Ok, now that we’ve gone over the different types of
accounts and how to handle them, I want to give you the rules of the game. This
is very important. Without knowing this information, you have no leverage in
dealing with bill collectors, and you’re certainly not going to get the
settlement percentage you’re looking for.
Consumers are protected by the Fair Debt Collection Practices Act (FDCPA), something I’ve already mentioned a few times in the book. This bill was passed to regulate the debt collection industry and provide guidelines for debt collector conduct. To view the entire bill, visit the Federal Trade Commission website at www.FTC.gov. I’m going to briefly go over the basic guideline so you can be better prepared the next time the phone rings and it’s a debt collector.
HOW CAN A DEBT COLLECTOR CONTACT YOU?
·
By
person, mail, telephone, e-mail, fax or (believe it or not) through various
social network sites, such as Facebook.
·
After
8 a.m. and before 9 p.m. If they call you outside of these times, they’re in
violation of the law.
·
At
work, unless you’ve informed them not to call you at work.
When I was collecting, I lived in Oregon on Pacific
Standard Time. I picked up the phone at 9 a.m. and called Hawaii, not realizing
that it was three hours behind. Obviously, I woke up the debtor. When I
realized what I’d done, I wanted to hang up because I knew I was breaking the
law. Since I had the debtor on the phone, I took advantage of the situation and
made an arrangement with him to pay the debt. Prior to that time, I had spent
months trying to get a hold of him, with no success. If that debtor knew that I
was breaking the law, he could have filed a complaint against my company and
received an award of $1,000 or more for that one offence.
CAN YOU STOP A DEBT COLLECTOR FROM CONTACTING YOU? Yes, you can stop a debt
collector from contacting you by writing a letter known as a cease and desist.
Once the collector receives the letter, they can NOT contact you again except
to say there will be no further communication, or that they intend to
take some specific action. Please note, sending such a letter does not make the
debt go away if you owe it. You could still be sued. All it does is cease
communication. In addition, this can sometimes work against you. Creditors may
get upset if you send a cease and desist letter and may escalate your account
into a different status or department for further action. In some cases, after
you’ve sent a cease and desist, a collector may continue to contact you, in
this scenario you may want to file a complaint with the proper agencies.
CAN A DEBT COLLECTOR CONTACT ANYONE ELSE ABOUT YOUR DEBT?
If you have a company or an attorney representing you, the debt collector
must contact them rather than you. A debt collector may contact other people
(including family members and even neighbors) but only to find out where you
live, what your phone number is or where you work. The collector may not tell
anyone other than you, your spouse or attorney the purpose of their call.
CAN A DEBT COLLECTOR CONTINUE TO CONTACT YOU IF YOU BELIEVE YOU DON’T
OWE THE MONEY? When
a collection agency receives your account they must, by law, send you a letter
introducing themselves and what account they’re attempting to collect. This is
known as a “30 Day Letter.” You have 30 days from the date of the letter to
dispute the validity of the debt. A debt collector can NOT contact you if,
within 30 days after you receive the written notice, you send the collection
agency a letter stating you don’t owe the money. However, if the agency
provides proof that you owe the debt, they can continue to contact you. Realize
the above only applies to collection agencies and not original creditors.
Original creditors don’t have to abide by the FTCPA laws.
CAN A DEBT COLLECTOR THREATEN TO SUE YOU? A debt collector or agency
cannot threaten to sue you unless they mean it. When I say mean it, what I MEAN
is that they must have the resources and intentions to do it. For example,
threatening to turn over your account over to their legal department when they
don’t have one.
A collection agency can sue you without being represented by a law firm or attorney, only if they take you to small claims court. Keep in mind that small claims court is reserved for smaller balances and typically for civil, family or private parties. Most collection agencies don’t have the time or patience to take you to court over a measly couple hundred dollars.
The scary part is, these days there are plenty of law firms, which in reality, are collection agencies flooding the court houses with bogus lawsuits, essentially using the law to manipulate consumers into paying their debts. If a creditor threatens to sue you, the first thing you should ask them is, “Who’s your attorney?” or “What’s the law firm representing you?”
