Consumer Debt Collection

Anyone faced with the possibility of consumer debt collection likely understands the stress and frustration of unpaid bills. Collection agencies are businesses that specialize in tracking down payment on delinquent accounts. Hired by creditors, these agencies will attempt to collect on bad debts, receiving a percentage of the amount of the money owed for their trouble. Some agencies take a different approach by purchasing debts outright from creditors. The purchase price for these debts is generally less than the initial amount of indebtedness. This approach has a two fold benefit. The agency makes money through payments from debtors on the original delinquent accounts. The creditor selling the debts can remove delinquent accounts from their accounts receivable roster. For the creditor, the difference between the primary debts and the price that is charged to the collections agency is considered a business loss and is written off. Of course, there are many laws and regulations that control the practices that are utilized to collect any money that is owed. Abusive behavior is clearly defined by law and is strictly prohibited. A consumer debt collection agency may be a department of the original debtor organization. When this is the case, this is known as a first party agency. A third party agency exists when an outside party is hired to collect on unpaid liabilities.

A consumer debt collection organization will generally attempt to collect money that individual consumers may owe on a variety of debts. These debts could include medical expenses, property taxes, generic household expenses, car payments, mortgage payments, credit card indebtedness, or money that is owed for child support. There are several ways that an agency can make contact with a debtor. These means of contact may include the postal service, the telegram, or via telephone or fax. However, there are specific times that are specified by law when a consumer debt collection organization can make contact. Calling in the early hours of the morning or making contact late at night is not permitted by law. In the unlikely event that an individual agrees to be contacted at all hours of the day or night, the agency is free to call whenever they wish. Consumers who retain legal representation have an advantage in this area. If an individual informs the collecting agency that they have hired an attorney, that agency must make all contact through the attorney and leave the debtor alone. Contact at a debtor's workplace is legal, but if a debtor makes it clear that their employer is not in favor of such contact, the contact must cease.

In a best case scenario, a consumer debt collection organization can be an asset to a debtor as well as a creditor. By working with the agency to try to come up with a reasonable approach for repayment, delinquent funds can be recovered and a debtor can have the peace of mind of knowing that they are working honorably to pay back money that is owed. That is not to say that there are not organizations that attempt to utilize practices that could be called abusive. Thankfully, there are specific regulations that can be enforced to insure that any behavior employed by a collections agency is above board. For example, an agency may not contact anyone else about an individual's indebtedness. Family members, friends, or neighbors should never be informed of a debtor's payment woes. A debtor's attorney, the creditor or any legal representation that is attained by the creditor are the only people who may lawfully be included in any correspondence or contact regarding the account. There are exceptions to this rule. If a consumer debt collection agency is seeking information on a debtor's address, phone number, or place of employment, other individuals may be contacted. But in making this contact, any inference to unpaid debt is prohibited.

There are many things that the law considers unfair practices in the area of consumer debt collection. Some of these unfair practices could include collecting more money than is actually owed according to the original lending agreement or outright deception on the part of the collecting agency during a phone conversation regarding the debtor's account. An agency representative is also not permitted to make exaggerated threats that are not based on legally appropriate and realistic actions. In any mailed correspondence, there can be no indication on the outer envelope that betrays the reason for the communication inside. For this reasons, postcards are not considered a legally appropriate method of communication with a debtor. The Bible talks about the freedom that is offered to believers. "Now the Lord is that Spirit: and where the Spirit of the Lord is, there is liberty." (2 Corinthians 2:17)

Unfortunately, there are many organizations that push the envelope of legal activity, and there are others who seem to have little regard for the law. In the event of harassment by a consumer debt collection agency, there are specific steps that a debtor can take to end this behavior. A consumer can contact the Federal Trade Commission about any abuses. Remaining informed about what a collector can actually do is a good first step. Basically, there are only three legal courses of action that a creditor can take. They can cease to move forward with any kind of business activity with the defaulting individual. Or, they can report delinquent activity to a credit bureau. Lastly, they can take a debtor to court to pursue legal action. If a debtor feels that they are being harassed, the debtor can send a cease letter to the creditor informing them of their desire for the harassment to end.

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