Fighting Bill Collectors
Dealing with debt collectors can be very stressful. Although some are reasonable and play by the rules, other collectors employ low- wage telephone personnel who are paid on the basis of how much they can get out of you; hence, some can be very deceptive and/or nasty in trying to squeeze money out of you.
In the article below, we are going to cover the following areas:
Collections in General
What Collectors Cannot Do Legally
Common Tricks and Shady Practices of Some Collectors
Dealing Effectively with Debt Collectors
Turning the Tables on Collectors- Suing Them Under the Fdcpa
Let’s get started:
1. Collections in General
When you first become overdue in a credit card payment, medical bill, or other debt, you are likely to get collection calls or letters from the creditor. Since this is the company or person you actually originally dealt with, they can collect under a different set of rules than collection agencies; generally, there are not so many regulations they have to follow as they would have to if they were a law firm or collection agency. They will keep up writing and/or calling you for a while, but if you continually do not pay, or are unable to pay, they may (depending on that creditor’s policies) do any of the following:
1) They may turn the account over directly to a collections attorney; 2) They may turn the debt over to a separate collections department which they own; 3) They may contract with a separate third- party collection agency collect for them, while retaining ownership of the original account, so they can get the lion’s share of any amounts collected; or 4) They may “write off” the debt and sell the account to an unaffiliated separate collection agency, which may or may not be affiliated with a particular law firm.
If they turn the account over directly to a collections attorney, the law firm will notify you that you must pay, and if you do not respond favorably within a reasonable time, they will file a lawsuit against you. For full details about what this involves, see our article Dealing with Lawsuits, elsewhere on this web site.
If they “write off” the debt, this does not mean that there will not be any further attempts to collect it. Usually, it means they have turned it over to their internal collection department, or to an outside attorney or collections agency. This may be right away after it is written off, or it may be a year or two later. These collection agencies often find they can pester debtors enough to get payments out of some of them, without the expense of an attorney filing suit.
Filing a lawsuit is not cheap for collectors. Just the filing fees with the court can run from $53 to $300, depending on what court and what state. For example, the fee to file a case in the State Court where we are located in Georgia costs $206.00; in the Magistrate Court (for debts up to $15,000.00) it costs $53.00. To each of these, a $50.00 Sheriff’s Service fee must be added. On top of this, the collector’s attorney(s) will charge the collector perhaps $200 to $600 to file and prosecute the lawsuit, which may or may not succeed. And even if they win, they or their attorneys need to do yet more work to collect the judgment, through garnishment, FiFas, asset discovery & seizure, or other means. For example, garnishment costs in Georgia Magistrate Courts costs $103.00 including the Sheriff’s Service fee, and the attorney may well charge another $150 to $300 to do the garnishment. So, as you can see, to sue a debtor, then garnish his wages can easily cost the collector at least $400 to $1,000, perhaps much more; again, with no guarantee of success. This is why collectors would prefer to collect without involving the law; they would rather have that money in their pockets. Generally, they only actually sue when other methods fail, and when the amount at stake is large enough to be worthwhile. The larger the amount of the debt, the more likely they are to go to court over it; but they may threaten to file suit for a much smaller amount, when they really do not intend to take it to court.
Some collection agencies use their pressure tactics on debtors and collect from the fairly easy cases, and sell more resistant cases to another collection agency. This is why a debt listed on a credit report – say, a store credit card debt – may show up two or three or four times, under different collectors. As a rule, the more often a debt is sold to another collection agency, the less collectable it is considered, and the less it is sold for. Uncollected debt usually ends up being sold for a few pennies on the dollar – or even a fraction of one cent. These lower-rung collection agencies are usually the most likely to be abusive, intrusive, and rude. When they are paying so little for the debt, they only need a few out of every batch to end up paying off to make a good living. Starting with the first time the debt is sold, collectors buy all rights to the debt if they can collect it; therefore, if you end up paying one of these collectors, the original creditor does not receive anything; only the collection agency profits.
