While trying to work out a deal through a debt reduction company, the debt collectors will be knocking on your door. Some can be very aggressive and use numerous illegal tactics to get you to pay your outstanding debt. Many of these unscrupulous debt collectors will tell you that you will be arrested if you do not pay off your debt.

This is not true.

You can't be arrested if you do not pay your debts. A debt collector is not allowed to imply that they are a government representative or that you have committed a federal crime. They may not harass or abuse you or anyone they contact about your debt.

You need to be aware that credit collectors will do anything to get the debt repaid. Establishing a relationship with a debt reduction professional will enable you to reduce harassment and repay your debt.

Debt creditors use all kinds of shady tactics to try to get you to pay. Do not be bullied into repaying the debt under terms that you did not agree to. By using a debt reduction plan, you can avoid numerous calls, letters and visits from debt collectors. A debt reduction plan will take each outstanding debt you have and use one monthly payment to repay each of them.

Though a debt reduction company, you can reduce payments to each creditor, pay less over time, pay off the debt in full, and still be in good standing when the debt is paid off. Debt collectors will no longer call, as the debt reduction company will take care of informing each creditor that they are working with you and that the debt will be repaid.

In order to stop the debt collectors, a debt reduction plan should be used and adhered to in order to be successful.

Popularity: 8% [?]

1. I am from the Legal Department and you are being sued.

From my experience less then 2% of all debts listed to a collection agency ever result in formal legal proceedings and in most cases legal costs required to initiate a lawsuit have to be advanced by the collection agency. From a business perspective, it makes no sense to throw good money after bad hoping to recover the legal costs and the debt if you do not have enough assets available to satisfy the judgment being sought after. It's just not worth it to the collection agency. Bill collectors use the "legal department" threat only because it is scary and most people don't know better. The fact is that most bill collectors sit in a tiny 3"x 3" cubicle and pretend to be someone they really aren't on the phone.

2. I am going to garnish your pay cheque.

In order to get any piece of your pay cheque, the bill collector needs a judgment from a court in their favour but the collectors will not seek a judgment unless they have reason to believe that you have enough assets to satisfy a judgment. Pursuant to Section 7(2) of the Wages Act (Ontario), no more than 20% of your wages may be garnished. A creditor can bring a motion to increase the amount of wages that may be garnished but a debtor also has the right to bring a motion to have such amount decreased. I have heard Collectors tell people they will garnish 50% of their pay but the truth is that even if they get a judgment, garnishments rarely exceed 15-20% of pay. Again they only use the threat because it scares people and most don't know any better.

3. If I don't have payment by 4 p.m. today, we are (Insert threat here).

Bill collectors are paid a commission to do their job and so are the managers that are breathing down their necks in order to hit their targets. Some aggressive bill collectors can make six figures annually if they push people hard enough. They will tell you anything if they feel that it will result in a payment and a bigger commission cheque for them.

4. Pay in full, monthly payments are not an option.

They want full payment from you because they make more money off you when you pay in full. Payments are always an option; in most cases going directly to the creditor will get you a monthly payment plan. It won't fix your credit but you will at least be able to stop the demand for full payment.

5. Collectors can call you as much as they like.

Pursuant to Section 22(6) of R.R.O. 1990, Regulation 74 to the Collection Agencies Act (Ontario), there are restrictions on the frequency of calls that collection agencies can make to you. Despite what they may tell you a bill collector cannot harass you. If you register a letter requesting the collection agency to communicate with only in writing the calls should stop otherwise you can escalate their behavior to their ombudsman or provincial ministry to take further steps.

6. Collectors can call and harass your family, friends and neighbours.

A collection agency can only contact a third party to confirm your home address and telephone number or your employer to confirm your employment, title and business address; that's it (Section 22(3) of Regulation 74 to the Collection Agencies Act). If the collector divulges details about the debt or tries to embarrass you, there are steps you can take to deal with and stop this behavior.

7. Bill collectors can talk to you any way they feel.

Bill collectors can be obnoxious and rude; many think that insulting people will get the debt paid. Collection laws prevent this type of behavior reoccurring if you escalate it and deal with the issue. If you feel that they have mistreated you by using profanity, intimidating or coercive language, you can certainly stop it. They will most certainly deny the activity so a tape recorded conversation or voice message will be your best friend here.

