Friday, December 12, 2008

Consumer debt is increasing in unprecedented numbers. In September, outstanding consumer debt in America reached $2.59 trillion. That's an increase of $6.9 billion since August.

The debt collection industry is benefiting from this economic crisis and becoming a booming business. Credit card companies, banks, and other lenders are continuously turning to the debt collection industry to collect outstanding debts, and some of the debt may be old. The change in bankruptcy laws in 2005 has made it difficult to discard old debt, so the old debt is resurfacing (also known as zombie debt - see our blog dated July 10.)

Debt collectors are using more advanced ways to collect debts. There are companies that help debt collectors determine which accounts are recoverable using computer models with a scoring system. They can tell the debt collector the probability of re-payment and the approximate amount of the payment.

The collection process usually begins with phone calls after a payment is 90 days late. The debt collector can also use internet searches and skip tracing to find the debtor. Skip tracing is where the debt collector uses credit reports, loan applications, etc. to find the debtor's friends, family, neighbors or even employers in order to contact the debtor.

Debt collectors may work with you to settle the debt, by collecting a lump sum or lowering your monthly payments. Not all debt collectors follow the law. Last year, the Better Business Bureau and Federal Trade Commission received almost 100,000 complaints against bad debt collectors. If you are being harassed by a debt collector, contact us.

Friday, November 21, 2008

During these difficult financial times, some people are late making their payments. Are you one of them? Are bill collectors calling you? If so, here is some information that may help when talking to the debt collector.

1. Don't become hysterical and tell them all of your personal problems. Stay calm. Ask for details regarding the debt you owe, such as the name of the company, address, date the debt was incurred, and amount owed. Within 5 days after you're first contacted, the debt collector must send you a written notice telling you the amount you owe, the creditor to whom you owe the money, and what to do if you believe you don't owe the money.

2. Debt collectors have rights. They can contact you in person or by mail, telephone, telegram, or fax between the hours of 8:00 a.m. and 9:00 p.m. They can inform credit card bureaus of your unwillingness to pay, which will damage your credit.

3. You have rights, too. Debt collectors cannot use abusive language or threaten you. They cannot continue to call you at work if you have instructed them not to do so. Send the notice directly to the debt collector via certified mail, with a return receipt, to document proof the debt collector received your cease and desist notice.

4. Don't pay money you don't owe. If you decide to pay the debt, even if you don't owe it, just to get them to stop calling you, it is an admission of guilt and it will have a negative impact on your credit score. Dispute the claim in writing. If it is an old debt, check with your state attorney general's office. There is a statute of limitation on debt: generally 3 to 15 years.

5. Get help. If you are being harassed by debt collectors, you can file a complaint with the Federal Trade Commission or your state attorney general's office. If the debt collector has broken the law, you have the right to take action against them. Contact us.

Friday, October 10, 2008

West Virginia's State Attorney General Sues Florida Debt Collector

West Virginia's state attorney general's office has filed a lawsuit against Charles Howell & Associates, Inc., a Tampa-based debt collector. Gregory Wells, the company's president and CEO is also named as a defendant. The suit claims that Howell & Associates called West Virginians about nTelos cellular phone agreements involving several hundred dollars in cancellation fees.

Consumers were threatened with a law suit, although Howell & Associates have no lawyers on staff and do not file lawsuits. The debt collectors threatened to report consumers to law enforcement officials, disclosed consumers' debt information to employers and other third parties, and threatened to add more fees to the consumers' debts.

Debt collectors can receive commissions based on their collections, so they tend to be overly aggressive and may cross the line from a legal standpoint. Consumers are protected from debt collection harassment abuse by the Fair Credit Reporting Act, Fair Debt Collection Practices Act, and the Florida Consumer Collection Practices Act. If you have been contacted by Charles Howell & Associates, contact us.

Tuesday, October 7, 2008

Additional ways to avoid being harassed by a debt collector:

1. Complain to a Government Agency

If you are being harassed by a debt collector, contact an agency, such as the Federal Trade Commission or your state attorney general's office. These agencies enforce the laws that prohibit debt collection abuse.

