June 16, 2009 -- Even good people can fall behind on their debts.
That's why we should all be concerned when some debt collectors step over the line, as explained in the question below.
Question: Because of the hard times, people fall behind on credit card payments. I would like to know when it becomes harassment on the part of the credit card company calling you. In the last three days, the same credit card company has called a friend of mine 24 times -- as quickly as 2 minutes apart. How do you get them to communicate with one another so they know they have contacted you? It has become very annoying and some of the people that call are very rude. It is bad enough to be in this situation without people harassing you.
-- P.E., Macungie, Pa.
Answer: P.E., if this situation persists, then I would suggest your friend become familiar with the Fair Debt Collection Practices Act, a federal law that prohibits debt collectors from using abusive, unfair or deceptive practices.
Then, once familiar with this law, your friend should prepare to utilize its provisions the next time he or she is contacted by a debt collector for this credit card company.
The Fair Debt Collection Practices Act applies to personal, family and household debts, including money owed on personal credit cards, auto loans, medical bills and home mortgages. It does not cover business debt.
The federal law applies primarily to third-party debt collectors hired by a credit card company or other lender rather than the lender itself. Some states, including Pennsylvania, also have similar laws that apply directly to creditors.
In your case, P.E., your friend should first confirm whether it is the credit card company itself calling or an outside debt collector. If it's the credit card company, she may need to look to Pennsylvania's Fair Credit Extension Uniformity Act law for help.
As for the federal law, it was first enacted by Congress in 1977 and last updated in 2006. The Federal Trade Commission, which is responsible for enforcement, recommended in February that the nation's debt collection legal system be reformed and modernized.
According to the FTC's annual report on the act to Congress, the agency receives more complaints about debt collectors than any other industry.
The Fair Debt Collection Practices Act sets guidelines on when and how a debt collector may contact you, how you can halt the contact, whom the collector may contact and what practices by the collector are off limits.
Fair Debt Collection Practices Act
Here is a summary of the Fair Debt Collection Practices Act's key provisions.
Contact Times and Places: Unless you agree, a debt collector may not contact you before 8 a.m. or after 9 p.m. They also may not contact you at work if they are told you are not allowed to receive calls there.
Stop the Calls: The FTC suggests you speak with a debt collector at least once to see about resolving the matter. After that, you can tell the collector to stop contacting you. The best way to do that is in writing.
The FTC suggests you draft your letter, make a copy for your records, send the original by certified mail and pay for a "return receipt" to document that the collector received it.
Once the letter is received, the collector may contact you only for one of two reasons: to confirm there will be no further contact or to notify you of specific action, such as the filing of a lawsuit.
Just keep in mind that sending a no-contact letter doesn't rid you of the debt; it just puts the collector on notice that you should not be contacted any further.
Contact With Others: A debt collector must contact your attorney if you have retained one. If you do not have an attorney, the debt collector may contact others -- but only to find out how to contact you. A collector is not permitted to discuss your debt with anyone other than you, your spouse or attorney.
Written Notice: A debt collector must send a written "validation notice" informing you how much money you owe within five days of first contacting you. This notice should contain the name of the creditor to whom you owe money and what to do if you don't believe you owe the money.
Prohibited Practices: The Fair Debt Collection Practices Act bans a number of practices. These include harassment, abuse and threats of violence or harm.
For instance, a debt collector may not use obscene language, repeatedly use the phone to annoy someone or publish a list of names as a means of embarrassing someone who has not paid a debt.
Also, a debt collector may not lie when trying to collect a debt, threaten you with arrest or give false information about you to someone else.
Advice: Know the Law
In your friend's case, P.E., I would suggest the best defense against the practices you described is a thorough knowledge for the Fair Debt Collection Practices Act and a letter to the collector asking for no more contact, as explained above.
To learn more, check out the Federal Trade Commission publication "Debt Collection FAQs: A Guide for Consumers." It can be found at www.ftc.gov.
You can also consult the National Association of Consumer Advocates, www.naca.net, which has a section on debt-collection practices on its Web site.
This work is the opinion of the columnist and in no way reflects the opinion of ABC News.
David McPherson is founder and principal of Four Ponds Financial Planning in Falmouth, Mass. He previously worked as a financial writer and editor for The Providence Journal in Rhode Island. He is a member of the Garrett Planning Network, whose members provide financial advice to clients on an hourly, as-needed basis. Contact McPherson at firstname.lastname@example.org.