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| Collectors & Collection Agencies |
If you use credit and fall too far behind on your payments, a collector from a collection agency may contact
you. These individuals are usually very persistent in the collection of the debt. The Fair Debt Collection
Practices Act governs the practice of debt collection. This law is in place to protect consumers.
Before proceeding, lets us establish a few definitions:
Debtor:Anyone who owes money on an account is considered a debtor. Most lenders do not use this term
as it gives a negative impression. However, once you are in collections, you are branded as a debtor.
Collector:Any individual who is employed for the purpose of collecting past due accounts. This can
also include lawyers who collect debts for their clients.
Collection Agency:Any third party business whose primary purpose is the recovery of past due accounts.
Most creditors have their own accounts receivable departments. These departments are not considered collection
agencies, as the main purpose of the company is not the recovery of debts.
Under the Fair Debt Collection Practices Act, collectors and collection agencies are prohibited from doing
any of the following:
- Use threats of violence or harm against the person, property, or reputation
- Publish a list of consumers who refuse to pay their debts (except to a credit bureau)
- Use obscene or profane language
- Repeatedly use the telephone to annoy someone
- Telephone people without identifying themselves
- Falsely imply that they are attorneys or government representatives;
- Falsely imply that you have committed a crime
- Falsely represent that they operate or work for a credit bureau
- Misrepresent the amount of your debt
- Misrepresent the involvement of an attorney in collecting a debt
- Indicate that papers being sent to you are legal forms when they are not
- Indicate that papers being sent to you are not legal forms when they are
- You will be arrested if you do not pay your debt
- They will seize, garnish, attach, or sell your property or wages, unless the collection agency or
creditor intends to do so, and it is legal to do so
- Actions, such as a lawsuit, will be taken against you, which legally may not be taken, or which they
do not intend to take
- Give false credit information about you to anyone
- Send you anything that looks like an official document from a court or government agency when it is not
- Use a false name
- Collect any amount greater than your debt, unless allowed by law
- Deposit a post-dated check prematurely
- Make you accept collect calls or pay for telegrams
- Take or threaten to take your property unless this can be done legally
- Contact you by postcard
- Call you before 8 a.m., after 9 p.m.
- Contacting you at work if he knows your employer disapproves
- Telling anyone aside from you and your attorney that you owe money
Your Rights:
- Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe, the name of the creditor to whom you owe the money and what action to take if you believe you do not owe the money.
- A collector may not contact you if, within 30 days after you are first contacted, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.
A few facts about collection agencies & collectors:
- Collection agencies make nothing if they do not recover any monies. Typically, a collection agency keeps 20% to 25% of recovered money
- Most collectors are commission based similar to a car salesman
- Collection agencies usually have pre-approved permission to settle accounts (usually 75% to 80% of the balance)
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