Perhaps Debt Collectors Aren’t Scum of the Earth?

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They make a living by hounding deadbeats (or presumed deadbeats) to pay off debts. Reports have surfaced that they routinely break the law in pursuit of payoffs. Now, debt collectors are asking for your respect, and even a little sympathy.

Debt collectors, often reviled for harassing debtors into paying off debts, say that they’re the ones feeling harassed lately. A NY Times story tells how debt collectors are now trying to change their image, so that workers in the industry are thought of as actual human beings rather than shady bottom-feeders preying on folks hit by hard times.

A big part of the image makeover a website, Ask Doctor Debt, created by the debt collection association ACA International to inform consumers about their rights, the law, and the limits of what debt collectors can and cannot do. The natural question is one posed on the website itself:

Why would an organization made up of credit and debt collection professionals want to help consumers?

And here’s how the organization answers:

Simple—educated consumers who understand their rights and responsibilities when it comes to the credit and debt collection process are far easier to work with than those who do not. In addition, dealing with debt and credit issues can be an emotional and sometimes intimidating process. It doesn’t need to be. If you know your rights, fully understand the situation you’re in and what options are available, you can avoid unnecessary stress while making the best decision for you and your family’s financial well-being.

All sounds sensible. But does is the site really on the consumer’s side? Much of the info is presented in a Q&A format, like this:

Will I have to pay more because the debt is being collected by a collection agency?
Answer:
By law, a third party debt collector cannot attempt to collect more than the amount owed. Interest, fees or other charges must be authorized by the agreement creating the original debt or permitted by state law. Review the credit agreement to determine if you are held accountable for interest charges, late fees or attorney fees.

There is nothing untrue about the answer here. But there is some basic advice that’s missing. The whole truth is that collection agencies are always up for negotiation, and they’ll often accept far less than the amount owed. Some experts advise a debtor to play hard ball and offer to pay half, or even one-tenth of the debt. Depending on the situation, the collection agency makes money on the deal regardless and is happy to settle. But the site set up by debt collectors won’t tell you about that. [time-link title="(Read about how to outsmart a debt collector.)" url=http://moneyland.time.com/2009/12/08/how-to-outsmart-a-debt-collector/]

Elsewhere, the site poses the question:

Does debt have a statute of limitations?
Answer:
Potentially, depending on the law of the state in which you live. However, in most states there is generally no limit on how long a creditor can attempt to collect on a debt.

Again, no one can claim the answer is false. But what’s not fully explained is that once a debt is past the statute of limitations, debt collectors are completely powerless to do get the debtor to pay up. Yet, that still doesn’t stop some collectors from trying. (Check out an example in southern California from not long ago.) Why? Apparently, because these efforts are sometimes successful. Unless a consumer knows better, he or she might unwittingly be talked into paying off a debt there’s no legal requirement to pay off.

A better source of advice for dealing with debt collectors (or straight-up scammers) is the Better Business Bureau, which, for instance, advises consumers:

Stop collector calls. According to federal law, a debt collector cannot continue to contact you—at work or home—if you tell them to stop. Write a letter stating not to contact you anymore.

There is similar info at the Ask Doctor Debt site, but it’s framed in a much different, way less forceful manner, which also hints that it’s best to just play ball:

… you may send a letter to a collector requesting that all collection calls cease. But in order for this request to be effective, it must be in writing. Once the request is received by the collector, the collector may only contact you once more to inform you that collection efforts will cease, or they can contact you to notify you of the specific remedies the collector or creditor may use to collect the debt from you. These remedies may include filing a lawsuit to collect the debt or pursuing wage garnishment.

I also can’t find anything at the Doctor Debt site that’s as blunt about situations when you absolutely should not pay as this, stated by the BBB:

Don’t pay. Do not claim a debt that isn’t yours or make a payment on a bill just to make the collector “go away.” Even just one payment can indicate that you are accepting the full responsibility of the debt. The invalid debt could also reflect as a liability on your credit report.

So while the debt collector-sponsored site may somehow be helpful improving the industry’s image, keep in mind that other sources do a better job of actually helping consumers deal with debt collectors.

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