Collection agencies and bill collectors have a bad reputation because they are a business like any other whose goal is to generate profits for its shareholders; its their job to push you hard to pay. There are ways to deal with the debt and their behavior but it takes time and a certain investment in researching your rights. Try not to avoid the debt but find a way of dealing with it. The only way to stop the collection activity is to pay the bill or go bankrupt. If you can pay the bills in full, do so as soon as possible.

If payment of your bills is not an option due to extreme financial hardship, you may wish to explore bankruptcy by consulting with a Trustee in your local yellow pages. Going bankrupt will most certainly deal with the debt but since it's detrimental to your credit rating, it should only be used as a last resort. Also, a Trustee is a court appointed agent for your creditors so even though you pay them for their service, the Trustee is looking after your creditors' best interests. Your debts are wiped out but so are most of your assets subject to certain limited exceptions and your credit report shows the effect for 7-10 years.

Debt settlement should be considered as an alternative to bankruptcy since it is quickly becoming one of the newest and best options in Canada to retire debt quickly and ethically. A debt settlement company will act as your agent, and negotiate a settlement with your creditors. Once the settlement is paid, the balance is written off and your credit report is updated to reflect that the debt is finalized. The time frame to settle debt can be anywhere from 1 month to 36 months depending on your ability. This is often the least expensive, least damaging to your credit and the fastest path to debt freedom.

Remember that bill collectors make a living off of trying to scare and intimidate people so they can earn a big commission cheque. Consider the source when they call and don't let bill collectors push you around, you have rights and can fight back and win!

Popularity: 2% [?]

In many circumstances, the consumer has rights against the collector which might avoid the need for bankruptcy relief. One weapon is the Fair Debt Collection Practices Act or FDCPA.

The FDCPA prohibits contracts from third parties if the collector knows the debtor is represented by a bankruptcy attorney, otherwise contact with third parties is permitted but only to locate the debtor. In practice, writing is required in advising of bankruptcy attorney representation to avoid he said she said dispute.

The collector must inform the debtor in every communication that the communication is from a debt collector. The collector must send the consumer dispute verification invitation within five days of initial contact, and the collector must suspend collection until the debt is verified if the dispute is received within 30 days.

A debt collector may not harass,   oppress, or abuse a consumer, but this is not defined and is left up to the courts. The collector may not publish a list of nonpayer’s, except to credit bureaus, or use obscene or profane language, or make repeated telephone calls for annoyance purposes. Debt collectors may not use false or misleading means to collect a debt, and may not collect more than what is justly owed. Actual damages, $1000 statutory penalties, and attorney fees may be recovered. After filing personal bankruptcy, and the automatic stay is in place, it's taboo for collectors to call you at all.

From your bankruptcy attorney’s point of view, a tape recording of an abusive call is best. Second best is a detailed narrative of what took place and how you felt. Be aware that it is very difficult to convince a judge or jury that you are in the right, so the more proof you have the better.

The easiest and often most effective action you can take is to simply ask the creditor to stop calling you. You may have to remind the caller that the firm has violated one or more of the provisions of the Fair Debt Collection Act, but the calls should cease. Should you be dealing with a collection agency and not your original creditor, you may also create and send your own cease and desist letter stop their debt collection harassment. Always send a cease and desist letter by certified mail, return receipt requested so you'll have proof of its receipt. Also, make every attempt to send this letter to a physical address of the collection company, not to a P.O. Box. You can report harassment problems to your state Attorney General's office, the Federal Trade Commission, the American Collectors Association or your local State Bar Association. Should problems persist, you have the right to sue a collector in either state or federal court within one year from the date of the violation. If you are successful you are eligible to recover money for damages, court and bankruptcy attorney costs plus an additional amount of up to $1000. If you have no way out to catch up you will probably have to file chapter 7. The beauty of this is, once you file chapter 7 bankruptcy, all of the calls will stop.

The Fair Debt Collection Act specifies the rights of both creditors and debtors. If you have been subjected to any of the actions noted, you are the victim of creditor harassment for the FDCA regulations. Collectors are prohibited from calling before 8 AM and after 9 PM or even constantly using the phone to harass you. Next, they can't deposit a post dated check prematurely. Another very common complaint is that creditors cannot use profane language. Something else they have been known to do is give false information of any type concerning your account to someone else. Once you file for bankruptcy in the automatic stay is in place that creditors will be notified and they can't even contact you at all. This is probably the largest benefit of filing personal bankruptcy besides wiping your debts clean.