2. Bankruptcy

Filing for personal bankruptcy stops all collection activity from collectors, creditors, or even government officials. But, as a general rule, debt collection harassment can be stopped without going to the extreme of filing bankruptcy. Bankruptcy should be saved for consumers that have serious financial troubles.

3. Sue the Debt Collector for Illegal Conduct.

Consumers are protected by federal and state fair debt laws, such as the Fair Credit Reporting Act, Fair Debt Collection Practices Act, and Florida Consumer Collection Practices Act. Debt collectors often break these rules because they think they can get away with it or that consumers are unaware that they have rights in these matters. However, only consumer debt transactions are covered by these laws. Original creditors and their employees are excluded from the federal law.

Keep in mind, however, that the debt collector has specified defenses under the law, including bona fide error defense. This is a limited defense and the debt collector must show that it adopted reasonable procedures to avoid such errors.

Additional claims to consider in debt collection harassment cases include:
  • Tort claims such as invasion of privacy or defamation
  • State debt collection remedies
  • State unfair and deceptive acts and practices laws
  • State credit repair organization laws
  • Unauthorized practice of law statutes
  • Criminal Laws

Monday, September 22, 2008

How to avoid being harassed by a debt collector:

1. Deal with your creditors before you are referred to a collection agency. Call the creditor to explain your situation. Make sure that you actually owe the money. Do not make promises you can't keep, such as making a payment on a certain date, when you know you will not be able to make the payment.

2. Send a letter via certified mail. Keep a copy of it.

Here's a sample:

Dear Sir or Madam:

I am writing to request that you stop contacting me about account number _____ with (name of creditor) as required by the Fair Debt Collection Practices Act 15 U.S. C. section 1692c (c). (Note: Delete reference to the Act where the letter is to the creditor instead of a collection agency.)

(Describe any harassment you have received. If appropriate, include information about why you cannot pay the bill or do not owe the money.)

This letter is not meant in any way to be an acknowledgment that I owe this money. I will take care of this matter when I can. Your cooperation will be appreciated.

Note: Even though it is against federal law, not all debt collectors will stop harassing consumers. If this is the case, contact us.

3. Contact a Lawyer.

If your letter doesn't stop the harassment, a letter from a lawyer should. The lawyer may be able to raise legal claims for violations of the federal law that prohibits debt collection harassment. Federal law states that collection agencies cannot contact consumers represented by lawyers. This does not apply to creditors collection their own debts, but creditors usually abide by the law as well.

4. Negotiate with the creditor.

Its better to negotiate with a creditor before the debt is sent to a collection agency, but you may be able to work with the collection agency.

5. Raise complaints about billing errors.

If the collection letter contains an error, write to the company and request a correction. Consumers have the right to dispute a debt. Collection agencies must tell you the steps to take to dispute the date during the first contact or within five days of the first contact. If the consumer disputes the debt in writing within 30 days, the collection agency must stop collection efforts while it investigates the debt.

If the debt involves a line of credit, a credit card, or an electronic transfer of money, you have the additional legal right to require the creditor to investigate the bill.

Friday, September 19, 2008

Unpaid hospital bills are being auctioned to debt collectors.

Hospitals are trying to recover unpaid medical bills by auctioning the debt online. Debt collectors will buy the debt or provide guaranteed payments to hospitals for access to the unpaid accounts. The agencies will receive a portion of the fees collected, so they will try to collect more than the debt owed, in order to cover its initial investment, and they may be more aggressive with the debtor because they need to recoup their costs.

The auction-site owners say that they have safeguards in place to protect patients from abuse, such as recording the telephone conversations and getting permission from the hospital before suing a patient.

Friday, August 29, 2008

What do you do if a debt collector has contacted you?

Once you have been contacted by telephone, the debt collector must outline your debt, stating the amount, whom you owe the money to, and what action to take if you don't owe the money. If you don't owe the debt, you must write a letter stating you don't owe the money within 30 days.

If you decide to pay the debt, even if you don't owe it, just to get rid of the debt collector, it is an admission of guilt and it will have a negative impact on your credit score.

