Reader Question: Debt Collector Won’t Work With Me

Adam Levin’s recent story about debt collectors, Daddy, Make the Bad Man Go Away, prompted a reader named Kathy to ask some detailed questions about dealing with a debt collector. Ironically, a story in the New York Times described how debt collectors are trying to get some respect. Hopefully they are not the same ones contacting Kathy—but who knows.

Here’s my response to Kathy’s questions. There are many other consumers with similar questions about the debt collection process and your rights, so thanks for the opportunity to respond. Please keep in mind I am not an attorney and this is not legal advice.

Kathy: The article was very good, and informative; however, I have other questions that I have not seen any responses to: 1) How to deal with debt collectors who are also law firms, like Pressler & Pressler

Law firms that regularly collect debts are required to follow the Fair Debt Collection Practices Act, just like any other collector. If they don’t, they are breaking the law, and you may sue them.

[Article: Eleven Ways a Debt Collector May Be Breaking the Law]

2) How to get help with an issue with a debt collection agency, because the FTC only catalogs complaints. They don’t act on them unless there are hundreds (or thousands) of complaints from a specific collection agency.

You are correct Kathy, the FTC does not get involved in individual disputes.  However, it can still be worthwhile to file a complaint because it may prompt an investigation into a particular company. I would also recommend you file the same complaint with your state Atty. General’s office as they sometimes act more quickly than the FTC. As of July 21, 2011, you should send your complaint to the Consumer Financial Protection Bureau.

It sounds like your real question is how do you get affordable, effective legal help? My first suggestion is that you talk with a consumer law attorney with expertise in suing debt collectors. If the debt collector is breaking the law, you may be able to sue the collection agency. Under the FDCPA, if you win, the debt collector will have to pay statutory damages of $1000, plus your attorney’s fees. Punitive damages may also be awarded. Some consumer law attorneys will take your case on a contingent fee basis where you do not pay anything unless you recover. It doesn’t hurt to run your situation by one to see if you have a good case.

The other thing you can do is set up a free consultation with a bankruptcy attorney. The attorney can tell you what the debt collector can and cannot do to collect from you, and explain your options. Sometimes you’ll have negotiating leverage if you tell the debt collector that you are meeting with a bankruptcy attorney and are hoping to avoid bankruptcy, but will be forced to consider it if they won’t work with you.

[Resource: Get your free Credit Report Card]

Payment plans »

Image: pshegub, via Flickr.com

3) What to do if you have verified the debt then asked for a payment plan you can afford. The debt collector (this has happened to me; I have been unemployed over 2 years & do not receive unemployment benefits) refuses to take what you offer (it’s their right), and will then sue you for “refusal to pay”.

A debt collector is not obligated to accept whatever payments you feel you can afford to make. At the same time, it would be pretty unusual for a debt collector not to accept a payment they receive in the mail! However, I don’t recommend you pay a debt collector until you have something in writing that verifies the amount you owe and a payment schedule.

So what if they mark you down as refusing to pay? It’s an idle threat. You could counter that pressure tactic by sending them a certified letter stating what you are willing and able to pay. You could tell them in the letter that if they don’t accept your payment you will mark them down as refusing to accept payment. Show them how ridiculous their threats are.

Quite honestly, Kathy, if you have been unemployed for two years, it may not even make sense for you to pay anything on this debt. If you don’t have the income or assets to pay, you could send the debt collector a letter telling them to stop contacting you again. It won’t stop them from suing you, but if you are able to show them that you don’t have anything for them to go after, they may decide to put your file at the bottom of the pile, or send it off to a different collector. Again, by meeting with a bankruptcy attorney, you will better understand your options.

[Resource: Consumer Guide to Debt Settlement]

They will also mark you down as “refused to pay” & sue you if you refuse to let them access your bank account for direct debits. My husband & I have BillPay with our bank, and when I offered to pay them monthly through billpay, the debt collector refused, saying they don’t have the technology to handle it (!) You mean you have the technology to take money out of my account through direct debit, but not to receive my bank generated checks through billpay? See BillPay checks don’t have your checking account information, therefore, it’s safe. The debt collectors don’t like it because they can’t get access into your bank account.

Never, ever, ever give a debt collector direct access to your bank account. You are smart to stand your ground on that. Be firm. If you do pay the debt collector, a cashier’s check or a prepaid card is a safer bet. But, again, only pay the collector if you have something in writing that details what you owe and how your payment schedule will work. And keep good records of every payment you make.

Hope this helps, Kathy!

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[Article: Top 10 Most Misunderstood Facts About Debt Settlement]