If you receive a letter from a law firm such as “Cheatem and Krammer, LLC” or something of this sort, look them up online to see if they’re legitimate. In most cases, their website should include their attorney’s names and bar numbers. If you want to know if they’re licensed in your state, simply plug the attorney bar number into the state bar website and do a quick search.
CAN A DEBT COLLECTOR THREATEN TO PUT YOU IN JAIL? The FDCPA prohibits
creditors from threatening a debtor with jail time. This is not to say you
can’t go to jail for other issues relating to a debt lawsuit, such as contempt
of court. If a creditor threatens to throw you in jail, they’re trying to scare
you. Being in debt is NOT a crime. You can’t prosecute someone criminally for
owing a civil debt.
If a sheriff shows up at your door step, don’t get scared. In some states, collection type law firms use the Sherriff’s department as a means of serving consumers with a summons to appear in court. No, they can’t haul you off to jail. In most cases, they’re courteous and simply want to deliver the paper work and get on with their day.
WHAT ARE COLLECTORS PROHIBITED FROM DOING? There are many things a
collector is prohibited from doing. To get the entire list I’d highly recommend
going to the FTC website and look at the FDCPA for yourself. In the meantime,
I’ll give you the most common creditor violations:
• Harassment in the form of excessive phone calls
• The use of obscene language or profanity while on the phone • Telephone calls before 8 a.m. or after 9 p.m.
• Calling you at work, AFTER you informed them not to
• Attempting to collect a debt which doesn’t belong to you
• Calling you without
properly identifying who they are, what agency they work for and what debt
they’re collecting
• Threatening to sue,
repossess property, garnish wages, or ruin credit or other such activity which
is outside their authority or is not actually intended
• Inform others about your
debt without express permission given by you
• Pretend to be an
attorney, law firm or government agency without the proper licenses
WHAT
CONTROL DO YOU HAVE OVER PAYMENT OF DEBTS? If you owe more than one debt, any payment you make must
be applied to the debt you indicate. A debt collector may not apply a payment
to any debt you believe you don’t owe.
WHAT IS A MINI-MIRANDA AND DO COLLECTORS HAVE TO USE IT? The FDCPA states that every
time a collector contacts a debtor they must disclose who they are and what
they’re calling about. It helps keep collectors from being deceptive or
misleading. This is known as the Mini-Miranda and generally goes as follows:
“THIS IS AN ATTEMPT TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE. THIS IS A COMMUNICATION FROM A DEBT COLLECTOR”
The FDCPA says that the Mini-Miranda should be included in the initial communication, but according to certain state laws, it must be used in all communication. As a result, some collection agencies prefer to use it every time they contact a debtor to avoid possible violations or legal action. If a debt collector leaves a message on an answering machine or voicemail the Miranda is slightly longer and should state something like the below:
"THIS MESSAGE IS FOR (NAME FIRST AND LAST).
IF YOU ARE NOT (NAME FIRST AND LAST) YOU SHOULD HANG UP OR DISCONNECT NOW. IF YOU ARE (NAME FIRST AND LAST) PLEASE CONTINUE TO LISTEN TO THE FOLLOWING MESSAGE. THERE WILL NOW BE A THREE SECOND PAUSE IN THIS MESSAGE.
(THREE SECOND PAUSE)
BY CONTINUING TO LISTEN TO THIS MESSAGE YOU ACKNOWLEDGE THAT YOU ARE, IN FACT, (NAME FIRST AND LAST). (NAME FIRST AND LAST) YOU SHOULD NOT LISTEN TO THIS MESSAGE SO OTHERS CAN HEAR IT AS IT CONTAINS PERSONAL AND PRIVATE INFORMATION. THERE WILL NOW BE A THREE SECOND PAUSE IN THIS MESSAGE TO ALLOW YOU TO LISTEN TO THIS MESSAGE IN PRIVATE.
(THREE SECOND PAUSE)
THIS IS (COLLECTORS NAME) FROM (COMPANY NAME) COLLECTION AGENCY. THIS COMMUNICATION IS FROM A DEBT COLLECTOR. THIS IS AN ATTEMPT TO COLLECT A DEBT AND ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.
