3 debt collection horror stories
Are you afraid to answer your phone for fear of debt collection threats? You’re not alone.
“Debt collectors have gotten a lot more aggressive,” says Kristen Garrett, the public relations coordinator for Pittsburgh-based nonprofit Advantage Credit Counseling Service.
While most collectors stay within the bounds of the law, others are opting for behavior that’s outrageous, heartless and just plain illegal.
Counselors say they’ve noticed a difference between collectors for original creditors and the third-party debt collectors who buy the debt for collection. Many times, the original creditor is more willing to work with consumers, says Robert Cotton, a certified personal finance counselor with Raleigh, N.C.-based Consumer Education Services Inc.
With an outside debt collection agency, agents’ jobs often “are based on what they are able to collect,” says Don Hicks, senior counselor for Novadebt, a nonprofit credit counseling agency in Freehold, N.J. And the quickest way to get that money “is with aggression and instilling fear in consumers,” he says. Other methods are embarrassment or humiliation.
Here are some recent collection stories that rank among the worst of tricks:
‘We’re going to drag you to jail!’
Garrett thought she’d heard it all until her agency got a call from a senior citizen late last year. “She called literally in tears and said debt collectors called and said they had the police outside. If she didn’t pay, they were going to drag her to jail,” Garrett recalls.
Debts are a civil matter, not criminal — and jail time isn’t even an option. “It’s important for people to know that there is no such thing as debtor’s prison,” Garrett says.
If agents are making illegal threats like jail time, deportation and physical violence, you can report the harassment to the Federal Trade Commission or to your state attorney general’s office.
The federal Fair Debt Collection Practices Act prohibits bad behavior by third-party collectors. Third-party collectors aren’t allowed to call you at work if you ask them to stop, reveal to anyone else that you have a debt, publish or threaten to publish your debt, harass you by phone or use profanity. They can’t threaten illegal punishment like jail, loss of child custody, deportation or physical harm. They can’t phone your home before 8 a.m. or after 9 p.m. or even call at all if you’ve asked them in writing to cease contact or if you’ve hired an attorney.
‘We’re going to take your home!’
One New Jersey senior owed $12,000 in credit card debt after charging everyday living expenses on her card, says Hicks. The agent called and told her that debt collectors were going to take her home. What’s more, she was told they weren’t willing to take a penny less than the $12,000 she owed, and they wanted it now.
She tried to scrape up the money herself but couldn’t, Hicks recalls.
“Debt collection agencies are very smart in doing research,” he says. They will threaten specific assets like a home or income source. But in many states, homes are protected from debt collection, he says.
There are two things you can do:
- Call a local credit counseling agency affiliated with the National Foundation for Credit Counseling or the Association of Independent Consumer Credit Counseling Agencies. Or, you can call your state attorney general’s office to see what your rights are and which assets are protected in your state.
- Ask the collection agency for its contact information and proof of the debt in writing. The debt collection law requires them to comply. Tell them you want them to send you the agency name, contact address and phone number, the debt amount, the original creditor, the date of the original debt, and when and how the company acquired the debt. Not only will it help you research the debt’s validity, but it will buy you time, Hicks says.
‘We’ll make you a deal!’
A Pennsylvania man opened his mailbox to find what sounded like a great offer: Automatic debt settlement from a collection company, offering to take just $800 for his $1,100 debt. He threw it out.
That was a smart move because it was a disputed debt from years before. The original creditor already had acknowledged that it wasn’t the man’s debt, says Garrett. It’s not uncommon for old debts to expire. They also can be discharged in bankruptcy or settled.
In addition, states have time limits on how long a debt collector can legally pursue old debt, so it pays to see if that time has passed. If it has, you can’t be forced to pay the debt. If you don’t know if the debt is still valid, ask the debt collection company for proof of the debt and contact the original creditor about its current status.
For consumers, knowledge is real power. “If you’re savvy and understand what you can do to keep it from getting aggressive, you’re in a better position as a consumer,” said Hicks.