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Message #606 Collection agencies

mp3 #606 Collection Agencies (mp3 file)


Persons or corporations that don't get paid often turn debts over to a collection agency. Collection agencies are licensed and regulated by the state. There are also federal regulations that a collection agency must obey. These regulations cover the collection of consumer debts, such as personal, family and household debts and are for the protection of the public and to insure fairness in debt collection practices. For instance, in communicating with any person other than the debtor to locate a debtor, the agency cannot state that the debtor owes a debt nor contact the person more than once unless registered to do so, nor can the mail sent to that person indicate that the information sought relates to debt collection. An agency may not call a debtor at any unusual time or place, such as after 9:00 p.m. or before 8:00 a.m. If you have an attorney and so inform the agency, the agency may not contact anyone but the attorney. Upon being contacted by the agency, ask for a written notice containing the amount of the debt and the name of the creditor to whom money is owed. If a debtor tells the agency, in writing, that he or she refuses to pay a debt or that he or she wishes no further communication, the agency shall not communicate further with the debtor except to advise that further efforts will stop or that certain legal actions or remedies will take place. A collector may not badger or abuse a debtor or use or threaten violence to the person or property or use obscene or profane language. The agency cannot cause a telephone to ring or engage anyone in conversation repeatedly or continuously to annoy, abuse, or harass anyone. No false representations may be made by the agency, nor can they threaten to take any illegal action or any action they don't intend to take.

Failure to comply with these regulations subjects the agency to a law suit for damages and a civil fine.

Now you know some of the things a collection agency can't do, but what can they do? The agency can make reasonable inquiries to find out where a debtor is living; they can contact a debtor and ask him or her to pay the debt; they can hire an attorney to sue to collect a debt and to exercise all the rights of the original creditor to garnish wages or property after getting a judgment. They can call a judgment debtor to court to reveal information about his or her property, living expenses and income.

What should a debtor do if he or she is contacted by a collection agency? If the debtor owes the bill, arrangements for payment can usually be made. Any agreement to accept monthly payments is an accommodation on the part of the agency, not their legal obligation. However, most agencies, while they have a right to immediate payment of the entire balance, will accept reasonable efforts to pay. Remember, not having the money to pay does not relieve the obligation to pay, and a creditor may get a judgment against a debtor regardless of his or her ability to pay.

If a debtor does not owe the bill, let the agency know it. If the agency insists that the debt is owing, they may have to sue to prove it. If a debtor receives papers from a court, he or she must do something within the time specified by law. Ignoring the papers because a person doesn't owe the bill can lead to a default judgment and loss of the opportunity to contest the claims of the agency.

Collection agencies are a legitimate, useful part of our commercial society. Without them, the cost of doing business would be much higher, and all consumers would pay for the few who abuse their credit. The vast majority of consumers pay their bills and have no contact with collection agencies. Since agencies charge the people who turn over unpaid accounts to them a percentage of the amount collected, most creditors would prefer to settle with their customers before their accounts are assigned to a collection agency. Most creditors also are understanding about legitimate inability to pay and are willing to make arrangements with their customers.

In conclusion, a collection agency must operate within certain guidelines, but has the power to act on behalf of a creditor and may even take a debtor to court. If the debtor does not owe a bill, he or she should protest and quickly respond to any legal action. If he or she does owe the bill, every effort should be made to pay it in order to avoid further obligations of time, money, and emotional energy.

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