Consumer Harassment Rises as Collections Boom

For many Americans with too much debt, the recent economic downturn could not come at a worse time. As more consumers fail to pay their debts and delinquency rates rise, debt collection has started to boom.

While bill collectors squeeze money out of strapped consumers, reports of questionable debt collection practices abound. In 2007 nearly 71,000 people complained to the Federal Trade Commission about over-aggressive collections agents, almost double the number from 2003. In October, Darrell McGraw, West Virginia’s Attorney General, sued Charles Howell and Associates, a Florida-based collections agency, for allegedly harassing and threatening debtors with arrest. McGraw alleges the company even took money from senior citizens who didn’t owe anything. (Charles Howell and Associates deny the allegations.)

“Well, we can expect this problem to get worse,” Missouri Attorney General Jay Nixon wrote on his blog for consumers.

If you’re getting calls from collections agencies, learn your rights:

1)    Don’t pay a debt you don’t owe: It may sound obvious, but it’s not. Collections agencies often launch enforcement actions against the wrong people thanks to the companies’ sloppy paperwork.  Under the federal Fair Debt Collection Practices Act [in PDF], you have the right to demand that the collections agency provides written proof of your debt.

2)    Debtors’ prisons died in Charles Dickens’ days: Collections calls are deliberately unpleasant, but agents cannot threaten you with arrest. They can not threaten to take your car without a court hearing, nor can they call before 8 a.m. or after 9 p.m. And if they drop the F-bomb, they’re crossing the line: under the law, no swearing is allowed.

3)    Don’t let agencies harass you: If collections agents call too often, write them a letter. You have the power to force them to stop.

4)    Know what you owe: Before making payments, check your statements and make sure the agency is not charging outrageous fees. Fees can be adjusted. You can refuse to pay until a more reasonable rate is set. If the agency refuses, report them to your state Attorney General and the Better Business Bureau.

5)    Don’t stop with a good thing: Once you start making payments, pay your debt in full. It will save you the trouble and added expense of going through collections again.

Learn more about handling collections agencies with Credit.com’s Collections Crash Course.

Tagged as: Attorney general, Bill collectors, Charles Howell and Associates, consumer rights, Darrell McGraw, debt, Delinquencies, economic downturn, Fair Debt Collection Practices, Federal Trade Commission, Missouri Attorney General Jay Nixon

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