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9 secrets debt collectors don't want you to know

Debt collectors have their tricks of the trade to convince people they need to pay up big, right now.

By MSN Money Partner Aug 1, 2014 1:26PM

This post comes from Allison Martin at partner site Money Talks News. 

Money Talks News on MSN MoneyOwing on balances you can't afford is bad enough, so the last thing you need is a debt collector hounding you about it. And don't think for one minute that they'll cut you any slack. These folks are in it to win it, and they want to make as much money as they can.

Worried Man © CorbisUnfortunately, many take unfair and illegal advantage of debtors because many debtors lack basic knowledge about their rights. To avoid falling for collectors' traps, you must understand the Fair Debt Collection Practices Act. The Federal Trade Commission explains some of your rights here.

Here are nine little-understood facts your debt collector doesn't want you to know:

1. You are not obligated to communicate with collection agencies

Tired of receiving the phone calls and letters from pushy collection representatives urging you to pay or else? You can stop those companies dead in their tracks with a cease-and-desist letter.

But understand that they may pursue legal action if you do so. And the agency has the right to notify you via mail of the termination of collection efforts or their intention to turn to the court system for assistance.

When a debt collector initially calls, don't ignore it, and don't ignore any summons to appear in court about the debt. In that first call or in a follow-up letter, the collector must provide details about the money you supposedly owe.

After that, the Consumer Financial Protection Bureau says:

If you dispute a debt (or part of a debt) in writing within 30 days of when you receive the required information from the debt collector, the debt collector cannot call or contact you until after your dispute has been investigated and the debt collector has provided the verification of the debt in writing to you.
You can also request that the creditor give you the name and address of the original creditor. If you make that request in writing within 30 days, the debt collector has to stop all debt collection activities until the debt collector provides you that information.

If the debt collector reaches out to you before the investigation is complete or starts to harass you about the outstanding balance, they may be in violation of the FDCPA. You can file a complaint with the attorney general's office in your state, the Federal Trade Commission or the Consumer Financial Protection Bureau. Or you may be able to get free legal help.

2. You don't have to disclose personal information

There is no law mandating the disclosure of identifying information, such as your Social Security number and your date of birth, to debt collectors. They may insist that it's required to verify the debt, but it's not.

3. Paying off an account in collections won't wipe it from your credit reports

That account in collections will remain on your credit reports for seven years, FICO says, even if you pay it in full.

However, when you negotiate with the collections agency to settle the debt, either by full or partial payment, you can ask that they have the debt removed from your credit reports. If they agree, make sure you have that in writing from them before you pay it off.

4. Your assets are not at risk, yet

During the collection process, the representatives are allowed to bug you, with limits, in an effort to collect on the delinquent account. But they cannot garnish your wages unless a judgment is issued in court.

That doesn't apply to all debt. For instance, the federal government does not need a court order to garnish your wages for student loan debt.

The rule doesn't apply when you fall behind on your mortgage or car loan. In some states, no court action is required to foreclose on a house. And the repo man doesn't need a court order to take your car.

Take a look at Nolo's article to get an idea of which of your assets may be at risk.

5. You may not have to fork over a big chunk of cash

The debt collector wants the largest possible amount it can get from you to beef up its earnings. But you may be able to set up a payment plan that fits within your budget.

Just remember that the collector is not legally required to agree to a payment plan. But you can ask.

6. You may be able to negotiate the best deal at the end of the month

It turns out, you may be able to score the best deal with debt collectors toward the end of the month. Fred Williams, a former collection agent and author of "Fight Back Against Unfair Debt Collection Practices: Know Your Rights and Protect Yourself from Threats, Lies, and Intimidation," told Daily Finance:

I think most agencies go on a calendar month schedule. The end of the month is when collectors' bonuses are determined. In addition to the increased threats made because they were under pressure to make their quotas, that's also the time to get a deal because they're under pressure to bring in the money quickly. They want a settlement, cash in short order. The end of the month is a time to close the deal.

