Handling Collection Agencies and Creditors

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Handling Collection Agencies and Creditors

You need not be at the mercy of collectors, though it is to your advantage to work with them.

If you are bothered by collection agencies calling you and demanding payment on your debts, know that federal law prohibits bill collectors at collection agencies from calling you at "unreasonable" hours. This usually means before 8 am and after 9 pm.

What collectors cannot do

The Fair Debt Collection Practices Act puts a number of prohibitions on collector behavior. Collectors are, to name a few actions, forbidden to harass you, add unauthorized charges to your account, and make false statements to you. They may not contact you at work if they know your employer disapproves. They must identify themselves to you on the phone. Also, you are allowed to demand in writing that the collection agency stop contacting you.

Fair Debt Collection Practices Act does not apply to the collections department of a creditor; only to outside collectors. There are a few exceptions to this exception at the state level, so contact your state’s consumer protection bureau to see what practices it prohibits.

The most effective action

Your most effective action will definitely be to deal with the collector. It can prevent the damage to your credit from getting any worse, and it can help you regain lost privileges (for example, a suspended online auction account). If you do not cooperate, the creditor can sue you and get a court judgment. The judgment can let the creditor garnish your wages (up to 25%), seize bank accounts, or put a lien on property you own. Court judgments can last many, many years, and in many states the creditor can renew them afterward.

One last note: All states allow the collection of interest on debts.