What Can a Debt Collector Really Do?

During the current tough economic atmosphere, many Americans have to make difficult choices between meeting their needs and paying their debt.  It is easy to understand that some of us have concerns regarding debt collection now or looming in the near future. Debt collectors can be frightening. Abusive debt collectors have been the most complained-about industry on the Federal Trade Commission's consumer website for many years. 

Debt collection harassment and abuse can take a particular toll on vulnerable older consumers. Federal and state laws are in place to protect us from harassment. However, many collectors do not comply with the law. It is up to us to know our rights and to stand up against abusive practices from some debt collectors.

A debt collector working on behalf of a creditor can do little more than demand payment. If the creditor has not taken the client's house, car or other property as collateral on a loan, then legally the creditor can only do three things:

1. Stop doing business with the consumer.
   
   
2. Report the consumer to a credit bureau.
   
   
3. Sue the consumer in court. Even if they obtain a favorable judgment, it does not force the consumer to pay the debt. It gives the creditor the right to "try" to seize part of a consumer's wages or property.

To avoid harassment, consumers should consider the following steps.

1. Try to head off harassment before it starts. Consider calling the creditor to explain the situation and negotiate payment options.
   
   
2. The cease letter. Write the collector a cease letter. Federal law requires the collection agency to stop their collection efforts after they receive a written request to stop. This only applies to third party collectors in most cases. Keep a copy for your records and send it by certified mail.
   
   
3. The lawyer's letter. Federal law requires collection agencies to stop contacting a consumer known to be represented by a lawyer as long as the lawyer responds to the collection agency's inquiries.
   
   
4. Raise complaints about billing errors. If the debt is a mistake on the creditor's part, consumers can write to request a correction. The collection agency must stop collection efforts while it investigates.
   
   
5. Complain to a Government Agency. Write a letter to the Federal Trade Commission or the Kentucky Attorney General's Office. They are responsible for enforcing laws designed to protect consumers.

For More Information

Consumer Response Center
Federal Trade Commission
CRC-240, Washington, D.C. 20580
1-877-FTC-HELP
www.ftc.gov

Consumer Protection Division
Kentucky Office of Attorney General
1024 Capital Center Drive
Frankfort, KY 40601
502-696-5300
http://ag.ky.gov/civil/consumerprotection/complaints/forms.htm