7. You may be able to work with the original creditor

In some instances, the original creditor will be willing to work with you to collect the amount owed. However, if it has already sold the account to a third-party debt collector and charged it off in the books, you're left with only one option. And that’s working with the debt collectors.

8. Your delinquent debts are nobody's business

Unless you have spouse or co-signer, or an attorney working on your behalf, debt collectors must keep their lips sealed about your outstanding balances. And if they reach out to others in an effort to locate you, all contact with those people must cease once you are located.

Consumer lawyer Sukhman Dhami told

We call these "third-party disclosures," a violation of Section 1692c(b) of the Fair Debt Collection Practices Act, and they are exceptionally common, particularly when the debt collector leaves a message on a public answering machine. These public answering machine violations are called "Foti" violations after the landmark case Foti v. NCO Financial Systems.

9. You may be off the hook

Debt collectors probably won't tell you this, but once the statute of limitations on debt in your state has lapsed, you're off the hook, although that likely won't stop them from trying to collect the money. Atlanta bankruptcy lawyer Jonathan Ginsburg told

"In most states, the statute of limitations runs four to six years from the date you last made a payment. And that's the catch. In some states, a voluntary payment on a stale debt can revive the debt and make it legally collectible. Stale (or zombie) debt is big business," he adds.

Money Talks News finance expert Stacy Johnson added this advice:

Keep in mind that after the statute of limitations expires, unless the debt has been charged off or discharged in bankruptcy, you still owe the money. In other words, the statute of limitations doesn’t wipe out the debt, it just reduces the legal remedies available to collect it.
So if you find yourself in this situation, the smart move is to call a consumer lawyer (you can find one at the National Association of Consumer Advocates' website) and ask the attorney what to do.

Another word of advice when dealing with debt collectors: Never fess up until you have confirmed the validity of the debt and the authenticity of the collection agency.

Have you been deceived by debt collectors through any of these tactics?

More from Money Talks News

Aug 4, 2014 9:04AM
MSN ran this exact article a while back, no problem ~ they may be short of articles. 

I'm on the other end of the collections. I did work for a Minnesota U.S. Senator political campaign material during the last Midterm Election. He lost his bid for re election. I have been trying everything under the sun, every month to get this "Lawyer" - ( yes, he is a lawyer ) to pay his invoice for $4,222.00. He refuses to pay me. Statute of Limitations runs out in two years. His advise is for me to take him to court (????)  I have to hire a lawyer to take a lawyer to court? I turned him over to the MN Lawyer Ethics Board and they told me to go take a hike. Where's lawyers integrity and honesty? 
Aug 4, 2014 11:08AM
Aug 4, 2014 12:50PM

There are only three things worse than a debt collector, NO...make it four:

(1) Murderers

(2) Rapists

(3) Child Molesters

(4) Politicians

Aug 4, 2014 12:32PM

"Have you been deceived by debt collectors through any of these tactics? "

During the Great Recession I got laid off 3 times in a year, my marriage fell apart, and my finances imploded. I fell behind on the mountain of credit card debt I had at the time (all gone now).

A debt collector called my parents and threatened to throw THEM in jail for my unpaid debts. At that time my Mother was in the hospital having critical back surgery, and my Dad was dying of cancer.

When I found out about the thug collector calling my parents in violation of state law I immediately contacted the Minnesota Dept. of Commerce, got the forms, and filed a vigorous complaint against the east coast collections company that set this psychopath loose.

After waiting for 7 months for a reply on my complaint, I received written notice of the "investigation" about my complaint. It seems the only thing the state did was called the collections agency and ask them if what I said was true (!!!). Of course, they denied everything, which was enough for the state to end its investigation, saying my statements were "unfounded" (!!!!!)

The moral is: these sleazy despicable human beings will do whatever they want with impunity, because they know the states don't care enough about individuals to actually enforce the laws regarding debt collection.

