Know Your Rights When The Bill Collector Calls

Managing Tough Times – When Collectors Call

If you've fallen behind on some bills, you're well aware that debt collectors, a third-party hired by the original lender, are eager to collect those payments.

Some collectors go over the line, threatening to have the person arrested, making improper bank withdrawals, intimidating people and making harassing phone calls.   “Be aware that if you are overdue on a bill and get contacted by a debt collector,” says Brenda Schmitt, ISU Extension Family Resource Management Field Specialist, “the federal Fair Deb Collection Practices Act requires that you be treated fairly and without harassment.  Most people are not aware of their rights and debt-collectors take advantage of that fact.”  This doesn't mean you won't have to pay your legitimate debt.

Complaints about debt collection agencies are on the rise. The Federal Trade Commission said they received more complaints against debt collectors than against any other industry for at least the past three years. And for the past five years, complaints are up about 43 percent according to the Better Business Bureau.

In general, the law prohibits certain unfair and deceptive collection practices. Some basic rights prohibit a debt collector from calling you before 8 a.m. or after 9 p.m., unless you agree.  You cannot be contacted at work if the collector knows your employer disapproves.   If you don't want to hear from a debt collector, write a letter telling them to stop. By law, they have to. But, remember, the debt won't go away and you can still be sued.  The debt collector can contact your attorney -- if you have one. If not, your friends and family can be asked about how to get in touch with you.   A debt collector can't misrepresent the amount of your debt. A debt collector also cannot use profane or threatening language or say that they will put a lien on your property or file a lawsuit unless the agency really means to do that and it's legal. Collectors can't legally claim federal benefits, such as Social Security or your retirement accounts, like your IRA or 401(k).

Within 30 days from the initial contact made by a debt collector, you have a right to dispute any of the debt you are told you owe.  I you dispute the bill in writing; the debt collector can’t contact you again to collect the money until you are provided with proof of the debt, such as a copy of a bill.  If you do pay just to get rid of the debt collectors, it's an admission of guilt, and it will have a negative impact on your credit score.

Keep in mind that some debt has an expiration date. There is a limit to how long collectors can legally collect your debt. In Iowa the Statue of Limitations for an Open Accounts is 5 years; Written Contracts – 10 years; Domestic Judgment – 10 years; Foreign Judgments – 10 years and can be renewed in the 9^th year.

Sometimes debt collectors will try to collect on this old debt called zombie debt because it never goes away. Make sure you don't accept a new credit offer from a creditor you never repaid. Once that creditor renews your credit relationship, the clock starts ticking all over again on your state's statute of limitations.

You also have the right to sue a debt collector in state or federal court within a year of the date the law is violated. A victory will allow you to recover money for the damages you suffered plus an additional amount up to $1,000. A group may also sue a collector and for damages up to $500,000 or one percent of the collector's net worth, whichever is less.

For the Federal Government, the rules are different.  The Debt Collection Improvement Act  allows the government to take a portion of federal retirement, federal salary and Social Security benefit checks to cover non-tax debts owed to the government.

There are some debts that you can't get rid of. If you don't pay your federal student loans for example, debt collectors can garnish your Social Security wages and prevent you from renewing any state licenses. Debt collectors can even dip into your tax refund. Other debts like past-due child support and federal tax liens tend to stick with you.

If you think you've been treated unfairly by a debt collector, take action. File a complaint with the Federal Trade Commission at 877-FTC-HELP or go to www.ftc.gov. You should also contact your state attorney general's office.

picture courtesy of flickr.com 

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