Collection Agencies: Know their strategies and how to deal with them.
The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.
Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.
Collection agencies are independent companies contracted by creditors to collect on unpaid bills; this can be anything from debt due on credit cards, department store credit to unpaid rent. Quite often they have purchased these accounts in bulk from other agencies for mere pennies and go from there to attempt collection.
Agencies work on commission, which is anywhere from 11%- 16% on newer accounts and the amount that is owed. Older accounts of 12 months or more that the creditor has charged off can pay up to 35%. This creates a big incentive for a collector to keep trying to pressure you to pay even after the account has already been charged off.
Collectors will tell you that your credit is hurt more by not paying after the account has been charged off. This is not true, once an account has been written off as noncollectable by a creditor then the damage has been done and there is nothing more that can happen to your credit **. Once an account has been written off it will stay in that status on your report even if you pay it off.
As a negotiating (or threat) tactic collectors will say that derogatory information will be removed if you pay it. Also collectors will try to get you to settle for a discounted amount which might be tempting to agree to just to get them off your back. In either case (if you have the funds) request they give you a letter stating that once you settle with them they will provide you a letter "Deleting the account" . ** A delete letter will remove this item from your credit report completely as if it never existed and almost immediately your credit score will jump up by 20-30 points. Ask that the letter be sent directly to you by fax or email then it will be your responsibility to deliver to the Credit Bureaus saving time and ensuring the Bureau processes it to your file.
If you don’t pay a debt, a creditor or its debt collector could sue you to collect. If they win, the court will enter a judgment against you. The judgment states the amount of money you owe, and allows the creditor or collector to get a garnishment order against you, directing your employer, or your bank, to turn over funds from your account to pay the debt. Wage garnishment happens when your employer withholds part of your compensation to pay your debts. Your wages usually can be garnished only as the result of a court order. Don’t ignore a lawsuit summons. If you do, you lose the opportunity to fight a wage garnishment.
Collectors will send you threatening letters attempting to get you to pay, it never fails for a collector to try different tactics in the event that you may pay off the account. The debt collector is very good at using all the information at their disposal to intimidate you. These intimidation techniques generate big commissions for the debt collector.
Know your rights:
A collector may contact you in person, by mail, telephone, telegram, or fax. However, the collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A collector also may not contact you at work, if you inform them not to.
You can write the collector telling them not to contact you, once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it; you could still be sued by your original creditor.
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.
If you inform the collector that you have an attorney, the collector must contact the attorney, rather than you.
A collector may contact other people to find out where you live, what your phone number is, and where you work, however the collector may not tell anyone other than you and your attorney that you owe money.
A collector may not contact you if, within 30 days after you receive the written notice, 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 that the debt is still owed. If this happens you can retake the same actions as before.
Debt collectors may not harass, oppress, or abuse you or any third parties they contact.
For example: debt collectors may not; use threats of violence or harm; publish a list of consumers who refuse to pay their debts (except to a credit bureau); use obscene or profane language; or repeatedly use the telephone to annoy someone.
What to do if you feel your rights have been violated:
The law is clear: debt collectors can’t use abusive, deceptive or unfair practices. Debt collectors who cross that line will end up in trouble with the FTC.To file a complaint go to https://www.ftccomplaintassistant.gov/Information