NEW YORK (MainStreet) — The phone rings. You don't recognize the number. You get a knot in the pit of your stomach, because you're used to dealing with bill collectors who are rude, unprofessional or even abusive. No one should be worried to pick up the phone. No matter how much you owe, you have rights when debt collectors call. In fact, you might be able to collect a cool $1,000 every time they’re violated. Here’s how.
The Fair Debt Collection Practices Act
The main federal law governing your rights with bill collectors is the Fair Debt Collection Practices Act (FDCPA). This law, however, only applies to third-party debt collectors -- not your credit card company's collection department. Mike Sullivan, director of education with Take Charge America, points out that your state laws might protect you against original creditors.
"Most states have a state law as well," he says. "Oftentimes this just replicates the FDCPA. Some provide additional protection."
The most common violations of the FDCPA include calling you at odd hours, calling repeatedly, disclosing information about your accounts to third parties, contacting you after you've hired an attorney to handle your case for you, threatening you with criminal prosecution, using abusive and profane language or lying. So if you're being harassed, potentially illegally, what can you do about it? Quite a lot, actually.
Getting Even With Shady Bill Collectors
Randy Padawer, a consumer advocate with LexingtonLaw, urges you to pick up the phone -- but to document the call. Laws vary from one state to another, but some states don't require you to disclose that you're recording the call. Others require the permission of the other party. However, this is obtained as simply as debt collectors get it: just say something along the lines of, "This call is being recorded." In most cases, their continuing the conversation implies consent. Check your state laws.
This might be enough to scare the creditor into compliance. However, if it's not, you now have documentation of the abusive and potentially illegal behavior.
"Small claims court is your best buddy," says Padawer. What you're entitled to, under the FDCPA, is a $1,000 "statutory award." This means that the award is set by statute. Every time a debt collector commits an infraction, that's another $1,000. How do you go about collecting it? When you file in small claims court, you have to notify the collection agency. But Padawer notes that in most cases the agency is not even going to bother to show up. This means you'll get a default judgment. You then have to seek further action to collect your $1,000. Even if this just knocks down your debt, it's probably worth putting the time in and doing the legwork.
"Very few people document these abuses, file in small claims court and complain to the FTC and the CFPB," says Sullivan. "But I recommend you do."
Showing up in court with a tape of a debt collector lying or a notice meant to look like a government document will net you $1,000 each. "It really annoys them." Sullivan also notes "You have to show up."
Know the Statute of Limitations
Especially when it comes to your own debt, know the statute of limitations.
"You need to be aware of what these are in your state," says Sullivan. In fact, if someone tries to collect debt older than the statute of limitations, the worst thing you can do is even acknowledge that it’s yours -- something that might reactivate the debt.
It's not uncommon for companies to attempt to collect debt past the statute of limitations. This is known as "zombie debt." The practice is not illegal in and of itself. In fact, you can still be sued for debt that's past the statute of limitations. The statute of limitations only provides you with an affirmative defense against judgment. But again, the most important thing is to not to reaffirm the debt.
"If you do that, either verbally or in writing, you're going to start the statute of limitations all over again," says Sullivan.
Most Collection Agencies Follow the Law
Sullivan is quick to point out that most collection agencies at least try to follow the law.
"The penalties can be real," he says. "More than just an individual's $1,000, there have been class action lawsuits. There's a liability in not following the law."
-- Written for MainStreet by Nicholas Pell