Debunking The Debt Collectors' Spin Doctors
The nation's economic woes make debt collection a topic du jour, but while there are some good bits mixed into the Washington Post's article, "When Debt Collectors Disrupt Dinner," it probably should have been titled "What Debt Collectors Would Like You To Say And Do When They Call About The Credit Card." Read it with a shaker of salt. Read on for the good, the bad, and the lazy reporting, plus what you should actually to protect and exercise your rights as a debtor...
The Good: What You Should Do
The article does include some good information. For example, consumers should definitely never share bank account information with a debt collector. Doing so makes it a cinch for the debt collector to take payments right out of your account, even if you did not authorize one.
It never hurts to request verification, but it will not stop the collection in most cases. They will send what they have, and then start calling again.
Most importantly, you should take careful notes, record the calls if you can, and call a consumer rights lawyer. Because the FDCPA includes attorney fees and costs, most consumer rights lawyers will not charge clients up front; the bill will come out of any settlement, or the debt collector will pay it when you win your case.
I say this again and again and again, but getting a lawyer early in your case is the best way to protect your rights. As a foreclosed homeowner recently said "If you're going to take my house away from me, you better own the note." The same goes for credit card debt.
The Bad
The article says the FDCPA does not apply to debt buyers. Wrong. It does, as long as the debt buyer purchased the debt after default. In the case of credit cards, this is almost always the case. If a defaulted-debt buyer, violates the FDCPA, you can probably sue.
Henricks exhorts consumers to work out payment plans, neglecting to mention that consumers should first make sure the person calling actually has the right to collect the debt. He threatens—in quotation marks—that "failure to work out a repayment plan may result in legal actions such as wage garnishment or a judgment being filed." Of course, the collector has to sue and win in order to get a judgment or garnish wages, no easy task when most collectors cannot prove the consumer ever incurred the debt.
Just Some Lazy Reporting
Nearly everyone interviewed in the article is a collection industry insider, from lobbyist Scott Talbot and Nat'l Assoc. of Retail Collection Attorneys president, the ironically-named Robert Markoff. The lone exception is the AARP's project manager for consumer protection issues, Sally Hurme, who is quoted only once as saying it is difficult to settle debts. I think she would probably have more to say, given a chance.
The Silver Lining
The best thing in the article: Scott Talbot of the credit industry group (read: lobbyists), Financial Services Roundtable, says "There is going to be a consumer protection wave, which we support, that will sweep through Congress."
I'll believe it when I see it.
Sam Glover is a consumer rights lawyer, enemy of shady debt collectors, previous Consumerist contributor, and writes the Caveat Emptor blog. His column appears the first Monday of every month on Consumerist.
When Debt Collectors Disrupt Dinner [Washington Post] (Photo: mason bryant)
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Comments:
Beware of debt purchasers who buy zombie debt way past the Statute of limitations then try to trick you into thinking you have an obligation to pay. These bottom feeders of the industry are a special breed of awful because they know darn well these people they are harassing have no obligation to pay the expired debt but seek to take advantage of the individuals ignorance of their rights.
The best thing legislators can do is to ban Binding Mandatory Arbitration clauses. They force consumers to give up their rights to due process, especially since the arbitration firms (ie. National Arbitration Forum) are paid by the very companies they represent and thusly have a built-in conflict of interest. Sure, they say their neutral, but they have a vested interest in keeping the income rolling in.
@Hedgy2136: did you hit the wrong article? MBAs have nothing to do with scummy debt collector tricks.
The best way to deal with an unscrupulous debt collector is to know someone who owns more than 16 pigs.
As a small business owner I just LUV debt collectors.
I had a debt collector calling for one of my employees a while back. The debt collector would call and identify themselves as a friend or a personal telephone call.
Sneaky Sheit.
The punch line?
The employee is deaf-mute. You would think the friend would know the employee does not use standard voice telephones.
When in the mood I generally start of any conversation with someone obviously telepainintheassing by saying 'I do not give permission for you to record this call. Please turn off any recording device immediately.' That usually diverts things for several minutes.
I've always dreamed of getting a 900 number as my home number, setting it to charge a few bucks a minute and giving it out to every telemarketer, scam artist and debt collector around. Ah the long involved conversations I could have...
Speaking of debt collections, anyone know the statute of limitations for college loans? On 8/96, I got a stutent loan for $2000. When I transferred to another college in 5/97, I paid the loan in full by credit card. Even today, I get calls/mail saying I never paid back the loan, despite faxing a copy of the credit statement as proof several times (the card and account have long since paid for and cancelled, so no one can withdraw money from it). Hasn't the deadline to collect passed by now?
Student Loans are federally insured like Child Support you cannot get out of it. Also if you have a state job or a job that requires a license you can loose it if you don't pay up.
Advertising to consumers you can record phone calls is misleading because if the collector is in a state where both states cannot record calls, then legally the debtor cannot record a call and you are only making the situation worse for them and the hole deeper.
Also, the debtor not consumer can be threatened for legal action if they are the owner of the debt. It's called the FDCPA read it. Also looking for collector mishaps so you can get out a debt because you were not an honorable enough to pay back the money you owed just shows you, you're a sub human debtor bottom feeder looking for any old way out of excusing your poor judgment.
Here we go again. A lawyer using Consumerist as a means of drumming up more business. His first advice is always, "Hire a lawyer!"
@BigSlowTarget: Doesn't Skype has a pay-for-incoming-calls feature? I don't know if it is a 900 number or if it works outside Skype, but you could probably have some fun with that.
