In order to deal with debt collectors, it pays to learn what they can and cannot do. Although most bill collectors are careful to follow the law when contacting you, some are not. If a bill collector goes too far, you can take action.

The Fair Debt Collection Practices Act

The federal Fair Debt Collection Practices Act, or FDCPA (15 U.S.C. § 1692 and following), prohibits debt collectors from engaging in abusive behavior.

The FDCPA covers debt collectors who work for collection agencies. It does not cover debt collectors that are employed by the original creditor (the business or person who first extended you credit or loaned you money).

If a debt collector that works for a collection agency breaks the law, you can take steps to make sure it doesn't happen again.

What Debt Collectors Can't Do

Debt collectors from collection agencies cannot do any of the following:

• Call you repeatedly or contact you at an unreasonable time (the law presumes that before 8 a.m. or after 9 p.m. is unreasonable).
• Place telephone calls to you without identifying themselves as bill collectors.
• Contact you at work if your employer prohibits it.
• Use obscene or profane language.
• Use or threaten to use violence.
• Claim you owe more than you do.
• Claim to be attorneys if they're not.
• Claim that you'll be imprisoned or your property will be seized.
• Send you a paper that resembles a legal document.
• Add unauthorized interest, fees, or charges.
• Contact third parties, other than your attorney, a credit reporting bureau, or the original creditor, except for the limited purpose of finding information about your whereabouts. Unless you have asked collectors in writing to stop contacting you, they can also contact your spouse, your parents (if you are a minor), and your codebtors.

What to Do If Debt Collectors Break the Law

Here's what you can do if debt collectors engage in illegal activity:

1. Tell Them to Stop

Under the FDCPA, you have the right to tell a collection agency employee to stop contacting you. Simply send a letter stating that you want the collection agency to cease all communications with you. All agency employees are then prohibited from contacting you, except to tell you that collection efforts have ended or that the collection agency or original creditor intends to sue you or take advantage of some other legal remedy.

Don't hide from debt collectors. You can tell a collector to stop calling even if the collector is not breaking the law. However, many debt counselors feel that, unless you're judgment proof (that is, broke for the foreseeable future) or truly plan to file for bankruptcy, the best overall advice is not to ignore the debt or try and hide from the debt collector. Usually, the longer you put off resolving the issue, the worse the situation and the consequences will become. Whether you negotiate directly with the collector or obtain a lawyer's assistance, many counselors feel the best strategy almost always is to speak to the collector.

2. Document Illegal Behavior

If a debt collector breaks the law, document the violation as soon as it happens. Start a log and write down what happened, when it happened, and who witnessed it. Then, try to have another person present (or on the phone) during all future communications with the collector.

In some states, you can record phone conversations without the debt collector's knowledge. In others, this tactic is illegal. Check with your state consumer protection agency to find out what is permitted where you live. (To find your state consumer protection agency, see Nolo's article State Consumer Protection Offices.)

3. File a Complaint

File a complaint with the FTC. File an official complaint with the Federal Trade Commission (FTC), the federal agency that oversees collection agencies. Contact the Federal Trade Commission at 6th and Pennsylvania Ave. NW, Washington, DC 20580 or at www.ftccomplaintassistant.gov. In your complaint:

• include the collection agency's name and address, the name of the collector, the dates and times of the conversations, and the names of any witnesses, and
• attach copies of all offending materials you received and a copy of any tape you made.

Send the complaint to state agencies. Send a copy of your complaint to the state agency that regulates collection agencies for the state where the agency is located. To find the agency, call information in that state's capital city or check the state's website.

Send the complaint to the creditor and collection agency. Finally, send a copy of the FTC complaint to the original creditor and the collection agency. The original creditor may be concerned about its own liability and offer to cancel the debt.

Once your complaint is filed, don't expect immediate results. The FTC may take steps to sanction the agency if it has other complaints on record. The state agency may move more quickly to sue the collection agency or shut it down for egregious violations. Your best hope is that the creditor will offer to cancel the debt.

4. Sue the Debt Collector

If you've been subject to repeated abusive behavior and can document it, consider suing the collection agency. But if the illegal behavior was merely annoying, don't bother. For example, if the collector called three times in one day but never again, you probably don't have a case.

To sue the debt collector, you can represent yourself in small claims court or hire a lawyer and go to regular court. (The other side may have to pay your attorneys' fees and court costs if you win.) For more information about court, see Nolo's Small Claims Court area.

Money damages. If you win in court, you are entitled to recover:

• the amount of any actual financial losses you suffered -- for example, your therapy fees, if you suffered extreme anxiety as a result of the collector's actions, or the amount you paid to switch to an unlisted number to avoid harassment, and
• an additional amount (unrelated to actual losses) up to $1,000 for any violation of the FDCPA.

For a comprehensive discussion of how to deal with debt collectors, including sample letters and complaint forms, get Solve Your Money Troubles: Debt, Credit & Bankruptcy, by Robin Leonard and attorney Margaret Reiter (Nolo).

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