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Ending Credit Collection Harassment
You may be getting some awful telephone calls, calls that hurt
your feelings and may even be illegal! Sometimes your situation
gets bad enough to
need bankruptcy relief.
But before your creditors actually sue you, they will try to
make you pay up using informal techniques, rather than formal
court orders, as this is far less expensive and time-consuming.
First among these informal attempts may be turning their bills
over to a collection agency which may then begin harassment, by
calling you often and at odd hours by telephone, by trying to
talk to your employer about your debts, and/or by threatening
you with legal actions, etc. Many of these techniques that they
use are illegal! Yes, a creditor or agency can write you
letters, call once a day seeking payment, try to bring legal
action against you, but he is forbidden by law to harass you or
invade your privacy, or use deceptive means to get you to pay
your bills. He may not use foul and abusive language over the
telephone, tell anyone beside you the reason for his phone call,
insist on payment for a product or service that you claim to
have a legitimate grievance about, nor issue false threats (such
as saying that he is going to drag you into court to collect
$35, when in fact his agency's policy is not to file suit on
accounts of less than $100, because of the high legal costs
involved). He may not inconvenience you (by calling you at work
when you are not easily able to receive calls), or invade your
privacy (telling your employer or your neighbor that he is
trying to collect a debt from you).
Your rights under
the Fair Debt Collection Practices Act.
What debts are covered?
Personal, family, and household debts are covered under the Act.
This includes money owed for the purchase of an automobile, for
medical care, or for charge accounts.
Who is a debt collector?
A debt collector is any person, other than the creditor, who
regularly collects debts owed to others. Under a 1986 amendment
to the Fair Debt Collection Practices Act, this includes
attorneys who collect debts on a regular basis.
How may a debt collector contact you?
A collector may contact you in person, by mail, telephone,
telegram, or FAX. However, a debt collector may not contact you
at unreasonable times or places, such as before 8 a.m. or after
9 p.m., unless you agree. A debt collector also may not contact
you at work if the collector knows that your employer
disapproves.
Can you stop a debt collector from contacting you?
You may stop a collector from contacting you by writing a letter
to the collection agency telling them to stop. Once the agency
receives your letter, they may not contact you again except to
say there will be no further contact. Another exception is that
the agency may notify you if the debt collector or the creditor
intends to take some specific action.
May a debt collector contact any person other than you concerning your
debt?
If you have an attorney, the debt collector may not contact
anyone other than your attorney. If you do not have an attorney,
a collector may contact other people, but only to find out where
you live and work. Collectors usually are prohibited from
contacting such permissible third parties more than once. In most
cases, the collector is not permitted to tell anyone other than
you and your attorney that you owe money.
What is the debt collector required to tell you about the debt?
Within five days after you are first contacted, the collector
must send you a written notice telling you the amount of money
you owe; the name of the creditor to whom you owe the money; and
what action to take if you believe you do not owe the money.
May a debt collector continue to contact you if you believe you
do not owe money?
A collector may not contact you if, within 30 days after you are
first contacted, you send the collection agency a letter stating
you do not owe money. However, a collector can renew collection
activities if you are sent proof of the debt, such as a copy of a
bill for the amount owed.
What types of debt collection practices are prohibited?
Harassment. Debt collectors may not harass, oppress, or abuse
any person. For example, debt collectors may not:
- use threats of violence or harm against the person,
property, or reputation;
- publish a list of consumers who refuse to pay their
debts
(except to a credit bureau);
- use obscene or profane language;
- repeatedly use the telephone to annoy someone;
- telephone people without identifying themselves;
- advertise your debt.
False statements. Debt collectors may not use any false
statements when collecting a debt. For example, debt collectors
may not:
- falsely imply that they are attorneys or government
representatives;
- falsely imply that you have committed a crime;
- falsely represent that they operate or work for a
credit
bureau;
- misrepresent the amount of your debt;
- misrepresent the involvement of an attorney in
collecting a
debt;
- indicate that papers being sent to you are legal
forms when
they are not;
- indicate that papers being sent to you are not legal
forms
when they are.
Debt collectors also may not state that:
- you will be arrested if you do not pay your debt;
- they will seize, garnish, attach, or sell your
property or
wages, unless the collection agency or creditor
intends to do so,
and it is legal to do so;
- actions, such as a lawsuit, will be taken against
you, which
legally may not be taken, or which they do not intend
to take.
Debt collectors may not:
- give false credit information about you to anyone;
- send you anything that looks like an official
document from
a court or government agency when it is not;
- use a false name.
Unfair practices. Debt collectors may not engage in unfair
practices in attempting to collect a debt. For example,
collectors may not:
- collect any amount greater than your debt, unless
allowed by
law;
- deposit a post-dated check prematurely;
- make you accept collect calls or pay for telegrams;
- take or threaten to take your property unless this
can be
done legally;
- contact you by postcard.
What control do you have over payment of debts?
If you owe more than one debt, any payment you make must be
applied to the debt you indicate. A debt collector may not apply
a payment to any debt you believe you do not owe.
