Bill Collectors: Part II - What Can and Can't They Do?

Believe it or not, bill collectors are not all that powerful as they may make themselves seem. As scary as they could be, there is very, very little they could actually do. In fact, they are so limited in what they could do that it's almost comical. Being more bark than bite, bill collectors have to rely more on their scare tactics than they could on what they could do because the best way they could get you to pay that bill is to scare you into it.

Think of this: whatever your neighbor can't do to you, the bill collector probably can't do it either. Unless otherwise noted, the term BILL COLLECTOR would be referred to THIRD-PARTY COLLECTION AGENCIES.

Back in the seventies, bill collectors were out of control in how they talked with people, so much that a bill had to be past to keep them in check and to end abusive behavior. In 1978, the FAIR DEBT COLLECTION PRACTICE ACT (FDCPA) was past to keep third-party collection agencies under control in how they dealt with debtors. The Federal Trade Commission (FTC) has the authority to enforce this law, as well as your state's Attorney General. Any debtor who feels that a bill collector has violated any laws in the FDCPA could legally file a complaint to either the FTC or his or her state's Attorney General and if the collection agency is found guilty, the debtor could be awarded for "damages" (or "pain and suffering" if you will) up to $1,000.

The FDCPA puts third-party collection agencies in a legal bind and places more power in the debtor's hands. Even though a debtor owes money, he or she does not deserve to be harassed or treated badly. Unfortunately, CREDITORS are not under this law, but it's understood that they can't do whatever they want either. The FDCPA specifically regulates third-party collection agencies, which are the people who give us the most trouble.

Bill collectors have to be trained in FDCPA regulations so that they won't violate anything, especially since debtors are becoming more educated about what bill collectors can and cannot do. However, laws are not perfect and collectors would still challenge them. Collectors might still feel at an advantage because the average person doesn't know what collectors are able to do, so some of them might feel that they could get carry away without worrying about any consequences.

Bill collectors and creditors are very limited in what they could do as far as power goes. But first, let's talk about what your bill collectors can and can't do under the FDCPA.

Bill collectors CAN contact you by phone, fax, letters, e-mails or even home visits. They can even call your job UNLESS you specifically tell them IN WRITING that you do not want them to call your job. Calling places of employment for personal issues, especially if it involves debt, is very risky to the debtor because it could result in that debtor losing his or her job depending on the employer. Unless it's absolutely necessary, collectors might try to stay away from calling you at work...or at least they SHOULD.

Bill collectors MUST identify themselves, their company, and whom they're trying to reach. If a collector calls and fails to identify himself, that's a violation. However, this violation they could get away with easily because sometimes a collector's phone number does not show up, making it difficulty to trace who the caller was.

Collectors CAN call your neighbors and family members, BUT only to get information on your whereabouts. They CAN'T discuss anything further with them. The key is that collectors must keep your business as private as possible and can't discuss any details of your situation with anybody EXCEPT you or anybody that you approved of.

Collectors must be professional. They CAN'T lie, degrade you, misrepresent themselves (such as pretending to be cops or lawyers), or threaten to do anything UNLESS they are planning to do something (such as talking you to court). However, the only things they CAN threaten to do is to put a negative mark on your credit report and take you to court. They can't threaten to harm you or do anything inhumane to scare you into paying your debt.

Collectors CAN'T call you before 8 AM or after 9 PM LOCAL time (that is, YOUR time, not THEIRS). They CAN'T harass you in anyway (such as sending a ton of letters in a short period of time, calling numerous times during the day, etc.). Overall, collectors must talk with you as if conducting a business meeting with you and not talk to you as if you're a child.

The FDCPA is not an extensive set of rules and some may argue that it isn't good enough to keep collectors in check. But regardless of what laws there are out there for collectors, collectors still have very limited power when it comes to what they can do that we are usually afraid of of.

Let's take wage garnishment, dipping into out bank accounts, taking away our property, etc. We fear that bill collectors could freeze our bank account and take all of our money. We think they could take money from our pay checks. Believe it or not, collectors CANNOT do any of these things UNLESS they take you to court and WIN. Those who could legally take money from you in such manner would be government agencies (e.g. IRS).

