Debt Collection Abuses
When a consumer does not pay a debt, lenders or collection agencies have the right to take reasonable steps to give the consumer a chance to pay. They can usually telephone the consumer and make other reasonable efforts to let the consumer know that the debt is owed and the amount. Consumers can expect to receive letters giving them the same information. Under most circumstances, lenders – and in some states debt collectors and collection agencies – can sue the consumer to recover money owed.
But, no one should let the threat of a collection suit scare them into putting up with abusive telephone calls or other harassment. Sometimes some lenders will sue, but often they will just turn the debt over to a collection agency. Sometimes the debt collection agency may sue, but in some states collection agencies can’t sue people – only the lender can. In all situations, defending a collection suit in front of a judge is far better than the consequences to you and your family of disruptive and abusive telephone calls.
What can debt collectors do to me?
Debt collectors can sue you and ask the court to force you to pay them. They may try to imply that they can legally harm you in other ways because you owe them money. In reality, the worst they can do is sue you. If they do, it will be you versus them in a court of law. Legally, they cannot even tell any third party (except your spouse) about your debt.
Every state, county, or city collections court is different. The one thing that you should never do if you get sued is ignore the lawsuit. At a minimum, always follow the directions on the court summons to file a written answer with the court and do not let a default judgment be entered against you. If you are sued, you may want to talk with a lawyer who can advise you about your specific rights. AFFIL is not a lawyer referral service and cannot refer you to a specific lawyer. If you want to talk with a lawyer who might help you deal with debt collection matters, you can review the list of members of the National Association of Consumer Advocates (NACA) in your area. Or you can contact your state bar association’s lawyer referral service or local legal services office.
In court, you will have a chance to explain your side of the story. The lender or debt collector must produce certain minimum evidence in court to prove your debt, such as a signed contract and the like. Often they can’t or don’t produce these documents for a number of reasons, including the passage of time and poor record keeping. When you file an answer in the court when sued and go to the court date when notified, you put the lender or debt collector to the test of proving their case. If you win the case, then all collection efforts should end. If you lose the case, the judge will sign a paper listing the amount you owe. This is called a “judgment.” You may have the right to appeal the judge’s decision if you think it is wrong.
If all else fails, even if a judgment is entered against you, every state has a list of “exempt” property that can’t be seized and, if you are employed, a minimum amount of wages that can’t be garnished. In addition, social security and other benefits are also exempt. As a result, poor people who are unemployed and even some people who are working part-time or for low wages will not have to pay a judgment.
If a judgment is entered and your wages can be garnished or your property seized, the federal bankruptcy laws are available to protect people in financial trouble from undue hardship. If you think filing bankruptcy might be the right option for you, you can look for a lawyer through The National Association of Bankruptcy Attorneys.
What are debt collectors allowed to say on the phone?
Debt collectors have a right to inform you that you owe them money - not to embarrass, degrade, or annoy you.
Sometimes the line between permissible and impermissible practices is unclear, while sometimes the debt collection misconduct clearly crosses the line between what is reasonable and what isn’t. No one may use harassment, abusive tactics, or deceptive and false means to collect or attempt to collect a consumer debt. Remember: you never have to talk to debt collectors. You can tell them never to call again, and just hang up the phone. If they call back, tell them again and hang up.
These practices are illegal:
- Calling you in the middle of the night or the early hours of the morning
- Disclosing the alleged debt or other private information to your neighbors, friends, co-workers, employers, or other third parties (usually other than your spouse)
- Using profanity or obscene language
- Threatening violence against you
- Impersonating a lawyer or law enforcement officer
- Calling you over and over and over again without any legitimate purpose except to annoy and harass you, or to force payment of a disputed debt. Remember, they have a right to inform you that you owe them money, not to embarrass, degrade, or annoy you
- Calling you at work after you’ve told them you cannot accept personal calls at work
- Adding extra charges or fees that you do not owe
- Threatening any consequences that are prohibited by applicable state law
- Reporting to a credit bureau information that is known to be false
- Threatening to repossess or garnish property that is exempt from execution under applicable state or federal law.
