As economic times become more difficult, a greater number of people are defaulting on their bills. And a greater number of debts are being turned over to debt collection agencies. And with this has also come a rise in complaints about debt collection agencies. The Federal Trade Commission said that, for the past three years, they received more complaints against debt collectors than against any other industry. And for the past five years, complaints are up about 43 percent according to the Better Business Bureau.
Debt collection agencies are necessary for businesses who are legitimately trying to recoup their losses. According to a study cited by a collection industry trade group, in 2005 the collection industry saved the average American household $351. That is how much money households would have spent if businesses were forced to raise prices to cover bad debt.
But sometimes these agencies resort to unethical tactics to try and recover the debt. "Most people are not aware of their rights. And unfortunately debt collectors take advantage of that fact," says Joe Ridout of Consumer Action. So it's important that you know what these companies are and are not allowed to do. Here are some basic consumer rights:
A debt collector may not call you before 8 a.m. or after 9 p.m., unless you agree;
You may not be contacted at work if the collector knows your employer disapproves;
If you don't want to hear from a debt collector, write a letter telling them to stop. By law, they have to. But the debt won't go away and you can still be sued;
If you have an attorney, the debt collector is allowed to contact them. If you don't have a lawyer, your friends and family can be asked about how to get in touch with you;
A debt collector may not misrepresent the amount of your debt;
A debt collector may not use profane or threatening language;
Debt collectors may not say that they will put a lien on your property or file a lawsuit unless the agency really means to do that and it's legal; and
Collectors may not legally claim federal benefits such as Social Security, or your retirement accounts, like your IRA or 401(k).
Debt collectors can get very aggressive, so it's important that you know your rights. For more information, you can look at the Fair Debt Collection section of the Federal Trade Commission website. This site goes into detail about what debt collectors are and are not allowed to do. In addition, it provides information on how to file a complaint against a debt collection agency.