Debt Collectors

NOLO'S FAST FACTS: DEBT COLLECTORS
by the Editors of Nolo Press

The law prohibits creditors from using abusive or deceptive tactics to
collect a debt. The law, however, also grants powerful collection tools to
creditors once they have won a lawsuit over the debt. Here are six
frequently asked questions and answers about debt collectors.

1. Collection agencies have been calling me all hours of the day and
night. How can I get them to stop contacting me?
2. I'm also getting calls and letters from the collections department of
a local merchant I did business with. Can I tell that collector to
stop contacting me?
3. I just got a form collection letter with a lawyer's mechanically
reproduced signature on it. Is this a legitimate collection technique?
4. A bill collector insisted that I wire the money I owe through Western
Union. Am I required to do so?
5. I've moved a lot and recently heard from a collector on a bill that's
almost three years old. How did the collector find me?
6. Can a collection agency add interest to my debt?

1. Collection agencies have been calling me all hours of the day and night.
How can I get them to stop contacting me?

It's against the law for a bill collector who works for a collection agency
(as opposed to working in the collections department of the creditor
itself) to call you before 8 am or after 9 pm. The law, the Fair Debt
Collection Practices Act (FDCPA), also bars collectors from calling you at
work, harassing you, using abusive language, making false or misleading
statements, adding unauthorized charges and many other practices. Under the
FDCPA, you have the right to demand that the collection agency stop
contacting you, except to tell you that collection efforts have ended or
that the creditor or collection agency will sue you. You must put your
request in writing.

2. I'm also getting calls and letters from the collections department of a
local merchant I did business with. Can I tell that collector to stop
contacting me?

No, the FDCPA (Fair Debt Collection Practices Act) applies only to bill
collectors who work for collection agencies. Several states, including
California, Florida, Louisiana, Maryland, Massachusetts, Michigan, Oregon,
Texas and Wisconsin, have laws which bar all debt collectors--both working
for a collection agency and working for the creditor itself--from
harassing, abusing or threatening you or making any false or misleading
statement. These state laws, however, don't give you the right to demand
that the collector stop contacting you. There is one exception: Residents
of New York City can use a local consumer protection law (Rules of the City
of New York sec. 5-77(b)(4)) to write any bill collector and say "Stop!"

3. I just got a form collection letter with a lawyer's mechanically
reproduced signature on it. Is this a legitimate collection technique?

Perhaps not. Under the FDCPA (Fair Debt Collection Practices Act), a lawyer
must review each individual collection case before putting his or her name
on a collection letter. The lawyer can't simply authorize that a form
letter be sent and then let the bill collector send it, with the lawyer's
signature, if the lawyer hasn't reviewed the particular debtor's file. To
put a stop to it, you may be able to sue the lawyer for up to $1,000 in
small claims court for violating the FDCPA.

4. A bill collector insisted that I wire the money I owe through Western
Union. Am I required to do so?

No, and it could add a lot to your debt if you did. Many collectors,
especially when a debt is more than 90-days past due, will suggest several
"urgency payment" options, including:

* Sending money by express or overnight mail--this will add at least $10
to your bill; a first class stamp is fine.
* Wiring money through Western Union's Quick Collect or American
Express' Moneygram. Another $10 waste.
* Putting your payment on a credit card not at its maximum. You'll never
get out of debt if you do this.

5. I've moved a lot and recently heard from a collector on a bill that's
almost three years old. How did the collector find me?

In this technological age, it's easy to run but harder to hide. Collectors
use the following primary resources to find debtors:

* relatives, friends, neighbors and employers--collectors pose as
long-lost friends to get these people to reveal your new whereabouts
* post office change of address forms
* state motor vehicle registration information
* voter registration records
* a former landlord
* banks

6. Can a collection agency add interest to my debt?

Not unless it was called for in your original agreement or allowed under
your state's law. Many states do authorize the collection of such interest.In California, for example, collection agencies can add interest because
the Civil Code (sec. 3289(b)) permits a creditor to charge interest after
default, even if the contract is silent.

Copyright (c) 1995 Nolo Press
You may copy this article so long as you include this copyright notice.