Popularity: 12% [?]

Even if you owe a ton of money, you have rights. You have the right to be treated fairly, honestly, and as an adult. That means when a bill collector comes calling, he or she can’t lie, intimidate, or cheat you. They're prohibited by debt collector law and here are three specific things they cannot do.

1) They Cannot Harass You on the Phone

Federal law prohibits collection agencies from calling you outside of the hours of 8:00 a.m. till 9:00 p.m. your local time. And even during that time they can’t call repeatedly or leave elongated or threatening messages on your answering machine. And if they do get you on the phone they must be professional – they can’t use profane or rude language. They have to clearly identify themselves and stick to business.

2) They Cannot Try to Embarrass You

In the past it was common for bill collectors to send post cards or letters directly to debtors that clearly looked like attempts to collect debts. This was done to try to provoke the debtor into getting in touch with the agency and maybe working out a payback agreement. Other attempts at embarrassment like calling your neighbors or family were also used. But Federal law prohibits this kind of activity too.

3) The Cannot Misrepresent Themselves or Your Debt

Collectors can’t pretend to be somebody they’re not. Gone are the days when they could imply that they were in law enforcement or connected to your local law enforcement in any way. Gone are the days when they could imply that they were lawyers. And long gone are the days when they could pile on imaginary charges on top of your already existing debt in an effort to bring you to the bargaining table. Those days are gone because Federal Law protects you.

The name of the Federal law that provides all of this protection is the Fair Debt Collection Practices Act (FDCPA). It’s been around for over 30 years now and has protected many, many debtors from abuse and exploitation. Debt collector law is there for you and If you’re in debt, it’s not a bad idea to become familiar with it.

Popularity: unranked [?]

If you owe one or more debts and are wondering if a collection agency can call you while you’re on the job, the answer is yes. That’s the bad news. But there’s a bit of good news too. The good news is that the Fair Debt Collection Practices Act (FDCPA) provides you some protection by expressly limiting what debt collectors can and cannot say and do should they call your place of business.

According to the FDCPA, a bill collector may communicate with anyone other than you (the debtor) but only for the purpose of acquiring location information – i.e. where you live or work. When they do communicate with someone other than you, here are the particular rules they must obey.

They must identify themselves and simply state that they’re attempting to confirm or correct location information. They may not identify who they work for unless they’re specifically asked to do so. This applies to both verbal and written communication.

They may not use any language or symbol (in written communications) that indicates they’re in the debt collection business. And they may not even indicate that the communication relates to a debt collection. In short, they cannot state to a 3rd party that you (the consumer) owe any debt.

The bottom line is that debt collectors are only allowed to communicate with someone other than yourself if they’re trying to find out your address, phone number, or other means through which they can contact you.

Now, do collection agencies follow these rules to the letter? Alas, many do not. When that happens, you have some options.

File a complaint with the FTC

The FTC (Federal Trade Commission) is the government agency whose job it is to enforce FDCPA. You can file a consumer complaint online at their website (www.ftc.gov). An individual complaint will probably not be cause for the FTC to act, but it won’t hurt (especially if that collector has other complaints). Plus, you can also send a copy of the complaint to the collector themselves which may get their attention and let them know you’re going to defend yourself.

Send a complaint letter to your State’s Attorney General

The Attorneys General of each state are tasked with making sure their laws are obeyed and enforced. The chances are good that your state has its own collection laws that mirror in some way the laws set out in FDCPA. Do a little research and then write a letter to your Attorney General, pointing out specific abuses made to both your state law and the Federal law by the collection agency. As with the FTC, a single letter will probably not get the bureaucratic wheels moving swiftly in your favor, but it won’t hurt either and again, copying in the collection agency is a good idea.

There are other options you have such as writing the collection agency’s State Attorney General (if they’re located outside your state), or complaining to one or more debt collection professional associations. You can even hire an attorney yourself and sue the agency. In all cases though, remember that you have rights and no matter how much money you owe or how long the debt’s been outstanding, a debt collector must treat you fairly and according to the law.

Popularity: unranked [?]