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The All-American philosophy: Knowledge is Power. 

If your credit problems have progressed to the point where your creditors have turned your case over to collection agencies, it is important to know your legal rights.

Collection agencies are not allowed to:

If you have experienced any of the above, you have the right to ask the collection agency to stop harassing you. You can also report this to the Better Business Bureau, the Federal Trade Commission (see below), or your state's attorney general's office. The federal Fair Debt Collection Practices Act also states that you can demand that the collection agency stop contacting you, except to tell you that collection efforts have ended or that the creditor or collection agency will sue you. However, you must put your request in writing. Contact your Personal Consumer Advocate who will assist and explain this to you.

Please note: The FDCPA applies only to bill collectors who work for collection agencies, not the original creditors, so you will not be able to get the collection department of your credit card company to stop calling you with a letter. Only New York City has a local consumer protection law that requires the original creditor to stop calling you after a written request to do so.

What happens if the collector breaks the law?

The best way to ensure a bill collector does not violate the FDCPA is to keep accurate records.  It is best to communicate in writing.  If you do have to communicate by phone, try to tape record each conversation (make sure it is legal to do so in your state).  Also record everything the bill collector says in some form of a written log. Be sure to include the dates of the conversations. The next step is to file a complaint in writing. You can even file a complaint if you don't have a witness to any of these conversations, but a witness helps. The correct agency to file your complaint with is the FTC. You can even file a complaint online:

Federal Trade Commission
6th Street & Pennsylvania Avenue NW
Washington, DC 20850
202-326-2222
http://www.ftc.gov

Next, complain to your state consumer protection agency. Then send a copy of your complaint to the creditor who hired the collection agency. If the violations are severe enough, the creditor may stop the collection efforts.

If the violations are ongoing, you can sue the collection agency (and the creditor that hired the agency) for up to $1,000.00 in small claims court for violating the FTC regulations (note: you probably won't win if you can prove only a few minor violations). If the violations are outrageous, you can sue the collection agency and creditor in regular civil or small claims court.

Common Collections Tactics and Rebuttals

Some collection agencies do employ collection methods involving the use of false and misleading statements. They collect more effectively off of fear.  This allows them to close the deal NOW. They will always try to get you to pay right then and there. Some examples:

While the FDCPA allows a collector to add interest if your original agreement calls for the addition of interest during collection proceedings, or the addition of such interest is allowed under state law, it is not necessary to spend the money or risk your checking account for any of the above methods. The three or four days it may take to mail a payment with a first class stamp, if they do decide to come after you for interest, won't break the bank.

What if I can't pay?

It is in your best interest to settle your debts as quickly as possible to avoid a court judgment. A bill collector generally has only one way of getting paid: Demand payment by calling you and sending you threatening letters. If you refuse, the collector can't do much else and in some cases may even sue you. Once the collector (or creditor) does sue, they may get a judgment.  As an All-American client we will educate you on how to answer a summons and what to expect in court.  Don’t assume the collection agency or creditor will win.  The burden of proof is on them and most of the time they have no proof.  Although we don’t advocate our clients not pay their bills, we also don’t advocate collection agencies breaking the law

If you do receive a summons to go to court and do nothing, you can rest assure that you will receive a default judgment.  The collectors became very aggressive once this happens and may garnish up to 25% of your net wages (some states exempt).  The following are some other consequences of a default judgment:

• Seize any bank or other deposit accounts you have. his happens and may garnish up to 25% of your net wages (some states exempt).  The following are some other consequences of a default judgment:
  
  • Seize any bank or other deposit accounts you have.
  • Record a lien on your property, which will have to be paid when you sell or refinance your property (some states are exempt)