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About collection agencies

When collectors are trained, many call centers require that the agent not give up control of the call. They are trained to be assertive, demanding, and to talk over the debtor during an argument. They are also taught to refer back to any and all possible consequences of non compliance. It is illegal for them to threaten any action they do not intend to or cannot take (a common, illegal threat is to prosecute the debtor for fraud).

Collection agencies are not permitted to call excessively, although the law likely differs from an individual’s opinion as to the definition of excessive. Should you tell a collector that you are going to try to obtain the money in the next few days; the collector will schedule a callback. If you do not call back, the collector will do so starting from the scheduled time/date, and continue for approximately a week. If you have made a promise to pay an amount, the collector will again set a callback time/date. In the event the money is not received and you have not contacted the collector, they will conduct follow up calls, as frequently as twice a day for up to a week. Telling a collector over the phone to stop calling is not effective. To stop all calls, you must put it in writing.

Abusive, illegal tactics by collection agencies can include the following:
Contacting you at work when you have already informed the collectors that it is not permissible
Contacting 3rd parties after contact has been made with you
Disclosing or threatening to disclose information to 3rd parties (friends, family, neighbors, co-workers, supervisors, etc…)
Threatening to have you arrested
Reporting or threatening to report false information on your credit report
Threatening any other action they cannot or do not intend to carry out
Name calling (examples include deadbeat, liar, and thief)
Using profanity
Attempting to collect a debt, or the portion thereof, that is currently in dispute
Contacting you over the telephone after you have sent a letter revoking their ability to do so
Calling in excess of what the law (your state law or the FDCPA98, whichever is more strict) permits
Contacting you in any manner after you have sent a thorough cease and desist letter—except to inform you of any action now in progress, i.e., a lawsuit

In the event of violations, you must preserve your rights. File a complaint with the FTC, the state agency that oversees collection agencies, and/or obtain a lawyer. If the agency is based out of state, you may be able to file a complaint in their state as well.

One of a debtor’s rights when dealing with a 3rd party collection agency is to demand that communications cease. The debtor can demand to be contacted by mail only, or not at all. Should the debtor send a complete CND letter, it is advisable only when the statute of limitations has run out for the debt. Otherwise, the letter will be interpreted (assuming that it doesn’t blatantly state so) as a refusal to pay the debt. The collection agency/creditor may very well file a lawsuit, viewing litigation as the only way to receive payment. A letter restricting communication to letter form only, in many collection agencies, move the debtor’s account from a collector to the compliance department (or whatever the dept is named, that attempts to ensure that the law is followed regarding debt collection) or experienced collectors will prepare a letter for the account.

It is my personal opinion that any and all correspondence sent to the collection agency be sent using certified mail. This is to provide the sender with a return receipt, which may prove very useful evidence in the event you take the collection agency to court.

Many people wish to not work with the collection agency, and instead work with the creditor. A debtor may attempt to work with the original creditor as long as they still own the account. If the debt has been sold, then it is no longer possible to work with the OC. Some entities by policy refuse to work with a debtor once the account has been assigned to a CA. This is not limited to consumer debts, and can include taxes, student loans, tuition, traffic tickets and other civil penalties. Most collection agencies that are collecting assigned debts do so on a contingency basis, and may only settle on the OC's terms.

It is important to know that collection agencies can do the following:

-Require the full payment immediately
-Not accept partial payments
-When attempting to locate the debtor, they may contact 3rd parties to obtain contact info (neighbors, friends, family members, etc…)
-Sue you for the debt (if past the statute of limitations, the defense is expiration of SOL)
-Ask you for your employer, banking info, income, etc…you are not required to give this information to them
-Attempt to collect a debt that has passed the SOL
-Use power phrases, such as “refusal to comply/cooperate”
-Explain any and all possible consequences of not paying off the debt*
Many collection agencies will perform some level of negotiating.
Simplified examples of negotiations may include the following:

-PIF demand --> settlement of 2/3
-PIF demand --> ½ down, ½ in 2 weeks or a month --> ½ down, 2 payments of 1/4
-PIF demand --> 2/3 down, partial payment plan over 3-12 months
-SIF offer, limited time only

The older the debt, the lower a company may be willing to settle for, but no matter which collection agency is attempting to collect, they will likely use boiler room tactics. In other words, the money must be in by 2 p.m., end of the day, end of the week, etc… Whenever a debtor is told that the money must be in by 2:00 p.m. (sometimes 3 p.m.), it is often because any payments received after that time will be applied to the next business day’s collections. Towards the end of the month, the collection attempts often get more aggressive. This is because most collectors/collection manager’s bonuses are based upon some form of monthly productivity, and they are striving to reach or maximize that bonus check.

The terms will soften only over time, provided the CA does not aggressively litigate. After each offer you are given is rebuffed, the collector will likely press you harder by explaining possible consequences (and in the case of abusive collections, will threaten you with things they cannot actually do).

On accounts that have passed the statute of limitations, collectors will attempt to have you verbally acknowledge the debt, especially if the call is being recorded, or having you make a token payment. Even a minuscule payment, or a promise to pay, will restart the clock. A cease and desist letter that does not acknowledge the debt, but does inform the CA that said debt has lapsed is probably the best defense.

