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Monday, February 8th, 2010

Debtor Collects from Creditor Harassment

Anyone who has ever been hounded by a debt collector has probably fantasized about giving the collector a taste of his or her own medicine. That fantasy may be much easier to realize than most people imagine, as the story of a Dallas debtor shows.

Background: Your Rights as a Consumer

Laws are in place at both the federal and the state level to protect all Americans from overly aggressive debt collection practices. In fact, between the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and the Telephone Consumer Protection Act, a lot of behaviors typical of debt collectors are prohibited.

In addition to other things, debt collectors cannot:

  • Lie about their ability to take legal action to collect on a debt
  • Call you repeatedly with intent to annoy or harass
  • Call you outside of 8 am and 9 pm local time
  • Contact you directly when you have indicated that you have legal representation
  • Contact you by any embarrassing media (like postcards)

Unfortunately, many consumers are not aware of their rights and so do not take legal action against collectors who break these laws.

A Man with a Plan

According to the Dallas Observer, a man named Craig Cunningham has taken it upon himself to stand up for his consumer rights.

The Observer reports that Cunningham made some poor investment choices when credit was easy and ended up with more than $100,000 worth of debt. But, when collectors began contacting him and asking him to pay up, he decided to fight back.

Essentially, here’s how Cunningham has managed to make the most out of a bad situation:

  • He hired a lawyer to represent him and help him understand the intricacies of the consumer protection laws that were relevant to his case.
  • He began recording calls from his creditors and saving all forms of contact he received.
  • With the help of his attorney, he filed lawsuits whenever a debt collector violated a national or state consumer protection law.
  • He began receiving court settlements from successful cases.

Most collection agencies, it seems, prefer out-of-court settlements (which often involve a statutory fine) to taking a case to trial, since settlements save them money. The Observer notes that Cunningham has thus far earned $20,000 from suits against law-breaking collectors.

If you think your rights have been violated by a debt collector, consider contacting an attorney to determine whether you could take steps to receive compensation for the violations.

Additional Resources

Fair Debt Collection Practices Act (PDF)

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Posted in Financial Literacy | 2 Comments »

Thursday, August 13th, 2009

Study: More Complaints About Debt Collectors - Protect Yourself from Creditors

A new survey by the Consumer Federation of America and two other consumer protection groups shows that consumer complaints about debt collection are growing at the same time that resources available to address these complaints are diminishing.

The Findings: Complaints Increase, Funds Shrink

The survey, which examined 34 state, city and county agencies from 19 states, found these troubling trends:

  • More complaints: 62 % of agencies reported more complaints in the past year than in previous years
  • Cash crunch: 47 % reported recent budget cuts and one agency was completely shut down due to lack of funding
  • Less hurting more: 50 % reported that small-dollar amount complaints were up last year, suggesting that the economy has made consumers more likely to report minor problems
  • Debt collection complaints soar: This was the fastest-growing category of consumer complaints
  • Mortgage woes continue: Foreclosure rescue scams and other mortgage-related problems stood out as the most egregious of consumer complaints
  • Money problems abound: The majority of agencies cited funding shortages as the biggest challenge they faced

Economy Primed for Scams?

The CFA’s analysis of the survey suggests that the increased consumer complaints are no surprise in the current economy – when everybody’s strapped for cash, people will be more aggressive to collect what they can from others.

Keeping Yourself Away from Scams and Debt Collectors

The CFA offers tips for decreasing your odds of being victimized by a debt collection or other scam.

  1. Know your seller. When buying from a new business, check its status with your local Better Business Bureau www.bbb.org.
  2. Check licenses. Before hiring an individual, find out about licensing requirements in your state and how to determine whether a person has met them.
  3. Pay safely. If you’re required to put money down for something you’ll receive in the future, use a credit card rather than cash or a debit card – that way, you can dispute charges if necessary.
  4. Don’t pay in full up front. Putting down a deposit is normal for services to be rendered in the future – paying in full is not.
  5. Watch out for scams. Any offer involving money transfers, check cashing, upfront money demands or other promises that seem too good to be true are likely fraudulent. Don’t get involved.
  6. Read your contracts. Make sure any verbal promises you get appear in writing as well, and make sure you understand what’s in anything you sign.
  7. Know where to go for help. Nonprofit, community-based credit counseling services are available across the country. Seek one out on the web or from a trusted source if you need help.
  8. Trust your instincts. If you suspect foul play, back up and get some trusted advice.

Additional Resources
Consumer Federation of America, National Association of Consumer Agency Administrators & North American Consumer Protection Investigators: 2008 Consumer Complaint Survey Report

Learn how filing bankruptcy can help you avoid foreclosure and debt collector harassment.

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Posted in Financial Literacy | 1 Comment »

Thursday, August 6th, 2009

Are You Responsible for the Debt of a Deceased Relative?

When a dear family member dies, the last thing you want to think about is money – unfortunately, financial problems arise sometimes.

Besides funeral and burial costs, you may be forced to deal with the unpleasant question of financial obligations your loved one left unpaid.

Here’s what you need to know.

Protection from the Fair Trade Commission

The law that protects you from a family member’s debts is called the Fair Debt Collection Practices Act and is enforced by the FTC, a government consumer protection agency. Basically, the law outlines the following terms.

  • Who’s responsible for debts after death? In most cases, payment of any debts comes from the deceased’s estate. If money from the estate is insufficient to cover debts, they usually remain unpaid.
  • Is there a legal obligation to pay remaining debts? Most relatives are not legally required to pay debts. You may be obligated to cover debts left by a spouse; however, responsibility is often limited by state law. A bankruptcy lawyer in your state may help you learn more about state law and debt.
  • What should I do if debt collectors try to make me pay? First of all, don’t give out any of your personal information (SSN, bank account numbers, etc.). Some con artists stalk the obituaries and pose as debt collectors as a way to steal identities and money. Instead, direct the collector to the deceased’s representative (an executor of a will or an administrator).
  • Can I ignore debt collectors who contact me about debts? Technically, you can. But if you’re representing the deceased or otherwise responsible for his debts, you may want to negotiate with the collector to see if you can work out an arrangement.
  • How can I stop a creditor from contacting me? Write a letter to the collector asking her to stop attempting to collect the debt. Copy the letter and send it by certified mail so you’ll get a receipt when it arrives. After the creditor has received your letter, she can only contact you for two reasons: to announce a specific action (like a lawsuit) or to announce the end of collection attempts.
  • Can creditors tell others about a relative’s debt? Unless the creditor needs contact information for the representative of the deceased, he is generally prohibited from telling anyone besides a spouse, parent or guardian.

Learn more about filing bankruptcy and stoping creditor harassment.

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Posted in Financial Literacy, Post-Bankruptcy Debtor Education, Setting the Record Straight about Bankruptcy | No Comments »