PLEASE CONTACT ME AT ***-***-**** EXT ----
Collection agencies have
had a lot of trouble with this lately. They’re being sued by consumers because
this is not disclosed on voice mail messages, so if a debt collector is leaving
messages, make sure they’re done this way, or you might have some recourse
against them.
CAN A DEBT COLLECTOR CALL MY CELL PHONE? The Telephone Consumer
Protection Act (TCPA) states that you may be contacted by a debt collector
through your cell phone IF you provided your number to the original creditor
and/or gave express consent. By "consent," I’m referring to one of
two ways:
1. When you applied for the credit card you provided your cell number on the application form.
2. You gave verbal or written permission to call you on your cell phone.
Also note, calling a creditor back with your cell phone does not give them permission to keep calling it. Any debt collector calling your cell phone through an automated dialing system without your express permission is in violation of the TCPA. Debt collectors who violate the TCPA are liable for $500 to $1,500 per phone call. Think about that for a moment. Ten calls can add up to $5,000 or more! The next time a debt collector calls your cell phone, and you haven’t given permission, let them know that it’s a violation of the law.
CAN A DEBT COLLECTOR RECORD OUR CONVERSATION? Yes, a debt collector can record your conversation
as long as they’ve notified you ahead of time. This is typically done by giving
you a brief disclosure in the beginning of the call, such as: "This call
may be recorded for quality assurance.”
You too can record a conversation with a debt collector. However, you must be careful. In the U.S., 38 states require the consent of only one party to legally record a conversation. In the other 12 states, both parties must consent in order to record the call. Here’s how it works:
“One Party State” this means that only one person needs to consent to the recorded telephone conversation. This includes you.
“Two Party State” this means that both parties must consent to the recorded telephone conversation.
Being able to use the actual recording for legal purposes can be dangerous. Let’s say you live in a One Party State, and you secretly record a nasty collector’s conversation without letting him know. Sounds legal, right? I mean their telephone number on your caller ID says they’re in your state. Wrong! A collection agency may be concealing their true whereabouts, by forwarding calls from their head office in another state which could be a Two Party State. Often times, the caller ID isn’t a reliable way of knowing where they’re calling from. To make matters worse, if you attempt to use the recording in a lawsuit, you could be countersued for breaking state law by not having the collector know and agree to the recording.
If you’re planning on recording a conversation with a collector, play it safe, inform them that the call is being recorded and ask them to agree. If the collector doesn’t agree, hang up. Informing a debt collector that the phone call is being recorded can be beneficial to the debtor, whether it’s actually being recorded or not. Reason being, that a collector may be less likely to be rude, unprofessional, or violate the FDCPA with abusive tactics. Getting a collector to stay on the phone after you’ve informed them the call is being recorded is another story. Often times, they’ll hang up if the call gets heated!
CAN A DEBT COLLECTOR THREATEN TO RUIN MY CREDIT? The answer is no. I always
laugh when I hear that a collection agency threatened to ruin a debtor’s
credit. The reason is simple. It’s not the representative’s decision to make.
Your credit report will naturally be affected by a delinquent debt based on
whether YOU let the account charge off or not, or if it’s been transferred to a
collection agency. You have control of your credit report, not the creditor.
What happens if I make a minimum
payment within that time period? Simple, if you continue making the minimum
payments every month your account will not Charge Off. If your account already has and is now with
a third party Collection Agency, and they threaten to ruin your credit, my
question to them is,
how? It doesn’t get worse than a Charge
Off unless you’ve been sued and have a Judgment on your record.
In my experience, Debt collectors can be ruthless and overbearing.
Realize that they’ve heard every excuse not to pay a debt and don’t care what
your situation is. I’ve worked with some of the top paid Collectors on the
planet, and to make the most money, they need to push the hardest. Knowing more
about them and what they can and can’t do, will give you the advantage in the
conversation. Let’s move on to those letters I’ve been talking about, so that
you have ammunition in your pocket and the gun ready to fire at any Debt
collector that crosses your path!
