How to Overcome High-Pressure Credit Card Debt Collection Tactics (Part 1)

Written by CardRatings.com
Posted On: April 3, 2009

Editor's Note: This article is the first of a two-part series on debt collection.

On a recent Dateline NBC investigation, debt collectors posing as law enforcement officers were captured on tape illegally threatening debtors with immediate arrest if they didn’t pay up. Unfortunately, complaints about high-pressure debt collector tactics are continuing to generate numerous complaints to state and federal regulators, and with the slow economy the problem is likely to get worse. In 2008, some 78,000 consumers filed complaints with the Federal Trade Commission (FTC) about collection agencies.

Fortunately, a fairly strong federal law, the Fair Debt Collection Practices Act, offers important consumer protections for those who are having trouble paying their bills. So, it’s important to know your rights in case a debt collector crosses the line with you.

Here are the top high-pressure tactics that have generated complaints to the FTC in 2008 and how to fight back against them:

Demanding Too Much Money

Debts can mushroom once they are turned over for collections. In fact, 25,644 consumers complained that debt collectors were charging them much more than they owed, or trying to collect debts they weren’t entitled to collect (for example, debts discharged in bankruptcy.).

How to fight back: Debt collectors are not allowed to ask you to pay more than the amount of your original debt, unless fees or interest are legally allowed under state law. Unfortunately, because many debt collectors don’t itemize interest and fees when they bill consumers, it can be hard to tell whether a debt collector is charging you too much. However, you have the right to demand that debt collectors provide you with written validation of any debt they say you owe. If you think the amount they are charging you is incorrect, dispute the debt right away and ask for documentation. Send your dispute by certified mail with a return receipt requested.

Harassing Debtors

Debt collection harassment is illegal. Some examples include repeated or incessant phone calls, as well as threats or abusive language including profanity, or the use of racially insensitive terms.

Last year 27,382 complaints of this type were filed, including 10,610 from consumers who said debt collector used abusive or obscene language. Many consumers also complained that debt collectors called them before 8:00 am or after 9:0 pm, which is generally illegal.

How to fight back: Keep a written record of every call you receive from a debt collector. Record what was said, by whom, and when. You’ll find a free Collector Contact Worksheet you can download at DebtCollectionAnswers.com. Your notes can be invaluable if you decide to take legal action against a debt collector.

Verbal Threats

It is not unusual for collectors to threaten consumers with all kinds of dire consequences if they don’t pay. But debt collectors aren’t allowed to threaten to take action they can’t take, or don’t intend to take. 11,787 complaints were filed by consumers in 2008 relating to this type of conduct.

For example, a collector cannot threaten a consumer that she will go to jail if she doesn’t pay a past due debt, unless that is truly a consequence of not paying. We don’t have debtor’s prison in America, and you generally can’t be arrested simply because you are not to pay your credit card bills!

And before collectors can garnish your wages or seize your bank account to pay a debt, they usually must file a lawsuit against you and receive a court judgment in their favor. (Wage garnishment for debts owed to creditors is not legal in North and South Carolina, Pennsylvania and Texas.) In some cases, even threatening to ruin your credit can be illegal!

How to fight back: Take notes about your conversation with a debt collector and if he does threaten to take action against you, find out whether he has the legal right to do what he says he is going to do. Your state attorney general’s office or a consumer law attorney can help.

What do you think about the tactics discussed in this article and other debt collection practices? Would love to see your comments and questions on our active credit card forum.

Also, on a related note, if you are currently struggling with any type of consumer debt, then consider using the services of DebtGoal.com, the first free online debt management system.