I received another good e-mail this week, about debt collectors. I love writing about debt collectors, because there is a single, 10-minute step you can take to make them stop harassing you. Read on, to find out what it is! And if you have a question for me, please click here to write to me.
QUESTION: I have had a company calling me now for the past few weeks saying they are a mediation company trying to collect for a payday loan. They said the case was being turned over to the d.a.'s office in my city, and considered a class C misdemeanor, and there were fines up to $4000 that included court costs. The more questions I asked, the more evasive the caller became. He told me I had to pay via debit or credit card by this afternoon, but could not provide any documentation as to who he was collecting for and didn't even know the name of the company. They tell you to call back, and when you do, you get an automated voicemail telling you to leave a case number, your name and phone number. However, I have no case number!! Does this sound like a scam? ~D, Texas
ANSWER: Yup. Not only does it sound like a scam, it is a scam. Here's why: being indebted is not a crime in this country, period. And it is illegal for debt collectors to say you've committed a crime in order to wrest your money from you. Here are some more ins and outs of what collectors are and are not allowed to do.
The Fair Debt Collection Practices Act requires debt collectors to treat you fairly. They're not allowed to call you before eight in the morning or after nine at night. If they know your employer discourages personal calls, they are not supposed to call you at work. One call a day is the accepted industry standard. After a collection company calls you, it has five days to mail you a notice stating who you owe, how much you owe and what to do if you dispute the debt.
Collectors are not allowed to embarrass you publicly or discuss your debt with anybody else. They can call other people only to find out where you are. Collection agents are not allowed to pretend that they're with the cops or the courts. To repeat, they can't imply that you've committed a crime or threaten to arrest you. And they can get into serious trouble if they use foul language or threaten violence. Collection agents are not allowed to collect more than you owe. If you write a post-dated check they can't cash it early.
There are plenty of reputable debt collectors and they fulfill a valuable role in our financial system. But here's the rub: debt collectors make commissions that range from 15 to 50 percent of what you owe. So some go too far in their pursuit of your money and their commission.
If you do owe the money and want to put the debt behind you, often collection agents are willing to negotiate. After all, if you don't pay, they don't get paid. Say you owe $3,000, but you only have $2,000. If you offer to forward it right away, the collector may agree to call it even. But only do this if your credit is already in terrible shape, because the debt will be recorded as a loss, which puts a negative mark on your credit report.
If you are not yet ready to address the debt, you don't have to put up with the calls and letters. There is a 10 minute step that stops all of that! If you want a collector to stop calling, simply ask him for his name, the company he works for and the address. By law, he must provide it. Then send a certified letter demanding that the collector stop contacting you. Mention that you know you have this right under the Fair Debt Collection Practices Act. After that, the collection company can only notify you of specific legal action it plans to take against you. The debt doesn't go away, but the stressful calls do.