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Secrets of debt collection agencies

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By Andrew Housser

Getting behind on bills is never a good idea -- but it happens. In fact, nearly 15 percent of consumers deal with debt collection agencies at any given time. It can be unsettling when a debt collector tracks you down and inquires about repayment. But owing money to a creditor does not place you completely at its mercy. The Fair Debt Collection Practices Act enforced by the Federal Trade Commission protects consumers against unscrupulous tactics employed by collectors. Still, it is up to you to be educated and know your rights. Here is a look at six things to know about debt collection.

1. Talking to a debt collector is smarter than avoidance. You should not ignore notices about debts or debt lawsuits or try to evade all contact with a collector. It is a good idea to talk to a collector at least once to get more information and discuss steps to resolve the situation. The collector will try to direct the discussion toward commitment to payment, but it is important to obtain data first. It is possible that the collection agency is going after the wrong person or that their information is incorrect. After this initial contact, a debt collector has five days to send you a written validation notice outlining the name of the creditor, the amount they believe you owe and what actions you can take. 

2.  You can ask a debt collector to cease contact. You have 30 days after receipt of the validation notice to send a response to the collection agency. If you disagree with the assessment, explain why and ask the company to stop contacting you. You can find sample letters at the Consumer Financial Protection Bureau (CFPB). Keep a copy of your letter and send it via certified mail so you can verify receipt. Remember, while sending a letter stops the phone calls, it does not erase the debt. The creditor or the debt collection agency still can sue you to collect the debt.

3.  A debt collector's phone calls are restricted. Debt collectors cannot call you before 8 a.m. or after 9 p.m. unless you give them permission to do so. They also may not call you at work if you have asked them not to (you can make this request verbally on the phone or put it in writing). If you hire an attorney, the debt collector must go through your attorney instead of talking directly to you.

4.  Debt collectors cannot share information with family or friends. Debt collectors may contact family members and friends to inquire about your address, phone number and workplace. However, they cannot contact these third parties more than once. In addition, they can only reveal information about your debt situation to you, your spouse or your attorney -- not family members or friends.

5. You can record your phone conversations. Some states require that you have the other party's consent before recording a phone conversation. (Visit the Digital Media Law Project to determine your state's recording rules.) Even if consent is not required and even if you are not actually making a recording, sometimes it can help to tell a debt collector that he is being recorded. In the past, some collectors have issued threats, used obscene language, harassed people, or made false claims or misrepresentations. Today, all of these actions are illegal. A recording request by a customer can help reinforce the importance of professionalism with a debt collector – whether the customer actually records the call or not.

6.  You can file a complaint. You have several recourses if you believe a debt collector is acting unethically. Because many states have debt collection laws that differ from the federal debt collection act, you should contact your state's Attorneys General office. (Find yours via the National Association of Attorneys General.) You also can file a complaint with the CFPB and with the Better Business Bureau in the city and state where the debt collection agency is located.

You do not have to deal with debt collectors on your own. If you are dealing with serious debt and having a hard time making minimum payments, a reputable consumer credit advocate or debt settlement firm can help. Look for a company that is a member of the American Fair Credit Council.



Andrew Housser is a co-founder and CEO of, a free one-stop online portal where consumers can educate themselves about personal finance issues and compare financial products and services. He also is co-CEO of Freedom Financial Network, LLC providing comprehensive consumer credit advocacy and debt relief services. Housser holds a Master of Business Administration degree from Stanford University and Bachelor of Arts degree from Dartmouth College.
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