If you have many debts and the collectors are driving you crazy, it may be that lawsuits and garnishments are not far behind. Could you keep up with your mortgage, car payments, utilities, gas, and food if a wage garnishment started taking 25% of every paycheck? If not, it’s time you consider alternatives before your situation becomes worse. The answer may or may not involve bankruptcy, to get a fresh start. Call us for a free consultation to explore the possibilities.
2. What Collectors Cannot Do Legally
Collectors CANNOT legally keep calling and writing you if you order them not to.
All you need to do is send a certified letter, return receipt requested, in which you say, “Please cease all further communication with me, pursuant to section 1692c(c) of the Fair Debt Collection Practices Act.” They are required by Federal law to stop all further communication except 1) a statement that they will comply with your request, and 2) a statement that they will seek to invoke the remedy or remedies normally used by that collector, which means either suing you or turning the case over to an outside law firm. So if you do this, realize a lawsuit is the possible result, unless it is a very small amount. (If this happens, see our article Dealing with Lawsuits, elsewhere on this web site.) By the way, if they continue collection calls or letters after this, keep them for use as evidence, because you will have grounds for an easy Fair Debt Collection Practices Act case against them.
Collectors CANNOT legally threaten to swear out a warrant for your arrest, come to your house to force you to pay, or call the police on you.
You cannot be jailed for not paying a bill. (However, you can be jailed for contempt of court for not paying child support, or some other court-ordered payment such as a fine or restitution.) But collectors have zero authority under the criminal justice system; all they can do is sue you in a civil court proceeding; and if you are filing bankruptcy, they cannot even do that.
In addition to certain sleazy American collectors, there are several rings of thieves in India, Russia, and elsewhere that make menacing calls threatening immediate arrest if you do not give a wire or check-by- phone or credit card payment right away. Do not give these lying clowns the time of day; just hang up.
Collectors CANNOT legally contact your friends, relatives, neighbors, or work associates and speak with them about your debt.
They are only allowed to ask them how to get in touch with you, without disclosing that they are a collector.
Collectors CANNOT legally call you at work if you tell them not to.
Tell them your employer does not permit collection calls, and send them a certified letter, return receipt
requested, to prove you requested this if they violate your request.
Collectors CANNOT legally threaten to sue or garnish you if they do not actually intend to do so.
Collectors CANNOT legally phone repeatedly, or at inconvenient times.
Collectors CANNOT legally continue collection efforts after you dispute them in writing, without first verifying them in writing.
Collectors CANNOT legally use profane or obscene language.
Collectors CANNOT legally continue collection attempts without giving you written notice within five days of the first phone call.
Collectors CANNOT legally contact you by phone or by mail without telling you that the communication is from a debt collector.
Collectors CANNOT legally force you to settle with them without Court involvement.
They can sue you for the debt in court, however, and you can go before a judge or jury to prove you do not owe the debt, if you can afford to hire a lawyer. (Fighting a debt case without a lawyer is very foolish; the debtor almost always loses – not always because he does not have a winning case, but because he doesn’t know proper legal procedure. For example, if the other side filed a “Motion for Judgment on the Pleadings” or written discovery requests for admission, you
would lose automatically before you could even go to court if you didn’t handle these properly.)
If collectors do any of the forbidden things listed above, and you can prove it, you can sue them.
3. Common Tricks and Shady Practices of Some Collectors
SOME COLLECTORS SUE FOR A DEBT THAT IS TOO OLD TO COLLECT LEGALLY.
Here in Georgia, either four six years after you first failed to pay (depending on the type of debt), the debt is no longer collectable, as it is past the Statute of Limitations (SOL). So, some collectors just report the old debt as though it were a current account. We attorneys often call this “Zombie Debt” – it’s dead, but sleazy collection firms which buy old debt very cheap attempt to bring it back to life.
Even worse, they may claim that you contacted them about the debt, or made a payment (yes, sometimes they actually report that you “made a payment” – most typically, for $25) within the SOL. (Note: if you do make a payment by check on an old debt, which mentions the account number, or says “payment on account,” etc., the collector can introduce that check into evidence as a “writing” testifying to the validity of a debt which can, in fact, revive the debt; so be very careful.)