There is a statute of limitations on debt. Generally 3 to 15 years. Check with your state attorney general's office to find out the limit in your state (Florida State Attorney General's website: Do not accept new credit offers from a creditor you never repaid. Once your credit relationship is renewed, the statute of limitations starts over again.

If you have been treated unfairly, contact your state attorney general's office. You should file a complaint with the Federal Trade Commission 877-FTC-HELP or go to

You have the right to sue a debt collector in state or federal court within a year of the date the law is violated. You may recover money for the damages you suffered plus additional amount up to $1,000. A group may also sue a collector for damages up to $500,000 or one percent of the collector's net worth, whichever is less.

Wednesday, August 27, 2008

How do you stop a debt collector from harassing you?

If you have fallen behind on your payments due to an illness or a job layoff, debt collectors will be calling you. They have the right to collect on the money you owe, but some debt collectors cross the line.

There are some collectors that threaten to have you arrested, make improper bank withdrawals, intimidate people and make harassing phone calls. According to the National Consumer Law Center, a collector has even threatened to call a woman's work place until she lost her job. The Better Business Bureau reported that one debt collector called a consumer's grandmother four times a day using threats such as "if she dies, then her life insurance can pay this debt off."

The Fair Debt Collection Practices Act requires that debt collectors treat you fairly. If the debt is legitimate, then you have to pay it, but you still have rights.
  • A debt collector cannot call you before 8 am or after 9 pm.
  • You cannot be contacted at work if the collector knows your employer disapproves.
  • Write a letter telling the debt collector to stop calling you.
  • If you have an attorney, tell the debt collector to contact the attorney. If you don't have one, the debt collector can ask your friends and family about how to get in touch with you.
  • A debt collector cannot use profane or threatening language.
  • A debt collector cannot misrepresent the amount of your debt, such as in the case of a consumer, who filed bankruptcy in 1993. She was contacted in December of 1997, saying she had an unpaid credit card balance of $5,655 from 1992. With interest, the letter claimed the debt had grown to $19,400.
  • Debt collectors can't say that they will put a lien on your property, unless they really mean to do so.
  • Debt collectors cannot legally claim federal benefits, such as Social Security or your retirement accounts, like your IRA or 401(K) - unless the debt is owed to the federal government. In 1996, Congress passed the Debt Collection Improvement Act which allows the government to take a portion of federal retirement, federal salary and Social Security benefit checks to cover non-tax debts owed to the government, such as federal student loans.
  • A debt collector may not use false statements, such as: falsely implying that they are attorneys, that you have committed a crime, or that they operate or work for a credit bureau or misrepresenting the amount of your debt, the involvement of an attorney in collecting a debt, or indicating that papers sent to you are legal forms when they are not.

Thursday, July 31, 2008

Consumer complaints to the Federal Trade Commission about debt collectors have consistently ranked No. 1 among all industries for several years in a row.

The Fair Debt Collection Practices Act, prohibits deceptive, unfair and abusive practices by third-party collectors. The act doesn't apply to a company's in-house debt collectors, but the FTC can go after in-house collectors due to a provision of the Federal Trade Commission Act that prohibits "unfair and deceptive acts in commerce."

If you are being harassed by a debt collector, here are steps you can take to ensure that you resolve your situation quickly:

1. Don't ignore calls or written communications from collectors.

"As long as the collector is not being abusive, it's a good idea to communicate with the collector because if you don't owe the money, you'll be able to convince the collector to go away," Kane said.

"If you do owe the money, you may be able to work out some partial payment or long-term payment, which you may not be able to do if you don't maintain some line of communication with the collector."

2. Make the collector prove you owe the debt.

Within five days after you're first contacted, the collector must send you a written notice telling you the amount you owe, the creditor to whom you owe the money and what to do if you believe you don't owe the money.

3. If a collector calls about a bill you already paid, send them proof in writing that you met the obligation.

Respond in writing and provide documents showing the account has been paid or settled in full. If you don't have the records, you can dispute the debt or try to get proof from the original creditor.

4. Don't tolerate abuse from debt collectors

Collectors cannot threaten violence or publish a list of consumers who refuse to pay their debts (except to credit bureaus). They cannot use obscene or profane language, or repeatedly use the telephone to annoy you. They cannot call you at work if you tell the collector that your employer will not allow it.

