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Dealing with creditors (creditors)

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Dealing with creditors

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Dealing with creditors
[Special Note: Debt collection is an honorable profession. Most collectors abide by the laws of collection and are simply an instrument of the creditor. However this article is written to protect the consumer against the novice or incompetent collector whose presence would be more preferred in garbage collection rather than bill collection.]

E-mail and forum posting concerning credit agency harassment and other similar issues are always part of this site. But lately, there seems to be an even greater need to cover these areas along with the Fair Debt Collection Practices Act (FDCPA) because of the dramatic increase in questions and concerns about past due bills, bill collectors, and collection agencies.

To begin I recommend all readers take a look at the easy to understand explanation of the FDCPA on the page called, Your Rights Under FDCPA . Here you can easily learn what a creditor can and can't do, although I find this page a bit weak on actions you can take if an agency violates the law. (Of course the page is written by a collection agency but actions you can take will be covered later in this article). The full text of the law is contained in the FDCPA reference link in paragraph one.

Before getting into specifics, there is one other point I want to make. A while back I included in the Commentary section of the Newsletter a quote from uslaw.com. It was called Collection Agencies Are Bullies and is important enough that I am including it in this article:

"... a collection agency cannot garnish your wages or otherwise seize your money until after it has sued you and won the suit. Normally, it takes several months to sue someone in small claims court and win, and few creditors ever even bother to do this. Prior to getting a favorable court judgment, they cannot get any money from you unless you voluntarily send it to them. If the threats fail to get the money, the last option available to the collection agency is in fact to sue you. This happens in surprisingly few cases. Depending upon the size of your debt, it is normally too expensive for the original creditor or the collection agency to file suit. These lawsuits are usually just not cost-effective. Threats are cheaper. Knowing that a lawsuit is unlikely, it is possible to turn the tables and demand that the debate be held on your terms. [As an example] 'I demand that you treat me with respect and speak to me like an adult. I can pay you $50 a month and that is it. I will write no postdated checks. Take my $50, or sue me. That is all I can do.' The key thing to remember when dealing with a collection agency is that, believe it or not, you have all of the power. You control the checkbook. If you tell them to leave you alone, they have to leave you alone. Collection agencies are nothing more than bluffing bullies of bluster."

As a sidebar, dealing with a creditor or credit agency has been covered in another article appropriately called Dealing With A Creditor or Agency and I recommend that everyone read it. Additionally, How to Work With Creditors is a fast and simple step by step guide when you find a bit too much month left after the money. Similarly, Debt Priorities is an article which sets priorities when you know the month will never end as far as your debts are concerned.

But the remainder of this article will deal with credit collection agency harassment and what you can do about it.

Turn the table on creditors

No one likes getting that call which tells you what you already know. You've already received 1-5 letters telling you the debt is past due. These were probably from the original creditor. But now it has been turned over to a collection agency and they can intimidate. So what can you do? Here are some pointers. [Please note. These pointers are offered only to buy you some time or to stop harassment. They are not intended to offer an escape from responsibility].

The first thing you can do is be aware that a collection agency can do very little without the original creditor. Remember that the collection agency works for the creditor. Therefore one tactic to deal with an agency is stall. Asking questions about the validity of the bill will force the agency to return to the creditor for confirmation.

By the way, if you want to negotiate, it is always a good idea to try to work with the creditor first. The creditor has a wider range of options than an agency. Sometimes the original creditor will no longer deal with the debt once turned over to an agency, but try anyway.

Be aware of the Statute of Limitations (SOL) for Debt for your state. The SOL is an oft violated issue with collectors and often suits are even issued which can be set aside by the debtor if the debtor knows the SOL has passed. In fact, a counter suit could actually be brought if you receive papers stating you will be sued because this is harassment based upon an action that cannot take place which is against the law.

If you choose not to deal with an agency you have that right. Send them a letter so stating. At that stage they may contact you only to tell you that efforts to collect will stop or that the agency is taking action such as suing. To make this decision, the agency and creditor make a determination as to the likelihood of collecting, amount of debt, chances of winning a suit measured against court costs, etc., and assets owned by the debtor. Quite often, it is in the creditor and agency's best interest to simply forget the debt.

If a debt is "charged off", this does not mean someone can't try to collect on the debt. "Charge-off" is simply an accounting term for the benefit of the creditors books.

If the agency violates the FDCPA ... yell at the top of your voice. The louder you yell the better the chance that the entire debt may be dropped. As a minimum however, a complaint should be registered with the originating creditor, your state's attorney general, and the Federal Trade Commission. You also have a right to sue the agency for harassment in which case the original creditor should be named as a co-defendant in the suit. Per Nolo Press Publication Credit repair:

"You can represent yourself in small claims court or hire an attorney; you can recover attorney fees and court costs if you win. You're entitled to any actual damages (including pain and suffering) and up to $1,000 punitive damages. To win, you'll probably need to have a witness and to produce documentation of repeated abusive behavior. If the collector calls five times in one day and then you never hear from them again, you probably don't have a case."

Of course, when talking to the creditor you want to insure the creditor is aware that you might consider not suing for a consideration such as forgetting the debt and correcting any discrepancies on your credit file. You might also consider that if you don't have the proof required to sue, the agency may not know that. To conclude, the following is a paraphrased text from Nolo Press Money Troubles:

When talking to a bill collector realize most of them are sitting behind a desk with pre written scripts because the majority of responses are predictable. So your job is to turn the tables on the collector. During a pause in conversation the collector is expecting a response... don't give it. Make the collector respond first. If you can't outlast the silence and the question is to send money, simply say "I can't". When they ask why, tell them "it's none of their business". If they ask for a post dated check say something like, "A post dated check might bounce. You aren't suggesting I break the law are you?" If they threaten your credit record tell them something like, "It is an unfortunate issue but my record is already damaged." And if they threaten court action, tell them that is their right. And if they offer a repayment schedule do not accept it unless it is acceptable to you.You need to maintain control because the only control a bill collector has is his intimidation over you. Turn the tables on the collector and intimidate them first... not by threatening but by NOT playing their game.

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