YOUR MONEY: Don't let bill collectors scare youTough times mean that debt collectors are talking even tougher. And they will scare you - make no mistake. Brandy Martindale, a mother in Durand, Mich., sums it up well: "They are bullies. That is their company policy."
By: Susan Tompor, Detroit Free Press
Tough times mean that debt collectors are talking even tougher. And they will scare you - make no mistake. Brandy Martindale, a mother in Durand, Mich., sums it up well: "They are bullies. That is their company policy."
The debt collectors called Martindale more than three times a day, even though she was paying $50 each month toward her medical bills. Then, they threatened to garnishee her husband's wages. She panicked and borrowed about $6,000 to pay off the remaining balance for the medical bill in full.
"I've got a loan that I can't afford because I was browbeaten into it," she said.
As more consumers have a far harder time paying their debts in this recession, they must understand there are good ways, and bad ways, to respond to collection calls. Debt collectors do not always tell the truth - or play fair. Sometimes, a few go to the extreme to get money.
"Debt collectors are telling people they'd be better off just killing themselves," said Gerri Detweiler, co-author of "Debt Collection Answers," an online book at www.DebtCollectionAnswers.com.
Consumers facing the calls must do three things:
Maintain detailed written records.
When a debt collector first calls, simply ask for a letter in writing to explain the amount owed and to whom it is owed. You have a right to receive a written validation notice within five days after the collector first contacts you.
Mail letters to the collector by certified mail with a return receipt. Make photocopies of all letters that you send, said Ian B. Lyngklip of Lyngklip & Associates Consumer Law Center PLC, in Southfield, Mich. His Web site is www.sue4abuse.com.
Consumers should keep a file of materials relating to their credit history, which includes copies of their credit reports.
Stay calm and know your rights.
A debt collector may not contact you before 8 a.m. or after 9 p.m. unless you agree to it. Keep a log.
Say as little as possible when you talk to a debt collector.
"The more information you give them, the more information they can use against you," Detweiler said. For example, if you tell them where you work, they may try to call you on the job.
Do what you can to pay, but have the correct documents to avoid more trouble.
Lyngklip has heard from clients who were told that their debt was transferred to another debt buyer. You could be asked to pay twice, or even be sued, for a debt that you previously paid.
So, get your credit report to verify who holds that debt now, he said. Again, make copies of everything.
Martindale said the debt collectors were calling about a bill from 2003. Initially, she claims she reached a payment plan and she paid $50 a month for about a year toward the bill. Then, another person called and said she would have to send more money. The new caller said the other person had left the company, and no plan was in place. The new person threatened to garnishee wages.
Martindale, who complained to the Better Business Bureau and Michigan regulators, said she wishes she had known more about her rights and the rules.
She had no idea that a debt collector would have to take her to court to get her husband's wages. She would have gone to court - instead of taking out a new loan.
"I thought they made a call and boom," she said.
Debt collectors in most cases, Lyngklip said, must take you to court before garnisheeing wages. Federal student loans are an exception.
Lyngklip said consumers always should get the collector to verify a payment plan in writing. You also can write a letter back confirming the details. Again, keep copies.
The Martindales have two sons, ages 6 and 9, and find it tough to pay $125 a month toward the credit union loan for the medical bills. They have a mortgage and about $13,000 in credit card debt, too.
"I make $10 an hour," she said, adding that she works 36 hours a week as a home health care aide. Her husband was laid off in January from his job at an agriculture supplier.
Another rash example: Last year, the FTC and the State of Nevada charged 10 related Internet payday lenders, mainly based in Britain, with falsely threatening consumers with imprisonment, continually calling the consumers at work and telling friends or family about consumers' money troubles.
The recession makes it tougher for many consumers to pay bills. As a result, more consumers need to know their rights - and how to put a stop to the harassing phone calls.
(Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at firstname.lastname@example.org.)