Advertising to consumers you can record phone calls is misleading because if the collector is in a state where both states cannot record calls...
@Pious_Augustus: All you have to do is tell the person that you're recording the call. That way both parties know the call is being recorded. If they don't want to be recorded they can always hang up.
Also looking for collector mishaps...
You mean violations of the law? That's what you call a 'mishap'?
"no easy task when most collectors cannot prove the consumer ever incurred the debt."
As some of you guys know here, I'm a lawyer who works in the court system. It's amazing how little proof these credit card collections cases have.
First, the debt at issue has been bought and rebought numerous times. Creating a chain of ownership is nearly impossible.
Second, the debt collector will attach a vague affidavit from someone in its office attesting that "I have reviewed the file" and the "records show" that the defendant owes the debt. However, the debt collector will never actually attach any record. At best the attorney will attach a blank credit card appplication. I'm not making this up. This happens time and time again.
And the third problem for the debt collector is that the attorney is working on a flat rate. He agrees to take x number of debt work for y amount of dollars. If the case becomes difficult because the defendant starts to really fight, it will quickly become economically impossible for the attorney to put up a hard fight. If he spends a lot of time trying to prove his case, he's essentially working for free.
The huge advantage these debt collectors have is that the vast majority of these cases end in default judgment because the defendant is too ignorant or afraid or unaware to do anything about it. Instead of answering the complaint they stick their heads in the sand and hope it goes away. And worse of all, on top of the debt owed, plus the interest, the credit collector will also get his attorney fees paid.
When these cases are fought, the debt collector nearly always loses. (I only say "nearly" because I can't speak for every court. In our court they always lose.)
If anyone out there is sued for credit card debt, do yourself a huge favor and put up a fight. Answer the complaint the best as you can. That will stop you from being in default and will allow the case to proceed on the merits.
Also, these types of cases are usually filed in lower courts, sometimes called district courts. These judges are used to dealing with citizens representing themselves. They won't help you, necessarily, but they won't use your ignorance of the law against you.
@buckfutt: Except in this case it is excellent advice. When dealing with the legal system you should have an attorney represent you, or at least consult with one about your options. Most local bar associations offer low-cost or free consultation programs. Get your legal advice from an independent legal professional, NOT the debt collector.
Get the scoop on which collector does what and find out how to fight back at www.budhibbs.com
So if my credit card company sends me a notice that I have to agree to arbitration when I recieve the card, I know that means I can't sue them. But does it also mean they can't sue me??
Five minutes on Clark Howard's website will tell you everything you need to know about dealing with a collector--and as Clark puts it, "It's FREE!"
@BigSlowTarget: I love that idea. You're telling them that if they want to conduct a business discussion or transaction with you, then they need to pay you for your time. There's no reason that they should expect me to provide them with a free forum for discussing something that will make them money.
@FuryOfFirestorm: If it is still on your credit report, just challenge it. They'll have to prove that the debt is still valid, and you'll be able to show that it was paid. If that's the case, the bureau should take it off.
WHAT HE SAID (Scott Talbot):
"There is going to be a consumer protection wave, which we support, that will sweep through Congress."
WHAT HE REALLY MEANT:
"There is going to be a consumer protection wave, which we'll water-down, that will sweep through Congress."
The statute of limitations for student loans is usually longer than other types of debt. Where im from in Canada it's 3on normal debt 7 on student loans, in Ontario I believe its 5 and 7 respectively. All you really got to do to find out is do a search on what your state/provincial laws on the matter is.
As a collector for a large credit card company I can tell you that not all of us are bad people. I really try to help people that are having very hard times keeping up with there account. My best advice to you is while your account is current, contact your credit card company, my company has a department specifically designed for people with current accounts that are having hardships. Also signing up for account protection is great, it might seem a little expensive, especially if you have a high credit limit and the card is almost meeting that limit, but trust me if your account is current they can freeze it for up to three months, waive your finance charges and all kinds of great things. Always try to talk with your collection agent, some of us actually want to help you, and if you feel like they are being pushy or not trying to help, ask to speak with another agent. I know there are people on my team that are jerks to the customers, I do not agree with that. And try to be nice PLEASE!!! :) If I get a customer that is very rude and is trying to make me feel like trash, to be honest I will do the least to help them. Nice customers I will try to lower your interest rate, waive fees, and even if you don't pay and are nice, I will try to get you to the department that will help you the most. I hope this info is helpful. If you have questions just ask me.
I recorded several calls from a leading debt collection company (I won't name them) They called me names, threatened arrest, lawsuits, etc. I took notes on each call. I then took the notes and tapes to a lawyer. A couple of years later, the debt collection company paid a large amount of money for their misdeeds. I won't tell the amount, but the lawyer and I were very happy. If you are being called and harassed by one of these debt collectors, find out if it is legal to record in your state as it is in mine. Record the conversations and take notes. Consult a good lawyer and most likely you will have a case. Don't even tell them you are recording if you are not required to in your state. Don't let these idiots push you around. SUE THEM. THEY WILL PAY!
I could understand a legitimate debt collectors association gladly accepting legislation aimed at weeding out bad apples. The unscrupulous debt collectors give the legitimate ones a bad name. Contrary to popular belief, there do exist debt collectors that are not evil incarnate.
If they push for legislation to punish bad collectors, it helps to forestall or prevent legislation meant to make for those that follow the rules to collect.