A Personal Finance Guide

The New Limits to Bill Collection

When talking to bill collectors, you’ll want to not only write down the date and time of the call – as well a complete account of what you spoke about – but also the name of the man or woman you spoke with. The so called collection agents working for these sorts of companies are hired and fired at an incredible frequency. They’re really little more than telemarketers working for just over minimum wage. Accordingly, you shouldn’t expect the case workers to keep their own notes, pay attention to any promises previously given, or even still be employed by the company the next time you call. At the same time, however, some of the more professional collection agencies – especially the ones that are actually subordinate divisions of the creditors themselves – do record all calls and utilize the smallest bits of personal data regarding finances to calculate the chances of restitution over the coming months.

Remember, there’s a clearly defined limit as to just what the bill collectors are legally empowered to do under these circumstances. While they can send all the letters that they want and blow the phone off of the hook – though only within certain hours and only if the borrower has not signed on with a credit counselor or settlement specialist – their powers have been strictly curtailed over recent years. Further, most of the actions that they threaten, such as lowering the borrowers’ FICO scores by reporting delinquencies to the three credit bureaus, have likely already been done by the original lenders. What’s more, the big guns exploited by the collections agents to try and lure the borrowers into dangerous admissions are almost always more bark than bite.

Specifically, we’re talking about the bill collectors oft-discussed but rarely actualized threats of wage garnishment or asset forfeiture. While it’s undeniably true that whomever holds a legally binding note of financial obligation has the right to sue for restitution in a court of law up until the statute of limitation gives way, borrowers should keep in mind just how much money this would cost the collection agency. Lawyers aren’t cheap, and, with the civil courts already over stuffed with similar complaints over much greater sums, there’s no telling if a suit for judgment would even make it through the legal system before the loan hit the statute of limitations for a given state.

Add to that the growing desire of members of the judiciary to find for the borrowers in such cases because of an overall disgust with what the courts believe to be nuisance suits, and collections agencies will only go to such lengths in a minority of cases. Without that legal judgment, the potential for actually attaching the debtors’ checking or saving accounts or seizing the household assets fades to nothing. More desperate threats, such as alerting employers to the borrowers’ defaulted loans, are patently against the rulings of the FTC and should be reported to governmental authorities immediately. The trouble to credit ratings and FICO scores caused by lapsed payments should not be overlooked, of course, and borrowers must sincerely look into settlement of the debts if they have even the slightest financial possibility. However, for the truly indigent Americans weary of the constant bill collector harassment, you should take heart in that you’re already probably dealing with the worst that the collection agency can do.

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