Why would a collector’s law firm try to collect zombie debt which could be easily defended against in court? Because so many people don’t bother to answer and fight the lawsuit, either being in denial, or not wanting to deal with it, or assuming they’ll lose anyway, or not being properly served and
having no notice. So, in such cases, the age of the debt never comes before the court as an issue. Literally thousands of people lose these lawsuits every year because they don’t answer and fight them, so the other side wins an easy default judgment against them on an old debt that could have easily been defended against. The next thing you know, your wages are garnished or your bank account drained, based on the default judgment because you didn’t bother to get an attorney to fight it on time. There is a whole industry of bottom-dweller collectors who live off “zombie debt” which is by law non- collectable, because so many people do not fight it.
SOME COLLECTORS WILL SUE YOU WITHOUT GIVING YOU PROPER NOTICE.
They may file a false affidavit stating you were served. Or, they may serve you “by publication,” which means they swear to the Court they could not find your current address, or that you fled the county, etc., so they put a legal notice you are being sued in the county’s legal newspaper. Depending on what county you live in, this legal newspaper may be a major paper, or it may be a tiny obscure paper nobody much reads that makes most of its revenue publishing legal notices. Worse yet, we have seen cases where they “served by publication” in a county the debtor has never lived in.
Since you have no effective notice of the lawsuit, you cannot file an answer within 30 days and then have an attorney argue successfully at trial, so they can and will get a default judgment against you. Then they get a Writ of Fieri Facias (FiFa) issued, and miraculously find your correct address, and garnish your bank account, or maybe put a lien on your house. Or, they locate your employer’s address, and garnish your wages.
Usually, in these cases, the first you are aware that there ever was a lawsuit is when your employer is served with garnishment papers or you find that the bank has frozen the funds in your account. If you try to fight the garnishment, they just tell the court that they have a FiFa based on a default judgment. If you try to protest that you sent them a certified letter, that you were not served, etc., they will just say that you had a chance to argue all that in court before, and didn’t bother to answer, so those things are irrelevant to the garnishment. So if you become aware of a garnishment, immediately hire an experienced lawyer to see if it can be stopped. Sometimes it can. (Statistics tell us that if you attempt to fight this without an attorney, you will almost certainly lose.) If you need to know more about garnishments, see our article Stopping Garnishments, elsewhere on this web site.
SOME COLLECTORS WILL PRETEND TO “REALLY CARE” ABOUT YOU AND SAY THEY “WANT TO HELP YOU WORK THINGS OUT.”
This is not the time to tell them your life story. Don’t waste your breath. In fact, the less you say to them, the better. They don’t care two flips about your case, or your overall financial situation. They won’t “understand” and back off if you tell them a good sob story. They just want your money. They’ll never tell you that you should pay your mortgage, taxes and insurance first, then your car note and utilities, then gas, food, etc., then all other debts. They don’t care if you are a blind, crippled abandoned spouse living alone on Social Security. They just want your money because most collectors get paid a percentage of every dollar they wheedle out of you.
SOME COLLECTORS WILL TRY TO PUT YOU ON A GUILT TRIP.
They will play on your sense on duty to pay your bills, even when it isn’t possible. Yes, decent people want to pay their bills, but sometimes a layoff, cut hours, an extended illness, being deserted by your spouse, or other unplanned events can leave you very short. Even if you don’t have anything left to pay them after providing shelter, food, and the basics for your family, they will play on the fact that you already feel bad about being behind, and say that “good people pay their bills; you’re not a bad person, are you?” They don’t care if your mortgage or rent is due and the baby needs milk or you need your medicine; they just want your money now.
SOME COLLECTORS WILL GIVE YOU FALSE INFORMATION.
Collectors sometimes deliberately give you incorrect information about filing bankruptcy, court or garnishment procedures, your legal rights, etc.. in an attempt to get more money out of you. For example, they may tell you that you do not qualify for bankruptcy, or that they are going to garnish your wages if you don’t make a payment right away, when they have not even filed a lawsuit against you, which they must do, and win, before any garnishment is even possible. Never take a collector’s word for it regarding any of your legal rights, obligations, or possibilities. Speak to an attorney who’s on your side to get correct information.
