Debt collection in the US is in bad shape. Bills by businesses often go unpaid because they contain serious errors. They could have the wrong numbers or be in the name of the wrong person altogether. When these businesses cannot collect on a bill for these reasons (or any other ones), they sell the rights to collect on them to a debt collection agency for pennies on the dollar. They could sell the rights to collect on a $500 bill for merely $10.
Debt collection agencies buy bills like these by the thousand. They do this because they know they could turn a profit if they collected on even a fraction of them.
Most of the bills that these agencies have are long shots at best
Many of them are so old often that they stand invalidated under the statute of limitations on debts – which is to say that the law does not allow a creditor demand payment on them anymore. When in possession of such uncollectible debts, these agencies know that deceit and intimidation are their only hope.
While the US Fair Debt Collection Practices Act does set out strict rules for what debt collectors can legally do, the rules are often ignored. The small $1000 penalty imposed on violators isn’t much of a deterrent. Since many people aren’t aware of the protections offered by the law the harassment tactics of the collection agencies tend to work.
You can sue a debt collector if he uses these illegal moves
- Not reading you your rights the first time he calls you (called the Mini Miranda disclosure). This disclosure is supposed to tell you the name of the creditor you owe money to, the amount you owe, the fact that you have the right to demand proof that you do indeed owe the money demanded and the fact that you have a right to dispute the demand within 30 days.
- Calling at inconvenient times, such as at work, early in the morning or late at night.
- Calling excessively and using intimidating language.
- Threatening to tell your boss, your family or anyone else about your debts to embarrass you.
- Threatening to use the law to get you thrown out of your home if you don’t pay your bills.
- Asking you for postdated checks. Without adequate verification of the debt owed, there’s no reason to give them any checks. It is a dangerous move, since it gives them information about your bank account.
When a debt collector gives you trouble, your first step should be to head to the website of the Fair Debt Collection Practices Act to find out what exactly the law prohibits. If you find that the collector is in violation of anything, you should tell him the next time he calls that you plan to sue him for the violation – you can quote the law and section.
You should dispute the debt within 30 days
To do this, you must first send the debt collector a registered letter demanding verification of the amount owed. If the debt collector doesn’t send the information required of him, he cannot demand payment anymore. If he still does, you can sue.
Send a cease communication letter
If the collector doesn’t comply with the demand for verification and persists in calling you, you need to send him a cease communication letter by registered mail. If the harassment doesn’t stop then, it gives you another tool in court.
File a complaint with the government and with other organizations
The websites of the FTC, the State Attorney General and The Association of Credit and Collection Professionals offer ways to complain against offending debt collectors. If a debt collector seems to have violated the law, complain on these websites for free. It could help your case. The National Consumer Law Center offers more information on your options.
When you finally do get an attorney, it could help your case to have taken all these steps.