Another important thing to keep in mind is what is called “a statute of limitations” on your debt. If the lender or debtor does not sue you within a specified period of time, they lose their right to ever sue you again. This is usually a period of several years, normally counted from the date of the last payment you made. As a result, debt collectors will pressure you to make a partial payment—even a very small one—because this will extend the statue of limitations further in time. Therefore, it may be a mistake to make a partial payment when pressured by a debt collector after years of not paying, because in some states this partial payment starts the statute of limitations running all over again.
How should I react when lenders or debt collectors call?
Remember, the worst that can happen to you is you will be sued and get the chance to explain your story in court. You want to act in the best possible manner to make a favorable impression in court if you ever need to. Also, you want to record any illegal and abusive actions of callers.
- Remember: you never have to talk to collectors. You can tell them never to call again, and just hang up the phone. If they call back, tell them again and hang up.
- Write down when each call is made after you tell them to stop calling and have hung up on them. Most courts find that such continuous calling in these circumstances is nothing but illegal harassment, and having your written record is important evidence of their wrongdoing.
- It can also be a good idea to audio record abusive calls. In some states, you can record a telephone call without the knowledge or permission of the other party. In any state, you can record a call legally by telling the other party at the beginning of the call that you are going to record it and if they don’t agree, they need to hang up now. If they stay on the line, you can start recording, and you should repeat on the recording that you’ve warned them that they are being recorded. Their staying on the phone indicates their agreement to be taped.
- Save all collection letters and other documents that come in the mail, and keep the postmarked envelopes. Don't throw them away.
- It is not a good idea to change your phone to an unlisted number to avoid collection calls. That will only provide an excuse for them to call you at a place of employment, or to call neighbors and relatives with “an urgent message.”
Lastly, if you are being treated illegally by a debt collector or lender, you can file complaints about debt-collecting tactics with:
- The Federal Trade Commission, which says consumer complaints about collectors have topped their lists for three years running.
- State attorneys general also handle consumer complaints. To find your state’s attorney general click here.
What other rights do I have regarding debt collection?
This largely depends on whether your caller is a lender or a debt collector.
A lender is the company from which you borrowed money or bought the goods or services that you are repaying. The lender can also be another company to which the debt was owed before you fell into default – that is, before you stopped making payments. Depending on your state law, you may or may not have any protections against misconduct by the lender.
A debt collector or collection agency is someone who is collecting for a lender or for another third party after you got behind on your payments. Debt collectors who contact you—but not lenders—are subject to the Fair Debt Collection Practices Act. This is a law that provides strong rights for consumers. If a debt collector harasses you or violates this federal law, you may especially want to talk to a lawyer or file a complaint.
What if they think I am someone else, and I actually don’t have any debt?
Unfortunately, this happens all too often. The best thing to do is to write a “no contact” letter, make a copy to keep for your records, and send the letter in two different envelopes, one certified mail, return receipt requested, and the other regular first class mail. The letter should state that you are disputing the debt and explain why, and then state that you therefore will not pay and that you demand that they stop contacting you.
Be sure to identify yourself in the letter at least by name and address and identify the debt being collected as best you can, even just the name of the person(s) who called you. It is enough just to say in the letter “I refuse to pay” or “Do not contact me again.”
After you send the letter, you might receive one more letter telling you if the lender or debt collector plans to file a collection lawsuit. You may also receive your regular bills from a lender. Otherwise, you should not receive any more letters or telephones calls from that lender or debt collector, although they still have the right to file a suit against you.
What if I just can’t pay?
Even if you think you owe the debt but you just don’t have the money to pay it, you do not deserve to be endlessly harassed by callers. You should send a “no contact” letter and tell the lender or debt collector that you do not have the money to pay. Send the letter in two different envelopes, one certified mail, return receipt requested, and the other regular first class mail. Say that you cannot and will not pay, and that you demand that they stop contacting you.
Again, be sure to identify yourself in the letter at least by name and address and identify the debt being collected as best you can, such as by account number, lender, or even just the name of the person(s) who called you. It is enough just to say in the letter “I refuse to pay” or “Do not contact me again.”
After you send the letter, you might receive one more letter telling you if the lender or debt collector plans to file a collection lawsuit. You may also receive your regular bills from a lender. Otherwise, you should not receive any more letters or telephones calls from that lender or debt collector, although they still have the right to file a suit against you.