Some collection agencies will refuse all payment plan offers, accepting only the BIF. These most aggressive companies will only take the PIF, or litigate the matter. Unfortunately, if they are legally entitled to collect the debt, they then do have the prerogative to proceed this way. Even though it isn’t “right,” it is legal. Before suing you, a debt collector must have either bought the debt, or been assigned to collect on the debt by the entity that does own it. In the event a debtor has asked for validation and is sued prior to being given said validation, then the debtor should answer with a counter claim for FDCPA8 violations.

It might be worth noting a couple of other things. First, many collectors are rarely paid a good wage. They may be paid a few dollars above minimum wage, but have the incentive of a potentially large bonus check after exceeding the amount they are budgeted to collect. The bonus can effectively double or better their standard wages. A second interesting fact is that a good number of collectors end up with the job after having been collected upon themselves, even with the same office if they live in the area.

*There is a difference between giving possible consequences and threatening.
For example: A collector may explain that failure to pay a traffic citation can result in the driver’s license being suspended (if that in fact can happen). A collector may not state that he/she is going to suspend the license unless the debtor pays.

BIF = Balance in Full
SIF = Settlement in Full
PIF = Paid in Full
CA = Collection Agency
OC = Original Creditor
fdcpa = Fair Debt Collection Practices Act
FTC = Federal Trade Commission

Congrats on your first sticky.A very well put together topic.

Sub: #1 posted on Sun, 03/25/2007 - 17:28

cajunbulldog cajunbulldog
(Posts: 4850 | Credits: )

Thank you. I thought it might be easier for people to cope with collection agencies if they had a better idea of what they were dealing with.

Sub: #2 posted on Sun, 03/25/2007 - 17:29

Morningstar Morningstar

(Posts: 1633 | Credits: )

Well said. This is a good summary of the highlights of the fdcpa.

Sub: #3 posted on Sun, 03/25/2007 - 19:39

texaslawyer texaslawyer

(Posts: 258 | Credits: )

My question is regarding how to pay them if you do agree on a payment plan. Is it a bad idea to send them a check? (Not postdated, of course, I know that) I refused to give checking info over the phone, though they were very pushy about it, but I did send a check. Is that a bad idea?

Sub: #4 posted on Mon, 04/02/2007 - 11:41


Sending a check is a good idea because the amount written on the check will only be withdrawn from your account when they cash it. You will need to monitor your account on the available balance when the company will send the check to the bank. Payments by money order can also be mentioned when the agreement is signed.

Sub: #5 posted on Mon, 04/02/2007 - 16:11

Bridget Bridget

(Posts: 348 | Credits: )

I must mention that if you read fine print, most of your bills these days will say
"By sending a check you agree to authorize us to debit this amount". They turn paper checks into electronic transactions and vice-versa. I would feel most safe sending a MO.

Sub: #6 posted on Tue, 04/03/2007 - 10:20

saraheba saraheba

(Posts: 26 | Credits: )

u are so right morning star... due to the bonus structure within the CA, agents do tend to get very aggressive towards the end of the month, unless they had a stacking bonus like i did, which allows me to be lenient and so allowing the debtor to spread out payments according to what they can afford...

now this is going to be contraversial... don't know n/e better way to start ...

if u know ur in debt, pay the dang debt... yeah i know i know, life is tuff etc etc... but cut out TIVO, for a couple months, cut out the clubbing, and shoe sales, don t be like some debtors and mix up ur priorities ...

had a woman once that told me straight off that she spends 150.00 a month on cigarettes and nothing is going to make her touch that money, not ever the 3 yr debt she had with Ford... i was like ... LADY, ITS ONLY 50.00 BUCKS A MONTH I'M ASKING U FOR... she was adamant that she's not doing anything that would interferr with her smoking.

i'm not saying the blatantly rude collectors are correct in using scare tactics.. i just used sarcasm, satire and extreme cynism... however, i avoided raising my voice, threatening to call relatives and 3rd party persons, and more often than not, i usually gave pretty reasonable SIF's. There wasn't one SIF i took to my Boss and he didn't approve it, once the debtor explained why...

heck, in my last week i Sif a 80,000 account for 9,000 even though it was not in my department, or my company for that matter, since the department was closed down, but the lady wanted a clean slate on her credit... i nearly cried that day ... to think all that hard work and i couldn't see a penny out of the bonus on it...

The information provided may not be legal advice, but it is the general formula used by debt collectors world wide... the only ppl who i can tell u deviate for sure ... those b****rds from Manila ... they would sell their mother's to the market if it meant they would be getting BIF.

Sub: #7 posted on Wed, 04/11/2007 - 10:32

Marlee_Jordan Marlee_Jordan

(Posts: 17 | Credits: )

So what do you do if you can't afford the BIF, and they refuse to take payments?

Sub: #8 posted on Tue, 04/17/2007 - 13:47


You keep trying to negotiate with them, and send them what you can afford. Keep copies of all correspondence and payments, in the event they try to sue you for the debt, you can show the judge that you've been trying to take care of the debt for xxx days/months/longer...

they'll basically either:

a)accept a payment plan,
b)sell your account to another collection agency,
c)sue you for payment,

Sub: #9 posted on Tue, 04/17/2007 - 13:59

Morningstar Morningstar

(Posts: 1633 | Credits: )

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