12 - 2009

Your rights if a debt collector calls

If you are struggling with getting your financial life on track — or juggling the monumental task of trying to pay bills after a layoff or two slashes your income — you could be getting calls from debt collectors.

Even if you’re not, they might call. On Monday night, I sat down to pay bills — and realized that the check I’d written weeks ago to my second-mortgage lender was still sitting in my bills folder. That’s OK; such a situation is part of why I pay bills on the 25th of the month, then do a double-check by the 10th, before my mid-month bills are due. The mortgage payment is actually “due” on the 1st and “late” after the 16th, so I popped the check in the mail and it will be fine.

But yesterday morning at 8:03 a.m., as I was about to hustle Mlle. (that’s short for Mademoiselle, for you non-Francophiles) Cheap out the door, the phone rang. “Hi, this is Linda with [Company] Mortgage, the holder and collector of a lien on your home,” she said.

You notice she said collector, presumably so that if I wasn’t going to pay, I was on notice. I told her what happened, that I’d mailed the check, and that it included my extra principal. She was nice, even saying, “Thank you for taking my call this morning.”

Some collectors aren’t so nice. The FDIC has put out its new issue of Consumer News, which includes an article about what to do — and your rights — if a debt collector calls. Among them: They can’t call before 8 a.m. Thus the timing on my phone.

Here’s the rest of what the FDIC article says:

When a Debt Collector Calls
Beware of unfair practices and scam artists offering to “help” with credit counseling and debt management

People who are late making payments on a loan, a credit card or other bills may eventually be contacted by a “debt collector,” a third-party hired by the original lender. Dealing with a debt collector can be stressful. But be aware that if you are overdue on a bill and get contacted by a debt collector, the federal Fair Debt Collection Practices Act requires that you be treated fairly and without harassment.

In general, the law prohibits certain unfair and deceptive collection practices. For example, the law prohibits a debt collector from calling you before 8 a.m. and after 9 p.m., unless you agree. The law requires a debt collector to stop contacting you if you make the request in writing.

Also, within 30 days from the initial contact made by a debt collector, you have a right to dispute any of the debt you are told you owe. If you dispute the bill in writing, the debt collector can’t contact you again to collect the money until you are provided with proof of the debt, such as a copy of a bill.

If you have a problem with a debt collector, you can report it to your state Attorney General’s office (listed in your local phone book or other directories) and the Federal Trade Commission (visit or call toll-free 1-877-FTC-HELP, which is 1-877-382-4357).

Note that the Fair Debt Collection Practices Act covers debt collectors but not banks or others that lend the money initially. However, under federal law governing unfair or deceptive business practices, banks cannot engage in abusive behavior when trying to collect a debt. If you have a question or a concern about your bank’s practices, contact its federal or state banking regulator. You have the right to file a complaint with the regulator if you believe the bank acted improperly or illegally. If you’re not sure how to locate that regulator, you can contact the FDIC for guidance (see Sources of Help and Information on Managing Your Money).

Also be on guard against scam artists who prey on people who are late paying their bills by offering to “help” by reducing or eliminating their debts.

“Consumers should be especially wary of promotions and unsolicited offers by companies that advertise credit counseling services or that promise to settle your debts with your creditors for less than you owe,” said Deirdre Foley, an FDIC Senior Policy Analyst. “While there are many reputable organizations that offer credit counseling or that help consumers manage their debts, other companies charge high fees for questionable services or for services that are never delivered.” (Also see When the Economy Cools Down, Financial Scams Heat Up for tips on how to avoid mortgage rescue schemes and a variety of credit-related frauds.)

Foley added that before working with any company or organization that says it will settle or negotiate your debts, check it out with your state Attorney General and the Better Business Bureau.

For more information about how to protect yourself when dealing with a debt collector or a credit counselor, read the consumer facts published by the Federal Trade Commission at

For guidance from the FDIC about how to handle difficulties making a loan or bill payment, see When Payments Are a Problem.

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