Managing Debt

Reader Question: Debt Collector Won’t Work With Me

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Adam Levin’s recent story about debt collectors, Daddy, Make the Bad Man Go Away, prompted a reader named Kathy to ask some detailed questions about dealing with a debt collector. Ironically, a story in the New York Times described how debt collectors are trying to get some respect. Hopefully they are not the same ones contacting Kathy—but who knows.

Here’s my response to Kathy’s questions. There are many other consumers with similar questions about the debt collection process and your rights, so thanks for the opportunity to respond. Please keep in mind I am not an attorney and this is not legal advice.

Kathy: The article was very good, and informative; however, I have other questions that I have not seen any responses to: 1) How to deal with debt collectors who are also law firms, like Pressler & Pressler

Law firms that regularly collect debts are required to follow the Fair Debt Collection Practices Act, just like any other collector. If they don’t, they are breaking the law, and you may sue them.

[Article: Eleven Ways a Debt Collector May Be Breaking the Law]

2) How to get help with an issue with a debt collection agency, because the FTC only catalogs complaints. They don’t act on them unless there are hundreds (or thousands) of complaints from a specific collection agency.

You are correct Kathy, the FTC does not get involved in individual disputes.  However, it can still be worthwhile to file a complaint because it may prompt an investigation into a particular company. I would also recommend you file the same complaint with your state Atty. General’s office as they sometimes act more quickly than the FTC. As of July 21, 2011, you should send your complaint to the Consumer Financial Protection Bureau.

It sounds like your real question is how do you get affordable, effective legal help? My first suggestion is that you talk with a consumer law attorney with expertise in suing debt collectors. If the debt collector is breaking the law, you may be able to sue the collection agency. Under the FDCPA, if you win, the debt collector will have to pay statutory damages of $1000, plus your attorney’s fees. Punitive damages may also be awarded. Some consumer law attorneys will take your case on a contingent fee basis where you do not pay anything unless you recover. It doesn’t hurt to run your situation by one to see if you have a good case.

The other thing you can do is set up a free consultation with a bankruptcy attorney. The attorney can tell you what the debt collector can and cannot do to collect from you, and explain your options. Sometimes you’ll have negotiating leverage if you tell the debt collector that you are meeting with a bankruptcy attorney and are hoping to avoid bankruptcy, but will be forced to consider it if they won’t work with you.

[Resource: Get your free Credit Report Card]

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Image: pshegub, via Flickr.com

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