I am not saying they did not have the right to contact me regarding debts I incurred, nor am I looking for any freebies. I paid all my debts and closed all the accounts. As God as my witness I will never, EVER again have a credit card. It is a slimy industry filled with worthless, slimy people.

But to contact my parents during a time of severe crisis in their lives, and threaten to throw them in jail is way, WAY beyond acceptable behavior. If this STAIN of a human being were within reach of me I would have impressed upon him the error of his ways PERSONALLY.  But of course, these boiler room weasels never have to live with the consequences of their illegal vocation, which makes them even bolder and more lawless, and the State of Minnesota actually encourages this behavior by barely going through the motions to stop their actions.

The life-lesson here is no one will help you when you need it most, especially not the State. The best way to never have to deal with debt collectors is to never be in debt again. Lesson learned.

Aug 4, 2014 10:26AM
Number 10, debt collectors are hiding from other debt collectors.  
Aug 4, 2014 11:16AM

how to avoid debt:

enter the US illegally, steal someone's social security number, set up as many fraudulent accounts as you can and then spend, spend , spend!

...then hightail it back to Mexico with all your free stuff


Aug 4, 2014 10:20AM
Err .......... Sorry thought this was about IRS picking your pockets so the government can pay off all the useless and ineffective programs it voted for. My bad ......... 
Aug 4, 2014 1:09PM
I had one collection agency calling me threatening a lawsuit over a credit card debt... that I already paid off two years ago. Total scam and they refused to stop calling me. I had to report them and then block their number from my phone.
Aug 4, 2014 3:39PM
I love when they call me for bills from my adult daughter who lived with after her divorce several years ago. I act like I am drunck and have fun with them.
Aug 4, 2014 4:15PM
Welcome to the new slavery in America! Yes you should pay your bills but they have now tied getting a job with your credit score! That's right people, you now need to use credit to get a job! This country's so screwed!
Aug 4, 2014 3:23PM
Can I get the names of persons who I pay taxes too for there debts and welfare, EBT card purchases but never take up responsibility?.
Aug 4, 2014 4:31PM

I have a method that works.

Tell them the person they want is in jail.

They can be contacted through the Dept of Corrections.

I have power of attorney for a friend in that situation.

It makes every collection agency go away

Aug 4, 2014 3:30PM
From reading all these comments it is not difficult to determine who is probably credit worthy and who is
Aug 4, 2014 11:40AM
Hey, when you don't pay what you borrow, your not only a freakin deadbeat, your a thief. It's stealing no matter what YOU choose to call it. Whatever it legally takes to get you to pay back what you borrow is fair game. Lenders and credit card companies need to cut crooks and losers OFF, that would mean much cheaper interest rates for the rest of us.
Aug 4, 2014 2:29PM
I am glad to know this..... I think I might only be a couple months short of the statutes running out, come on Oct. 
Aug 4, 2014 6:03PM
Before the ACA was passed over 1 million families every year were forced to declare bankruptcy every year due to medical expenses.
These families often have 2 people working and have never been late on any bills before the hundreds of thousands of dollars in medical bills hit them!
It's not always dead beats that declare bankruptcy just to get out paying their bills.
Over one third of Americans have a debt that is past due that has been turned over to a collection agency.
Most families in America are STILL just a few paychecks from being on the street and homeless.

Aug 4, 2014 2:37PM
You don't have to worry about paying your bills when they close the lid and drop you down 6 ft.
Aug 4, 2014 9:27PM
Since we can't comment on real news items, but crap like this...why does it take so long to kill a convict with injection when it only took about 15 seconds when I had one of my horses put down?  CH hit the dirt that quick.....
Aug 4, 2014 4:57PM

You can run but you cannot hide !!!

(unless you're an illegal alien)

Aug 4, 2014 11:06AM
I like your articles but so far I have not found anything on a problem that one of our relatives is facing and that is, What happens when a person has to be confined to a nursing home and has to go on Medicaid and can't pay their bills? How is this handled?
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