Bill collector blues: when payments are past due and collectors come calling - know your rights.

When payments are past due and collectors come calling--know your rights

Perhaps you've been through a tough period and have fallen behind on your credit card, car loan or medical bill payments. Maybe an unemployment stint, divorce or default of a loan for which you co-signed has left you unable to pay your bills on time. Now the bill collectors are at your door, and the heat is on for you to start paying up.

What can you do? Even though bill collectors have a job to do, there are rules that they have to adhere to--and you should know where they must draw the line. For starters, the inconvenient 7 a.m. phone calls, repeated contact at work and threats to take personal possessions that are often associated with annoying collectors are--by law--off limits, unbeknownst to many debtors. But unfamiliarity with consumer rights leads most people to just swallow the abuse.

"It's not uncommon for a creditor to call and say, `We're coming in to take all the furniture out of your house next week,'" says Luther R. Gatling, president and founder of Budget & Credit Counseling Services in New York City.

But the law states that debt collectors, which include any person other than the creditor that regularly collects debt owed to others, cannot under the Fair Debt Collection Practices Act (passed in 1978), harass, use false statements or unfair practices, to collect past due payments. Creditors can make contact either by mail, telephone or fax, but within specific limits. To follow, are the limits of what can--and cannot--be done to you:

Harassment. Collectors should not oppress or abuse anyone. Threats of violence or harm against property or reputation, or the use of obscene or profane language is inexcusable. Telephone calls at unreasonable hours--usually before 8 a.m. or after 9 p.m. are unacceptable--unless they're agreed upon previously. Contact cannot be made at work if an employer disapproves, and collectors may not call without giving proper identification.

False statements. You cannot be told that you've committed a crime or will be arrested if you do not pay a debt. Collectors cannot misrepresent the amount you owe, or falsely imply that they represent the government or work for a credit bureau. Nor can they threaten to seize, garnish or attach wages or sell your property, unless the collection agency has taken you to civil court and a "default of judgment" has been ordered. Additionally, creditors cannot say that papers being sent to you are legal forms when they are not, nor can they misrepresent the involvement of an attorney in collecting a debt.

Unfair practices. You cannot be forced to pay any amount greater than the debt you owe (outside of late penalties and interest), unless allowed by law. Collectors cannot deposit a post-dated check prematurely, make you accept collect calls or pay for telegrams. They also cannot contact you by postcard, which would divulge your credit history in public.

That said, how do you take action if you've been a victim of these practices? You have the right to sue a collector in state or federal court within one year from the date the law was violated. However, first "direct your attention to the debt collector," says Shirley Rooker, president of Call for Action, a nonprofit consumer assistance organization in Bethesda, Maryland. During a phone conversation with a collector, ask to speak to the supervisor, then ask to get the debt verified in writing. Under the Fair Debt Collection Act, the collector must send you a written notice that states how much you owe, the name of the creditor and what action to take if you dispute the claim. Report the collector and the agency to your city or state consumer affairs department (which can threaten to pull the collector's license), your state attorney general's office or the Federal Trade Commission. If the problem is specifically related to abusive telephone practices, contact the complaint division of your local telephone company.

To stop a collector from contacting you, write to the agency requesting a stop to the calls or offensive behavior; and send it by certified mail. If you dispute the amount of money you owe, send a letter within 30 days of your first notice starting what amount you may or may not owe. The collector is barred from further contact until the disputed amount can be verified.

"If money is owed, try to work out a plan with them, but don't avoid them entirely," says Rooker. "If you're a chronic nonpayer, they may be unwilling to work out a deal, but most creditors will try to work out some type of repayment plan," she says. If you'd rather not deal with them directly, contact a nonprofit consumer credit counseling service in your area, which will offer low-cost or free advice or assistance, and possibly act as an intermediary.

If you have questions about your rights or the Fair Debt Collection Practices Act, write: Correspondence Branch, Federal Trade Commission, Washington, DC 20580.