I frequently see articles in the news giving advice on how people should respond to debt collectors. Many of them are completely off base, and even the best are insufficient. An example of a good article can be found here on the U.S. News Website. This article is a decent start, but alas incomplete. Here are my own additions to their tips:
1. Divulge as little information as possible. Whenever a debt collector calls you, they are legally obligated to inform you that they are “acting as a debt collector and any information obtained will be used for that purpose.” This phrase is also know as the “mini-miranda”, which is apt because the information you provide them will be used against you. For example, NEVER tell a debt collector where you work. Not only will they try to contact you there, but if a judgment is entered against you, they will now know from where to garnish your wages.
2. Never divulge your banking information. This is a corollary to the above tip, but is important enough to warrant its own heading. When you are making payments on a debt, collectors will often “helpfully” ask whether you’d like to set up a check by phone so they can run your payment through as an ACH transactions. Do not do this. Should the creditor get a judgment against you down the line, having your bank information will allow them to empty your accounts of any non-exempt funds. Additionally, some collectors are so unscrupulous, or simply incompetent, that they will withdraw payments you haven’t authorized. Don’t give them the chance. Instead, make payments with a money order (you can pick one up at your local post office.)
3. Tell them not to call you at work. If the collector already knows where you work, tell them not to call you there. Once you do, they no longer can. Period. It’s that simple. If they call your place of employment after being instructed not to, they are in violation of the Fair Debt Collection Practices Act and you can sue them for monetary damages.
4. Negotiate toward the end of the month. Individual collectors have monthly goals and/or quotas they have to meet in order to bonus, and firms often have goals set by their clients. Thus, you are likelier to get the best possible settlement within the last week of the month. This is especially true when you owe a sizable amount and you have managed to scrape together a lump sum with which to pay it off. As long as you can have that payment in by the 31st, they are likely to cut you their best possible deal.
5. Report bad behavior to regulators. The regulatory scheme governing debt collectors is best described as patchwork and varies depending on the state you live in. Nonetheless, depending on who is doing the collecting there is likely someone who oversees the collector’s practices to one degree or another. If you live in Minnesota, collection agencies are overseen by the Department of Commerce, who is in charge of licensing. Additionally, the state Attorney General should be responsive to unscrupulous trade practices in any industry. If the entity harassing you is a law firm, make a report to the Lawyers Professional Responsibility Board. Finally, if the offending entity is large enough, lodge a complaint with the Consumer Financial Protect Bureau. Always remember: just because you owe someone money does not mean you need to endure their bad behavior.
Finally, I hope that it goes without saying (considering you are visiting a law firm website):
6. Consult with a consumer rights attorney. The federal Fair Debt Collection Practices Act is one of your best protections against debt collectors. Not only will it curb abusive and illegal behavior, but it can result in a collector paying you instead of you paying them. Best of all, the act requires the debt collector to pay your attorney’s fees, meaning you can get free representation.
These are just a few of my broad tips for dealing with collectors. If you have any further questions or comments, please feel free to contact me.