Collectors are prohibited from revealing the existence of your debt to any other party unless you've given consent or a court has given permission.

A collector may contact a third party to find out your whereabouts. They can learn where you live, your home phone number and where you work. They are not entitled to your work number, although they can easily obtain it once they know where you work.

5. Take action if you are being harassed with collection calls.

Send the debt collector a written notice to cease communications in connection with the debt or written notice that you refuse to pay it. Send the notice directly to the debt collector via certified mail, with a return receipt to document proof the collector received your cease and desist notice.

Once the collection firm receives your notice, it must stop contacting you, other than to tell you that the collector or creditor may invoke further specified legal steps to collect the debt.

The best way to deal with debt collectors is to communicate with them quickly, document all communications, and to try to work out a payment plan, if possible.

Tuesday, July 29, 2008

Recently, a federal appeals court held that debt collection agencies cannot avoid responsibility for abuses by blaming them on creditors.

In the case of Reichert v. National Credit Systems in the UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT, Judge Mary Schroeder, ruled that the federal Fair Debt Collection Practices Act requires debt collectors to prove that they have used detailed procedures to ensure that they do not take actions that are prohibited by the act, such as harassing consumers, overbilling or making deceptive statements.

"A debt collector is not entitled to just sit back and wait until a creditor makes a mistake and then institute procedures to prevent an occurrence," the court ruled.

The case involved an Arizona consumer, Robert Reichert, who was contacted by a debt collector about an outstanding bill from his old apartment complex. The debt collector, National Credit Systems Inc., had tacked on charges for "attorney's fees," but couldn't explain where the charges came from. The collection agency claimed that it had overlooked the error because the landlord-creditor had always provided accurate information in the past. The court rejected that defense, holding that debt collectors must show detailed preventive procedures to escape liability for their actions.

"The court's ruling will compel debt collectors to police themselves more effectively," said Deepak Gupta, an attorney for Public Citizen who argued the case. "The ruling is very significant at a time in which increasing numbers of Americans are being contacted by debt collectors and abuses are on the rise."

Friday, July 25, 2008

An Illinois debt-collection agency is being sued for attempting to collect invalid debts. AFNI is accused of harassing consumers for debts they did not owe. They did not check to make sure the debts were legitimate before contacting the consumers. These debts were reported to credit bureaus and AFNI refused to take steps to remove the invalid debts from consumers credit reports.

This is a direct violation of the Fair Credit Reporting Act which states "The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system."

Tuesday, July 22, 2008

Have you been harassed, abused or mistreated by a bill collector? Have you received calls from a bill collector before 8:00 a.m. or after 9:00 p.m.? You are not alone. A couple was unable to pay $1,600 in rent after the husband had lost his job. Debt collectors began harassing them, calling them before 8:00 a.m. and after 9:00 p.m. and the debt rose to $9,000.

Federal rules regulate debt collection activity. Thirty eight percent of the FDCPA complaints in 2007 were due to debt collectors attempting to collect a debt not owed or an amount larger than the actual debt. According to the Fair Debt Collection Practices Act, debt collectors are not allowed to call consumers at the consumer's place of employment, before 8:00 a.m. or after 9:00 p.m. or if the consumer is represented by an attorney. If you are being harassed, call 866.553.3272 for a free consultation.

Thursday, July 10, 2008

Article posted in 03/25/08 Tampa Bay Times
Article taken from Newsday

After Kim Mullen filed for bankruptcy in 1993, she cut up all her credit cards. Since then, the Long Island resident has managed to obtain a good credit rating.

But four months ago, a debt collector contacted her, saying she had an unpaid card balance of $5,655 from 1992. With interest, the letter claimed, the debt had grown to $19,400.

As old debt seems to rise from the dead, it’s taken on a name – zombie debt. And in recent years, more such debt is coming back to haunt consumers, according to lawyers who specialize in debt.

Many credit card companies have started selling delinquent accounts to collectors to boost quarterly earnings, according to a report by Kaulkin Ginsberg, a Maryland-based adviser on debt collection. The collectors then resell some of that debt to other collection agencies.