What can you do if you believe a debt collector violated the law?
You have the right to sue a collector in a state or federal court
within one year from the date you believe the law was violated.
If you win, you may recover money for the damages you suffered.
Court costs and attorney's fees also can be recovered. A group of people
also may sue a debt collector and recover money for
damages up to $500,000, or one percent of the collector's net
worth, whichever is less.
Where can you report a debt collector for an alleged violation of
the law?
Report any problems you have with a debt collector to your state
Attorney General's office and the Federal Trade Commission. Many states
also have their own debt collection laws and your Attorney General's
office can help you determine your rights.
If you have questions about the Fair Debt Collection Practices
Act, or your rights under the Act, write: Correspondence Branch,
Federal Trade Commission, Washington, D.C. 20580. Although the FTC
generally cannot intervene in individual disputes, the
information you provide may indicate a pattern of possible law
violations requiring action by the Commission.
Wipe Out Your Debts!
If you're afraid to answer the phone because your creditors have been calling every night; and you're worried that one of them is
going to call your boss and tell him you're a deadbeat; and just trying to pay off your bills leaves you almost nothing for
food - it time you thought about bankruptcy!
With a small amount of money, a lawyer (and even he's not
necessary a lot of the time), and a careful evaluation of your
assets (what you own) and your liabilities (what you owe), you
too can make a new start with the help of the Federal and State
bankruptcy laws. But don't rush into this without carefully
determining which is the right way for you, for there are
several different ways to stop your creditors cold, and choosing
the wrong way can result in your losing much more than you might otherwise have to.
Straight Bankruptcy Usually Costs Less, and It's Quick!
If you have very few assets, and lots of debt, and not enough
income to pay the debts off, even on an extended plan (more
about that later), then you will probably have to file straight
bankruptcy. You must file the proper forms (or "schedules")
which you can purchase from any really good office supply
stationery store in your nearest city, especially one in a
district where there are lawyers' offices.
Bankruptcy is not a very complicated court action, so don't be
too afraid of it. You will need to know which district you live
in for Federal Court purposes; look in the telephone (white
pages) under U.S. Government - Courts, and locate the U.S.
District Court in your nearest city. Probably that court has
jurisdiction; but check this out by phoning the Clerk of the
Court and asking him, giving him you home address. You will
have to fill out several "schedules" or lists of your creditors:
creditors having priority, creditors having security, and
creditors having unsecured claims without priority. You must
list every creditor, for any one that is not listed can still
sue you and collect, even after the bankruptcy! If you don't
know if a debt is secured (backed up by a related asset, like
refrigerator bought on an installment loan) or unsecured (made
only on your personal reputation, with no related asset), ask
the creditor. Include as a creditor the name of anyone for whom
you co-signed a loan or note, and anyone who co-signed for you.
What Will You Have Left?
Will you be put out in the cold without food, clothing and a
house to live in after your creditors get paid? Not at all -
because most State bankruptcy laws allow some of your assets to be "exempt" from being used to pay your creditors! You must
check the specific laws of your State, but usually, the house
you live in, the tools of your trade, your personal clothes
(within reasonable limits) and certain specific basic home
furnishings are all not taken away from you. In fact, in this
totally absurd world we live in, many States now permit you to
also keep your TV set(!), because, apparently, they regard it as
a necessity for life!
Where to File
Once you have all the forms filled out and notarized, bring them
to the Clerk of the U.S. District Court in your district, along
with $50. You don't have to notify your creditors - the Clerk
does that, while also reminding them that now that you have
filed bankruptcy papers, they may not press you for any more
money, but may come to your hearing.
Usually your creditors don't show up, since by that time you
have filed bankruptcy, you have very few nonexempt assets left
that they are interested in. Whatever assets you do have that
are not exempt (if any) must be sold under the Court's
supervision. Any money thus realized is added to whatever cash
you may have had at the time you filed (if any) and the total
amount (which might be, and often is, as low as $50 or $750 is
divided up by the trustee appointed at your hearing and your
creditors get paid on a pro rata (proportional) basis to the
amount you owe them. If your assets add up to an amount that,
for example, only allows each creditor 3 1/2 cents for every
dollar of debt you owed them, then that 3 1/2 cents is all he
gets!
About three months after you have filed, you adjudged
"bankrupt". and you can start over again to incur, pay bills and
establish a new credit record. Be careful, however, about
talking to your old credits at this time. They may offer to
help you out by extending new credit, and maneuver you into
signing "reaffirmation" of your old debt! Ready anything you
sign very closely, and don't agree to repay any debt that you
have already discharged through your bankruptcy!
Lawyers for Complications
There are some people who should definitely hire a lawyer to
help them through their bankruptcies, especially people who have
assets like real estate that they want, somehow, to keep. Aside
from real estate, if you have been accused by any creditor of
fraud, you should also have a lawyer handle your case. If you
decide you don't need a lawyer to handle your bankruptcy, you
are still responsible for filling out all of the forms
accurately and completely, and every bit as carefully as if a
lawyer had done them. Leaving out a creditor's address from a
schedule, or forgetting a loan you co-signed can bring lawsuits
against you even after your bankruptcy. So be careful, and if
you find the bankruptcy process is too complicated, do see a
lawyer!
