CreditLaw.com’s Craig Thor Kimmel tells veterans, military personnel and their families how to stop harassment by debt collectors on WVMW-FM’s “What Vets Need to Know.” Listen to learn how to protect yourself:
Are you experiencing a high volume of aggressive debt collection calls? Are you constantly asking yourself how to stop collection calls? As a consumer you have rights, especially when it comes to harassing collection phone calls.
While you can verbally demand that calls stop, and to keep calling you is indeed harassment under the law, you may have a greater degree of success with a formal letter telling the debt collector to cease and desist all contact. Once the collector receives your letter the Fair Debt Collection Practices Act (FDCPA) only allows the collector to contact you one final time in writing, to set forth what action the collector will take next. Most collectors will not respond at all but will cease all contact as required.
We’ve provided a template for a good cease-and-desist letter. Insert your own personal information where indicated. If the debt collector does not honor the instructions, you have every right to take legal action, all without charge if you are a client of our firm. Feel free to call us about this or other FDCPA issues or consult our website: www.creditlaw.com.
City, State Zip
Debt Collector’s Name
City, State Zip
Re: Account Number
Dear Debt Collector [SPECFIC COMPANY NAME]:
Pursuant to my rights under federal and state debt collection laws, this is notice to cease and desist communications with me in any form, as well as my family and friends, in connection with the above account and all other alleged debts you claim I owe.
You are hereby notified that if you do not comply with this request, I will immediately contact private legal counsel and file a complaint with the Federal Trade Commission and the [YOUR STATE HERE] Attorney General’s office.
In what is sure to be considered a major victory for consumers everywhere, the FTC this week ordered Asset Acceptance to pay $2.5 Million in fines. Asset is one of the largest debt collectors / debt buyers in the country.
The fines handed out this week certainly send a message that debt collectors should not see themselves as above the law. The Fair Debt Collection Practices Act protects consumers from harassment, abuse and deception. A common way that debt collectors violate the FDCPA is through threatening legal action that is not intended to be taken, in hopes of collecting the debt. Another way is by placing telephone calls to the consumer at unreasonable hours or by placing calls to the workplace when told that the calls are not permitted or inconvenient to the consumer. Debt collectors often will disregard the statute because doing so is more likely to result in collection of the debt.
Michigan-based Asset Acceptance was fined over various practices, such as failing to state that the debt being collected could be beyond the statute of limitations; false credit reporting and attempting to collect a debt that was known to be invalid. Such conduct is not uncommon by many debt collectors large and small, as their business model for making money often is based upon buying debt for pennies on the dollar and collecting the full value or more from the consumer. When the debt is so old the statute of limitations has expired, the consumer who pays is under no legal obligation to do so, but that information Asset apparently did not disclose.
A consumer can be sued for an outstanding debt but if it is so old that the statute of limitations has passed, the consumer may still be sued, but has the limitations defense to assert, showing he is therefore under no longer under a legal obligation to pay. As to Asset Acceptance, the FTC did not want consumers to receive threats of suit, without mention that the debts may be beyond the statute of limitations.
The FTC also concerned itself with Asset Acceptance was not reporting correct information to consumer reports nor investigating claims to ensure the debts were valid. The settlement reached forces Asset Acceptance to disclose more information with greater accuracy.
While the FTC action is a big step in the right direction, debt collectors must be constantly monitored for conduct that violates the FDCPA and can never be left to be self regulating. Where there is more money to be made by violating the FDCPA standards that by comply with them, consumers should not expect collectors to change. A consumer is best protected by knowing his rights and by knowing who to contact if their FDPCA rights are violated. Contact an attorney at Kimmel & Silverman today at 800-NOT-FAIR or www.creditlaw.com for more information and a free case review.
Debt Collectors can be nasty and have earned their reputation for not being easy to deal with. It is easier it seems to avoid them altogether, hoping that the problem will go away on its own. Unfortunately, collection agencies have a hard time giving up. They know they are supposed to work within the rules set forth in the FDCPA and yet they often continue to violate them one way or another. They know that a debt collector can do more to make life difficult and aggravating for consumers when it comes to student loans, than other collections, and can take a judgment against you without even filing a complaint. Federal loans also carry with them the opportunity for debt collectors to have employment wages garnished or have a tax refund paid to the lender directly.
If you have a Federally sponsored student loan and cannot pay, and wish to avoid debt collectors, either write a letter demanding the collector to cease contact; or, ask in writing for a deferment on your loan; or better yet, negotiate the balance, perhaps through an attorney (not a “debt settlement company”). Because student loans are different types of debt than typical consumer purchases, debt collectors are often instructed by the lender to agree to deferments or in some cases a reduction of the entire amount, payable over time. Whether it is because of a difficult economy, finding and keeping a job, a disability, care for a family member, personal illness or military service, these options can be very helpful and make things easier for you to handle.
Beginning on July 21, the debt collection industry will be monitored closely by two regulatory agencies– the Fair Trade Commission (FTC) and the newly formed Consumer Financial Protection Bureau (CFPB). The FTC has been around for many years but the CFPB was created to reform the financial industry and better protect consumers, resolve widespread consumer complaints, and tighten debt collection laws. Here are a few ways consumers can hope for positive changes affecting the collection industry, including putting a stop to debt harassment.
Enforce the Fair Debt Collection Practices Act (FDCPA)
The Consumer Financial Protection Bureau will be able to enforce federal consumer financial laws, including the FDCPA. The purpose of the Act is to eliminate abusive debt collection practices such as contacting consumers outside of specified hours and using profane language in communication related to the debt. The CFPB will have the power to penalize companies that fail to comply with the FDCPA and can enforce violations of the Fair Credit Reporting Act and the Truth in Lending Act.