SOME COLLECTORS WILL EXAGGERATE, LIE, OR THREATEN YOU.
They are not under oath, and they do not have to follow through on any verbal promises they may make to you.
SOME “COLLECTORS” ARE NOT EVEN REAL COLLECTORS, BUT CROOKS.
Sometimes you get “collection” calls from a very pushy person who demands you wire him an immediate payment. He knows your name, address, Social Security number, perhaps bank account or credit card numbers, and he insists on payment the same day, perhaps even within the hour. He is probably an identity thief, pretending to be a collector. Simply tell him to put his demands in writing within five days, as required by the Fair Debt Collection Practices Act. Then tell him not to call you anymore, and hang up. (Or, if you prefer, laugh at him, or tell him off, or let him overhear you saying, “Yes, Sergeant, this is the caller I want traced.”) The gall of these scumbags is amazing.
4. Do’s and Don’ts of Dealing Effectively with Debt Collectors
DO hire an experienced debt attorney if a law firm contacts you. It is best to never talk to a law firm that is attempting to collect a debt from you. They know the game better than you ever will.
DON’T waste one minute talking with unreasonable, abusive, argumentative, or threatening collectors. There is no reason on earth to put up with their browbeating calls. You are under no legal, moral, or ethical obligation to tolerate this. Tell such people to put their demands in writing, and tell them to never call again. Just hang up immediately if they call back. If necessary, send them a notice to stop calling by certified mail, return receipt requested.
DO keep proof of all payments that have been made, whether statements from the creditor listing payments made or cancelled checks, etc.. Keep payoff letters for loans, satisfaction of mortgage papers, etc. indefinitely.
DON’T agree to anything with a collector – a settlement for a smaller amount, a payment plan in return for dropping a pending lawsuit or garnishment, etc. — unless they put it in writing, signed, with a notarized statement swearing under oath that that person has authority to sign for that collection company. Don’t send them a penny until you have that in hand. And if a lawsuit or a garnishment has been filed, and they agreed to drop it, demand proof it has been dismissed, then verify with the Court that it has been cancelled.
DON’T EVER give them a “check by phone,” regardless of how much they pressure you. Even if they say it’s “the only form of payment they will accept,” tell them absolutely no way. If they get your checking account number, as is needed for a “check by phone,” they might take more than you authorized, or even drain your checking account completely. They may not care about possible legal consequences; they know that you can’t afford to hire an attorney in their state to sue them, and that you can’t afford to take time off work to travel to their state to testify. In addition, if you give them your bank account number, then after they get a judgment against you, they can then file a garnishment and empty your bank account legally. Do not even tell them where you bank, for the same reason.
DON’T EVER give them a credit card or debit card number. You don’t know if they can be trusted to only take the amount you authorize.
DON’T EVER send creditors money through Western Union or other wire transfers. Make any payments you agree to by money order only, no matter what they tell you, so you have proof of payment.
DON’T believe any promises to “take bad accounts off your credit report” when they are not the original debtor. Once a bad debt is reported, the credit bureaus are the only ones who can change it, and they very rarely do, unless given convincing proof the original report was in error.
DO realize that if a creditor has written off your account and sold it to an outside debt collector, usually you can negotiate to pay a much lower amount in cash, as many collectors pay only pennies on the dollar to take over the rights to collect a debt. If you are a fearless negotiator and not a pushover, settlements of 50% to 75 % of the original amount are easily possible, and sometimes you can even settle for 30% or 40%. (You may wish to hire a good debt attorney with experience negotiating with debt collectors for this.)
5. Turning the Tables on Collectors – Suing Them Under the FDCPA or FCRA
The Fair Debt Collection Practices Act and the Fair Credit Reporting Act are two Federal statutes which spell out what debt collectors and credit reporting agencies can and can’t do. They make it possible for a consumer to easily sue, in the consumer’s own state, any debt collector which uses unfair, deceptive, or abusive methods, or any credit bureau which continues to report incorrect information. These Acts make losing companies pay your lawyers’ fees, so it does not cost you anything up front to file a suit. If you think you may have been subjected to unfair or abusive treatment, give us a call.