Dealing with Collection Agencies

People who are unable to discharge their financial obligations, may be contacted by a debt collection agency, viz. a third party employed by creditors in a bid to recover their money. The debt collector may be a collection agency, a lawyer or a company that buys delinquent debts and tries to profit by recovering bad debts. Sometimes, creditors may try and recover their debts with the aid of their collection department. The Federal Fair Debt Collection Practices Act (FDCPA), enforced by the Federal Trade Commission (FTC), regulates the collection of debt by a third party (debt collection agency). State laws apply to the credit collection department of the lender. One may visit the nearest State Consumer Protection Office for further details regarding state laws that regulate in-house debt collection.

Dealing with Collection Agencies - Rights of the Consumer

Dealing with debt collection agencies does not have to be an unpleasant experience. The collection of all personal, family, and household debts are regulated under the Federal Fair Debt Collection Practices Act (FDCPA). Personal debts include money owed on credit cards, auto loans, medical bills and home mortgage. A consumer has the right to ask debt collectors to refrain from using abusive language, calling at unreasonable hours, using unfair practices, quoting misleading statements, harassing the debtor, adding unauthorized charges and adopting other unfair practices. Generally, debt collectors are not allowed to contact people before 8 a.m. and after 9 p.m.

Debt collectors cannot harass people by threatening the use of violence. They cannot use offensive language or call people at unreasonable hours. Claiming to be attorneys or government representatives or claiming to be an employee of a credit reporting company, falsifying the extent of debts and alleging that the debtor may have committed a crime, are some forms of misrepresentation that may land the debt collector in trouble. Trying to levy additional interest, that is not legally permitted, contacting the debtor by a postcard and encashing a post dated check, well before the due date, are some of the unfair practices that may be pursued by debt collectors in their urge to recover bad debts. Providing incorrect information to the credit reporting agencies is also prohibited by the Federal Fair Debt Collection Practices Act.

If the collection agency resorts to misrepresentation and harassment or adopts unfair practices, the debtor may demand that the collection agent refrain from further communication except to let the debtor know that the collection efforts have ended or that the debtor will be sued by the collection agency.

The debtor has the right to dispatch the payment by first class mail, debit card or check, regardless of the mode of payment advised by the debt collection agency.

The Fair Debt Collection Practices Act (FDCPA) permits a debt collector to add interest on the debt provided the original agreement allows the collector to levy an interest during the collection period or the addition of interest is allowed under state law. It's never advisable to avoid dealing with credit collection agencies since putting off the issue of unresolved debts will result in further complications. One may try negotiating with credit collection agencies through lawyers, who specialize in dealing with collection agencies, and work out a mutually satisfactory arrangement.