First, let's talk about lawsuits before we go on to wage garnishment, etc. If a collector wants to take you to court, they would have to be willing to travel to your STATE and your COUNTY of residence in order to file suit since it'll be a CIVIL suit. If you live in California and your collectors are in Minnesota, then they're pretty much out of luck unless they are willing to spend the traveling and lodging expenses of staying in your place of residence. So, if you know that your collector is located in an entirely different place than you are, then a lawsuit is very, VERY unlikely to happen...unless you owe an INSANE amount of money, in which case your CREDITOR might have done the pleasure of suing you before a collector does.

If a collector takes you to court and wins, don't fear. All is not lost yet...especially if you know that you have nothing worth collecting. Winning a civil lawsuit means nothing more than that your collector has the right to collect money from you. Your collector would be granted a JUDGMENT against you so that he could rightly get his money. If you can't pay them the money, then the collector could sit with you and go over your assets. You two would go over what you have as collateral, your bank account information, and your place of employment. If you own two cars, your collector could take ONE of them. If you have money in the bank account, your collector could have money debited from your account until the debt is paid. If you have a job, your collector could have your employer retain a small percentage of your check, but every state is different and you would have to check with the laws in your state. You might be surprised that your state may not even allow for wage garnishment from private creditors and collectors, such as North Carolina.

Remember, your collector or creditor MUST take you to court and WIN if they are to take anything from you. Otherwise, they can't take anything from you.

Now, is filing a suit something collectors want to do? NO WAY! There are risks and expenses when it comes to suing, especially if the amount isn't worth it. For one thing, a collector must file suit in your place of residence, which could be expensive in itself. If a collector wins the case and finds that you have nothing worth collecting, then they're just screwed. You might find yourself to be "judgment proof," meaning that suing you would be a waste of time as you have nothing to collect or collecting from you would cause financial hardship.

So, even if a collector or creditor sues you and you know you have nothing to collect, then rest assure. Don't freak out and file for bankruptcy, which we would go over in our next article.

Some collectors might actually file suit but won't show up to court. As a scare tactic, they would fill out the paperwork, pay a little extra to have the sheriff deliver it to you, and would hope that you would call up to cry "Uncle." They have no intentions in actually suing you but only hope that you would get scared into paying since no one wants to go to court. This happened to my uncle. The sheriff served the papers, a court date was set, we got our information together and everything, we sat in the courtroom with a group of other people getting sued or suing, and his creditors never showed up. But I figured they wouldn't. And they thought to file suit because they were local and could easily travel to our county.

Also keep in mind that collectors probably know as much about the legal system as you do, which is probably not much. They may think that they could take you to court, win, and everything would be okay for them. But if you educate yourself more about how small claims cases work, you could probably beat them at their game. If they should sue you, you could do some of the following:

-Countersue: You sue me, I'll sue YOU. This might get collectors worried that you are actually willing to go to court with them. To them, this could translate to a long, drawn-out battle that they are just not willing to get into.

-Seek legal advice or do your own research. You might find that fighting in a civil case is actually easier than you thought.

-Gather all paperwork that would strongly suggest that there is no way you could pay your bills, including tax return forms, copies of living expenses and other bills that you owe, anything and everything that would show how poor you are.

-Challenge the suit before court. You actually may find that the court in which the collectors are filing the suit is out of your jurisdiction, in which case you would write to the court stating that fact. If a court is out of jurisdiction, then there is no case.

Remember, a court case is a chance to tell your side of the story. It's not an automatic condemnation.

Overall, though, a court case is not likely to happen, and the worst a collector would do is to continue to report your delinquency to credit bureaus. But if by some chance a collector or a creditor does take you to court, don't worry about it. If you truly cannot pay a bill, you cannot pay a bill. That's that.

The collector has a much power as the next guy. You have the right to sue and they have the right to sue. Whether or not they would actually care to do so is the question, but it's a fear that really shouldn't be in your mind.

For more information on the FDCPA, look at the FTC's website at www.ftc.gov.

So, what could you do to fight your collectors? We'll go over that in the next article