If you fall far enough behind on bill payments for credit cards, mortgage, auto loans, medical bills or other debts, you open the door to one of the worst nightmares in life: Debt Collection Harassment.
The definition of debt collection harassment is to intimidate, abuse, coerce, bully or browbeat consumers into paying off debt. This happens most often over the phone, but harassment could come in the form of emails, texts, direct mail or talking to friends or neighbors about your debt.
Collection agencies are permitted to recover the money owed to creditors. They are not permitted to use deceptive or threatening techniques to do so.
The Consumer Financial Protection Bureau (CFPB) said it received more than 163,000 consumer complaints concerning debt collection in just two years (July 2013-July 2015). The Federal Trade Commission (FTC), which regulates the debt collection industry, said that no other industry receives more complaints.
Collection agencies are most often chasing debt related to medical bills. The other major areas are credit card and student loan debt or auto loan and mortgage payments.
The Urban Institute estimates that roughly 77 million Americans, or 35% of adults with a credit file, have debt in collection. Not counting mortgage debt, adults owe an average of $5,178 for medical, credit cards, or utility bills that are past due. Their median debt (half owe more, half owe less) is $1,349.
A federal law — the Fair Debt Collection Practices Act (FDCPA) – outlines exactly what can and can’t happen in this business and most of the law is an effort to protect the consumers’ rights.
Summary of FDCPA
The FDCPA originally was passed in 1977 and amended in 1996 as a response to the alarming number of complaints about methods collection agencies were using to force people to pay their debts.
Be advised that the FDCPA does not apply to the original creditor, only to debt collection agencies.
The FDCPA says this about harassment: “A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.”
That seems plain enough, but the law gives more than 50 examples of what that means, including:
- Use of threat, violence or other criminal means to harm a person, reputation or property
- Use of obscene or profane language
- False representation that the debt collector represents a state or federal government
- Misleading information on the amount or legal status of a debt
- False implication that debt collector is an attorney or law enforcement officer
- Implication that nonpayment of a debt will result in arrest or imprisonment
- Causing a telephone to ring repeatedly with intent to annoy, abuse or harass
If any of these apply to your case, notify the collection agency with a certified letter that you feel you are being harassed. Send a copy of the letter to the original creditor, who could offer to cancel the debt or settle at an agreeable rate in order to avoid liability.
Stop The Phone Calls
Collection agencies are infamous for violating the rules against constant and aggressive phone calls. It is the one area that causes the most controversy in their business.
It’s hard to avoid the first phone call from a collection agency, but once you’ve heard from them, there are steps you can take to stop the calls altogether.
The first move is to wait for the collection agency to send a validation notice. They are required by law to send you a validation notice within five days. The notice must tell you how much money you owe, who the original creditor is and what to do if you don’t think you owe the money.
After the first call, FDCPA rules permit debt collectors to make calls between the hours of 8 a.m. and 9 p.m., but with very severe restrictions meant to protect privacy. The collection agency must identify itself every time it calls. It may not call the consumer at work. It may only call the consumer’s family or friends to obtain accurate information about the consumer’s address, phone number and place of work.
Most importantly, if a consumer does not wish to be called by a collection agency, he can either hire an attorney and refer all phone calls to the lawyer or submit a cease-and-desist letter, sent by certified mail, to the collection agency advising them that they may not contact you.
When the collection agency receives the certified letter, it can’t contact you except for two reasons: First, to let you know it received the letter and won’t be contacting you again and second, to let you know it intends to take a specific action against you, such as filing a lawsuit.
Sending a certified letter to the collection agency doesn’t mean you no longer owe the money, it simply means that the collection agency will have to take another route to get paid.
What If Harassment Goes On?
Hiring a lawyer or sending a certified letter to the collection agency should stop harassing phone calls, but there is plenty of evidence that it does not always work.
One reason is that collection agencies can resume contacting you if you don’t respond to the validation notice they send after the first call. Consumers have 30 days after receiving the validation notice to tell the collection agency that they don’t owe the money or ask for verification of the debt.
If a collection agency sends verification of the debt (e.g. a copy of the bill), it may resume calling you.
By then, it’s time to notify the collection agency that you have a lawyer or send a cease-and-desist letter, but even then, the phone may keep ringing.
Taking Legal Action
If you decide to take legal action, first file a complaint about the debt collector’s violations to the Federal Trade Commission (FTC), the Consumer Financial Protection Bureau (CFPB) and your local state attorney general’s office.
Then you may choose to sue the collector. If you suffered damages such as lost wages, the goal of your lawsuit should be to collect damages. If you can’t prove any monetary damages, you still may be awarded up to $1,000 in a lawsuit.
Keep in mind that a collection agency also can sue you to recover the money you owe. Although the law regulates the behavior of debt collectors, it does not absolve you of paying your debts. Don’t ignore a lawsuit summons, or you will lose your opportunity to present your side in court.
If you plan to sue for harassment, it is best to have a log that details your complaints with collection agencies and the times they violated the FDCPA.
That means writing down the day, time and a summary of the exchange each time you are contacted by a collection agency. It would help if you recorded the phone calls, though laws in most states say you must advise a caller before recording them.
It also is advisable to save any voicemail messages you receive from collection agencies as well as every piece of written correspondence. Let the collection agency know you intend to use the recordings in legal proceedings against them.
One way to avoid legal action is to send your complaint directly to the original creditor or debt collection agency and ask them to negotiate a settlement. In some cases, they may cancel the debt to avoid a court hearing.
They also might offer to reduce the amount they will accept in order to settle. If so, make sure the offer is in writing and specifies the exact amount to be paid. Also, request that the settlement offer include a promise to remove the bill from your credit history so that it no longer has a negative impact on your credit score.
Don’t ignore debt collectors, even if you believe the debt is not yours. The debt collector could sue you and win a judgment that will cost you more time and money.