Keeping Your Assets Instead
If you've fallen behind in paying your bills, but you don't want
to declare straight bankruptcy, you may want to clean up your
financial mess instead through Chapter XIII of the Federal
Bankruptcy Laws. Also known as the Wage Earner Plan, Chapter
XIII differs from straight bankruptcy in two most important
ways: you must pay off the entire amount of your debts (no 10
cents on a dollar here), and within a 3 year period. but the
good part is you are not declared "bankrupt", so no one ever
knows that you needed relief under any part of the Federal
Bankruptcy Acts.
The major advantage of the Wage Earner Plan, besides not being recorded permanently on
your credit record, is that you get to keep all your assets, exempt and non-exempt alike
(assuming you still have any left!). This is quite important, if, for
example, you have a good paid-up car, or expensive household
furnishings or a boat or other valuable assets that you want to
keep. Under Chapter XIII, you can get your current debts
"stretched out" to three years, which may well result in lower
total monthly payments than you are currently paying, and as
long as you pay off your debts in accordance with the agreement
files with the Court, month by month, no creditor will be able
to sue you to try to seize any other of your assets, and force
their public sale at disadvantageous prices.
Even if they have begin to sue you, once you file for relief
under the Bankruptcy Act, either under Chapter XIII or under
Chapter XI, straight voluntary bankruptcy, they can't touch you!
They are immediately restricted to getting from you only what
the referee or trustee will give them and that only after the
court proceedings have been completed. Often, if the creditor
threatens to sue you, the most effective thing you can do to
stop him (besides paying the debt!) is to tell him frankly that,
if he sues you, you have no other recourse than to declare
bankruptcy. This will often make your creditor willing to
negotiate the debt, and you may be able to satisfy him by paying
the debt back, but over a longer period of time (with smaller
monthly payments) than you originally contracted for.
Creditors know well that if you file bankruptcy, the chance of
their getting payment in full on their overdue account is very
low, so it is in their interest to try to ease your credit
burden at least for a while.
Make Yourself "Judgment-Proof"
If a creditor goes ahead and sues you, and gets a judgment
against you, he can then get a court order directing the sheriff
to seize your personal property, sell it and pay the creditor
the amount of your debt. However, if you have no valuable
assets, there is nothing for the sheriff to seize, and you are
what is generally called "judgment proof", or in other words,
can't be made to pay the debt. Because they know this is likely
to happen, street-smart debtors often hide their possessions, or
move them out-of-state, before the sheriff (or marshal) arrives.
This is, of course, illegal. The creditor's next move is to
try to "garnishee" your wages, which he does by getting a court
order directing your employer to set aside part of your wages or
salary every pay period and turn the amount over to him.
However, he can only do this if he knows, or can find out, where
you work. But even if your wages are garnisheed, there are
limits on what a creditor can take! Laws vary from State to
State. In some states wages cannot be garnisheed at all while
in others only small amounts are exempt from garnishment.
If you have no job, and no visible assets, or you live in a
State where your wages cannot be garnisheed, your creditors
actually have very few ways of ever collecting on that judgment!
Harassment and Other Creditor Tools
Before your situation gets bad enough to need bankruptcy relief,
and before your creditors actually sue you, they will try to
make you pay up using informal techniques, rather than formal
court orders, as this is far less expensive and time-consuming.
First among these informal attempts may be turning their bills
over to a collection agency which may then begin harassment, by
calling you often and at odd hours by telephone, by trying to
talk to your employer about your debts, and/or by threatening
you with legal actions, etc. Many of these techniques that they
use are illegal! Yes, a creditor or agency can write you
letters, call once a day seeking payment, try to bring legal
action against you, but he is forbidden by law to harass you or
invade your privacy, or use deceptive means to get you to pay
your bills. He may not use foul and abusive language over the
telephone, tell anyone beside you the reason for his phone call,
insist on payment for a product or service that you claim to
have a legitimate grievance about, nor issue false threats (such
as saying that he is going to drag you into court to collect
$35, when in fact his agency's policy is not to file suit on
accounts of less than $100, because of the high legal costs
involved). He may not inconvenience you (by calling you at work
when you are not easily able to receive calls), or invade your
privacy (telling your employer or your neighbor that he is
trying to collect a debt from you).
There are books that provide detailed additional information on
personal bankruptcy, and include sample letters with which you
can try to arrange "stretch-outs" on your own with your
creditors before bankruptcy is necessary. Some include sample
bankruptcy forms filled out that you can use as a model. Since
the accurate filing of all your debts and assets is so
important, it's a good idea to follow their detailed
instructions closely, with or without a lawyer, so that once you
get your creditors off you back, they stay off!
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