Dealing with a Collection Agency: An Interview with the Attorney General’s Office

Although you may feel relatively helpless when in a situation of having an account in collections you do actually have plenty of rights in this situation. The Fair Debt Collection Practices Act safeguards a debtor’s right to be treated fairly during the collection process. However, the consumer is also always responsible to pay legitimate debt.

Is it better for a consumer to have a consumer credit counseling agency or a consolidation agency handle debt collections?

If a consumer is having trouble covering debts, he or she can contact creditors to try to work out a payment plan. If overwhelmed by debt, a consumer can also set up an appointment with an attorney to discuss legal options.

Of course, the best way to avoid problems with debt collectors is to pay bills on time, and a careful budget can help with that. Credit counseling organizations can help you establish a budget, but it is important to choose the right organization.

In what ways can a collection agency locate and talk to a debtor?

• Debt collectors are allowed to make contact in person, by mail, by telephone and by fax about the debts owed.
• They can contact someone at home between the hours of 8 a.m. - 9 p.m; at work if they do not have a telephone number to reach the debtor during non-working hours; and through people who know the consumer if they are unable to locate the debtor through other means.

What if a consumer doesn’t want to be contacted?

To stop a collection agency from trying to make contact at home or at work, a consumer should put a request in writing.

1. Send a letter by certified mail telling the debt collector to cease phone contact both at home and the workplace.
2. Be sure to keep a copy of the letter on file.
3. Once a collection agency or attorney receives the letter, they may not contact the consumer again except to indicate that a creditor intends to take some specific action on the overdue account.

Consumers should keep in mind that sending such a letter will not make debts disappear. Creditors can still take legal action to collect money that is owed.

What constitutes harassment?

When debt collectors initiate contact, they may not:

• Use profane language.
• Threaten with violence.
• Say someone will be arrested if debts aren’t paid.
• Pretend to be attorneys or government representatives.
• Tell an employer or others about the debts, or pretend that they are making contact for other reasons than debt collection.

How does it affect a consumer's credit report to show debts going into collections?

I would suggest contacting one of the credit reporting agencies for more information on this.

What can working with a credit counselor accomplish?

Consumer credit counselors can help with the following:

• Review a consumer’s spending habits and make suggestions for reducing expenses and prioritizing bills.
• Develop a budget for to help control expenses and live within your means.
• Work out a payment plan with creditors so they’ll stop calling for payment.
• Reduce interest rates, late fees and over the limit fees.

Who should consumers call for credit counseling services?

One reputable source of referrals for non-profit credit counseling agencies is the National Foundation for Credit Counseling. Contact the NFCC at 1-800-388-2227, or check its Web site for further information or the number of a local agency.

Is bankruptcy a good option?

Our office cannot provide legal advice to individuals or represent individuals in their private legal disputes. However, under new federal bankruptcy laws, all individual debtors who file bankruptcy are required to undergo credit counseling within six months before filing for bankruptcy, as well as complete a financial management instructional course after filing bankruptcy.

Consumers may wish to contact a private attorney to discuss bankruptcy or other legal options.

Dealing with a Collection Agency

You should realize that many consumers wind up in some form of financial trouble at one time or another and you should not allow embarrassment to keep you from being actively involved in your financial recovery. This means that you shouldn’t allow yourself to leave bills unopened or avoid staying in contact with the creditors to whom you owe money. This is not to say that you should allow a collector to harass you, and this situation can unfortunately arise if a collector is too exuberant with his or her job. You certainly do not have to allow yourself to be harassed, and it is important that you know your rights as a consumer so that you do not endure bad behavior from a collector.

Most collectors are simply people who are doing a job, and for this reason you should not allow yourself to take out your frustrations on the person who is calling to collect on a legitimate debt. You will get the best results if you remain cordial and actively attempt to work out a solution that is best for both you and the creditor. Sometimes a miniscule monthly payment is enough to keep the collection agency satisfied as long as you continue to make the payments as promised.

Additional Resources

There are a variety of resources available to learn more about the Fair Debt Collections Act and other laws pertaining to debt collections. The website for the Federal Trade Commission should be one of the first places you look when you are dealing with collection agencies. Laws regarding collections of debt exist to protect you, but if you don't know the laws then you cannot protect yourself.

Also, North Carolina Attorney General Roy Cooper’s office has information on a variety of consumer protection issues. Certain guidelines will vary state-to-state, but reviewing this site will provide consumers with a better understanding of the process in order to ask questions and formulate a plan of action.

Dealing with a collection agency should be a wake up call that now is the time to get your finances under control. Take the time to work out a realistic budget and stop spending more money than you can pay back.