Part 1 of a series focusing on The Good, The Bad, and The Ugly of Debt Collection.
Ok. I was going to write this post later in the week, but I keep seeing so much information and so many “what not to do” examples of debt collection that I feel *someone* is trying to tell me something.
So, here’s the deal:
#1: Television is not real. I know this is a difficult concept for some people, but even “reality tv” is not real. Shows like Repo Men, Lizard Lick Towing, etc. that show people slugging it out to save their car from being repossessed aren’t real. I’m not saying that they don’t happen, they do. What I’m saying is that the law penalizes people who “disturb the peace” for “self help repossession.” Federal and State law both prohibit violence to recover property and can impose stiff fines on bad actors for each occurrence. Sure, it makes good TV, but it’s not a great way to stay in business.
#2: The debtor has a lot of protection under the law. Opportunities to dispute the credit, prohibition of harassing conduct, and (potentially) discharge under bankruptcy. If you’re in debt, read through the Federal Fair Debt Collection Practices Act (FDCPA). If you’re the creditor READ the Federal Fair Debt Collection Practices Act (FDCPA) and your state equivalent (if it exists). The creditor has to jump through some non-trivial hoops to collect on debts and if you don’t, you face severe fines for each occurrence (that is, let’s say you’re a creditor/collector and have made harassing phone calls – you can get fine $1000 PER PHONE CALL). That quickly makes the debt less attractive to collect.
#3: Realize that once debts are sold or “given over to collections” (in some cases), the collectors are incentivized to collect, regardless of the hardship on the debtor. Here’s an article on one extreme situation. Several debt collection organizations say that “they work with the debtor to get their finances on track and work out a realistic payment plan.” Often, in reality, this means that they work with debtors to prioritize the debt they’re trying to collect over items such as food, rent, or basic necessities (like internet!).
If you’re in debt and are receiving debt collection notices, or if you’re a small business trying to collect on a debt, see an attorney with debt collection experience. It can save a lot of headache, money, and time for everyone.
- The Creditor-Debtor Relationship: Low Level Disruption (cleardebt.co.uk)
- Fair Debt Collection – Thwarting Abusive Collections Tactics (lexingtonlaw.com)
- Debt Validation and Collection Agencies (lexingtonlaw.com)
- Collections and Telephone Calls (lexingtonlaw.com)