Debt collection agencies often attempt to use aggressive, harassing and misleading tactics in order to intimidate a person into handing over money. Many of the lies that debt collectors use to harass families are actually illegal under the federal Fair Debt Collection Practices Act (FDCPA). Unfortunately, the FDCPA has not stopped all bill collectors from continuing to use illegal collection methods. As more and more uncollected debt has accrued predatory collection agencies have sprung up that buy uncollected debt for pennies in hopes of collecting big. These debt buyers have been at the forefront of abusive collection practices.
Understanding what an agency can and cannot do can help to prevent a consumer from becoming a victim. Debt collection agencies are not allowed to contact an employer, family members or neighbors about collecting a debt. The debtor can specifically request that other individuals not be contacted about the problem. An agency is not allowed to contact other individuals more than a few times even if the debtor has not made a request. This type of behavior is considered harassment under the FDCPA and can be prosecuted in court. Agencies that are threatening this type of contact are either lying or planning on committing illegal activities.
A bill collector cannot threaten legal action if there is no plan to actually file a lawsuit. If a collection agency states that a bill is going to be passed to a legal department and there is no legal department, then the threat is illegal under the FDCPA. This is important to understand because some collectors will attempt to solicit payments in exchange for not taking legal action. A bill collector can only threaten legal action if the collector has access to an attorney and if there was already a plan in place to file a lawsuit.
It is extremely rare for a collection agency to bring legal action against a debtor. If the original creditor were willing to go through legal action they wouldn't have sent it to a collection agency or their collections department. For many kinds of debt they are required to accept a quarter of the full amount owed as complete payment. For medical debt it is even less. Legal action simply isn't worth it when a creditor is only legally entitled to a fraction of the total. This is why collectors will attempt to bully you into paying and lie about how much you have to pay.
The collection agency will not be able to garnish all available income. Companies that threaten to take away social security, pensions or all of a weekly paycheck are lying. There are some exceptions since debts like child support and rent are often regulated differently. Income from a pension, disability, unemployment and social security cannot be garnished in order to pay for credit card debt or an unsecured loan. Regular earned income can only be garnished to a degree that still allows the debtor to maintain a reasonable lifestyle.
Bill collectors who are attempting to collect unsecured debt or credit card debt are not able to take essential property away as payment. A primary residence, a single vehicle, a certain amount of personal property and any medical supplies that are necessary are all exempt from seizure. Certain types of debt and certain jurisdictions have slightly different laws covering this area. In general, however, a debt collector that threatens to take away a home is lying. Remember, it's a difficult and expensive process for them to take a home or garnish wages. Also remember that if they threaten to do something without providing a timeline or deadline for doing it they are likely lying. That's illegal and you can immediately turn the tables and go after them.
All collection agencies are banned from using any type of threatening tactics. Threats of physical violence, public humiliation and continued harassment are all threats that are not allowed under the FDCPA. Any threat of an action that is made without an intention of following through on that action is also not allowed under the FDCPA. The debtor is under no obligation to listen to or communicate with the bill collector and can request in writing that all communications stop immediately.
Collection agencies that lie to debtors and that consistently harass a family can be sued under the FDCPA. A lawsuit against a debt collection agency can result in the agency being charged hefty fines. It can also result in the debtor receiving compensation for damages, legal fees and other expenses because of egregious behavior on the part of the bill collector. Don't accept this kind of treatment.
Lucile Lyons is a freelance blogger and writes on behalf of carinsurance.org.