a collection agency can and cannot do. And each state also has their own FDCPA laws as well, in many cases more strict then the federal version.

What a collection agency can do:

  • They can call you at your home or place of work.
  • Can contact family members or friends to find out where you work or your address and or phone number. Only one time though unless they believe the first response was erroneous.
  • They can send mail to your home.

What a collection agency cannot do:

  • If you tell them not to call you at work anymore, they cannot call you at work after that.
  • They cannot call you before 8 AM or after 9 PM your local time.
  • They cannot threaten you with harm or violence, damage your reputation, jail or use swear words.
  • Cannot mail you by post card or have anything on the envelope showing that they are a debt collection business.
  • They cannot falsely represent the amount of the debt or the legal status of the debt.

This last one seems to be abused a great deal by debt collectors, they will say to you and sometimes even put it in a letter that triple damages are now owed because the debt is overdue or some other language. A court is the only entity that can award triple damages. A debt collections letter can say they can sue for triple damages but they cannot already say that it is owed before any court has awarded it.

Validation of debts

It is important that within five days of the initial communication with you, they have to mail you in writing the following, unless it was told to you in this initial phone communication. Sounds simple, but so many times you get a phone call with not much information and or you get some letter that doesn’t contain some or all of the following information:

  • The amount of the debt.
  • The name of the creditor who is owed this debt.
  • In a written statement it will say that unless you as the consumer notifies the collection agency that you dispute the debt or any portion of it, it will be assumed the debt is valid.
  • If you write back within the 30 days disputing the debt or any portion of the debt, the collection agency has to obtain verification of the debt and or judgment, including the name of the original creditor if different from the current creditor.

Make sure that you save everything you get mailed to you. It is important that if you dispute any of the debt, or whom you owe it to, or just want validation in writing, that you mail in a letter called a debt validation letter within the 30 days. It is much better to have everything in writing in front of you before you talk to them again.

The collection agency has to prove to you that you owe them this money instead of the creditor; they cannot just mail you some computer printout of the debt. If they cannot validate you owe them this debt, they cannot report this to any of the credit reporting agencies and they cannot continue to collect on it.

These are the basic things you should know, look out for and do if you have a problem with a debt collector. There are laws and you should not let the collection agency harass you.

If you do owe the debt, it has been validated and nothing left to do, you might try and call the original creditor and work out something with them first. If they refuse then call the collection agency and try and work out something with them. Many times they will take less then the full amount and consider that full payment. Ignoring the situation can make it worse.

Sam Montana © 29 December 2008

Click on your state for local laws

Federal FDCPA law

Sample verification demand letter to collection agency

Great web site for all kinds of debt information and discussions


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Comments (3)
How to get your free credit report and fix it | Factoidz

[...] Now you have to deal with the creditor or collection agency. Send them a letter by certified or registered mail disputing the information they put on your credit report, they now need to validate this debt. You can also send them copies or proof that you have paid this debt. For more information, you can read dealing with a collection agency. [...]


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