What Does a Collection Agency Do?
If you have an outstanding payment in your name, you may be contacted by a collection agency. Such outstanding payments may be real or the creditor may have made a billing mistake. However, many debtors believe that collection agencies have unlimited rights and so end up paying the outstanding amount, even when they do not really owe the amount. To avoid being harassed by collection agencies, it is important to know what these agencies can do and what they cannot do.
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Types of Collection Agencies
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There are two basic types of collection agencies. Sometimes, a firm may have its own subsidiary to handle delinquent payments. These are known as first-party collection agencies. They usually contact you in the initial months following your non-payment. However, when we talk of collection agencies, we usually refer to third-party agencies. A third-party agency may buy your debt from the original creditor or they may be hired by creditor to help get the payments do. Such third-party collection agencies work on a commission and get a percentage of the amount they are able to collect.
Steps that Collection Agencies Can Take
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Many people believe collection agencies have unlimited powers to get you to make the payment. However, collection agencies have only limited legal options. Collection agencies can contact you through phone and letters. They also can report the delinquent payment to the credit bureaus, which could negatively affect your credit rating. Finally, if the agency is working on commission, it may recommend legal action and if it owns the debt, they may sue and try to get the payment through the legal system.
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Things Collection Agencies Cannot Do
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Collection agencies cannot call you before 8 a.m. and after 9 p.m. They cannot call you repeatedly, use foul language, lie to you about their intentions or threaten you. While they can contact your friends and employer, they may not discuss your debt with them. Also, they cannot call you at work once you let them know such calls at workplace are not allowed. Legally, collection agencies cannot seize your assets, bank accounts or paycheck. They cannot get you fired from your job or engage in any kind of violence. Also, they cannot public disclose the details of your outstanding debt.
You Can Make the Calls Stop
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Under the Fair Debt Collection Practices Act, if the consumer communicates with the debt collector in writing, preferably by certified mail and with a return receipt attached, asking them to stop all further communications, the debt collector cannot carry out any further communications with the consumer. After such a letter is furnished, the debt collector may only contact the consumer once more to let them know that further correspondence will be stopped or to notify them of any actions they may be planning take. If they contact you more than once after they receive your letter to cease communication, you can sue them and get up to $1,000 per violation.
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