Review Debt Collectors’ Practices
Many Americans, as well as those in federal government, believe that financial institutions, the debt collection industry, and credit reporting companies are in need of reform to better protect consumers. The CFPB will review debt collector practices for example, and determine if their methods are abusive or unfair, but will still leave to private law firms the ability to pursue claims on behalf of individual consumers for monetary damages and private enforcement. If the Bureau deems necessary, businesses could be forced to tighten collection practices and reduce debt harassment at the hands of overly aggressive debt collectors.
In most cases, people who receive collection calls accrued the debt themselves and have fallen behind on their payments. In some instances, however, these charges are a result of identity theft. Because people rely on technology to pay bills and make banking transactions, it is important to stay protected against hackers and Internet fraud. The best way to avoid collection agency harassment is to reduce the risk of having your identity stolen in the first place.
Consumers who use debit cards should check their account activity frequently. Every major bank has an online banking option which makes it quick, convenient, and free to monitor checking accounts. Anyone who comes across questionable or suspicious transactions on their statement should contact the bank as soon as possible.
Credit cards are better protected against fraud. Therefore, they should be used for online shopping and other Internet transactions instead of debit cards. Information shared online runs the risk of being stolen by hackers and used without your knowledge or consent. Again, people who suspect their accounts have been used fraudulently should contact the credit card company immediately.
Collection calls only begin once payments have not been made for a significant amount of time. Regular credit checks are a surefire way to stop theft in its tracks. Some criminals can open new cards in the victim’s name; in some cases, the only way a person knows that this new account exists is by seeing it on their credit report. Credit scores are very sensitive to missed payments, and even a fraudulent card can have a negative impact on your score for a while.
It is important to understand why collection calls feel like harassment in order to deal with the stress they create.
Many Americans have fallen behind on their credit card, mortgage, and/or car payments because they have experienced some form of financial difficulty. This causes stress on the individual, as well as family and friends that are affected. To make matters worse, collection agencies are making harassing collection calls about past-due accounts on a daily basis. These agencies use fear tactics on vulnerable people for one purpose: to make money.
When a consumer falls behind on their payments, creditors often retain debt collectors or sell the debt to them for a fraction of the total debt. Now, it is up to the collection company to turn a profit for themselves by collecting as much money as possible. It is typical for these agencies to pitch a “deal” to settle for less than the original debt; in fact, they are still making a profit because they bought the debt for far less. This is when the debt harassment starts.
Debt collectors will often use threats and lie to the consumer to try to force a payment out of them. They will up the ante even further to squeeze as much money out of the person as they can. This causes added stress and anxiety on the consumer who is already overwhelmed by their finances in the first place. Even though some of the tactics they use are unethical, collections companies continue to use them for financial gain.
It is important for people in this situation to remember to stay calm. Many of the intimidation practices used by debt collectors calling the home or office are empty promises. If the threats feel like harassment then an experienced debt collection lawyer can help you learn your rights and stop the deception once and for all. Otherwise, taking positive steps to get out of debt is the best way to stop collection calls.
According to the “Top 10 List of Complaints” by Illinois consumers last year, phone calls regarding consumer debt harassment topped the list at number one. This statistic proves two things: that the state is still suffering from high unemployment rates and other financial troubles as a result of the failed economy, and people are as annoyed as ever by debt collection calls. This problem is not limited to the residents of Illinois; in fact, this is a nationwide dilemma.
Many of these complaints were made by people who experienced collection agency harassment. Abusive tactics were reported, including illegal practices used to scare people into making a payment. These scare tactics can be very convincing at times, but as the old saying goes “you can’t get blood from a stone.” In most cases, the consumer does not have enough money to pay off their debts otherwise their accounts would not be in collections in the first place. Until consumers are able to come up with enough money to make a payment, how can they stop debt collectors from abusing their power?
Consumers have two options: turn them in and/or sue them. There are laws in place that regulate debt collection practices, and agencies should be held accountable when they break the rules. First, go to the Fair Trade Commission to complain then do the same with your state’s attorney general. A last resort to make the harassment stop is to take legal action against the offending agency. Some debt collectors are so ruthless that it seems as though they want your happiness and peace of mind along with your money. Don’t let them control your life – find an attorney that will fight for your health and your wealth against illegal and unfair debt harassment practices.
While millions of Americans must grapple in this difficult and topsy-turvy economy, some businesses continue to thrive. In fact, Portfolio Recovery Associates, Inc., a company that purchases, collects, and manages consumer debt, are reporting record-breaking profits.
Portfolio Recovery Associates, like other debt collectors, makes money by purchasing consumer debts from creditors, banks and other financial institutions. As defaulted debt or late pay debt increases, buyers and debt collectors like Portfolio Recovery Associates see their revenues rise as well. From 2009 to 2010, Portfolio Recovery Associates experienced increases in net income of 66% from $12.4 million to $20.6 million. At the end of their fourth quarter of 2010, Portfolio Recovery Associates’ total revenue rose 38% from 2009 for a record $100.8 million.
Isn’t it ironic if not more than a little bit aggravating that the success of debt collectors, like Portfolio Recovery Associates, has a banner year while most Americans struggle with loss of income, jobs and being choked by debt? Debt collection and debt buying are not on recession proof; they are recession successful. As Americans fight to pay off accumulated debt, collection agencies flourish.
Of course, someone needs to do the collecting, it is just that when collectors deal with so much business in response to market conditions, it makes one wonder if the abusive behaviors consumers complain about will rise as well and/or if all the FDCPA protections are being complied with . The next time you receive an aggravating or uncivil collection call, remember that you have rights, and you don’t have to tolerate abuse.