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If you are behind on your bills and on the receiving end of collection phone calls, you will probably hear collectors make some very threatening statements. While most debt collection professionals try to stay within the boundaries defined by the Federal Fair Debt Collection Practices Act (FDCPA), many others cross the line on a regular basis. Last year, the Federal Trade Commission (www.ftc.gov) received more than 58,000 complaints about debt collectors, a figure which represents 17% of the total number of complaints received by the FTC. Consumers complain about the collection industry more than most other industries combined.

Collection professionals would probably respond that the enormous size of the industry and the sheer volume of collection activity accounts for the large number of complaints. However, only a small percentage of violations are actually reported by consumers, so the data collected by the FTC represents only a tiny fraction of the true scope of the problem. Even so, a pattern of abusive and illegal collection activity has been well-documented by the FTC, and it is getting worse instead of better.

Here are some common threats made by debt collectors:

“We’re going to take your house unless you pay this bill immediately.” This is a bogus threat. Unless the debt being collected is secured by the house in question (i.e., a mortgage or home equity loan), the creditor does not have the power to take your house away from you.

“If you don’t pay this bill today, we’re going to have a warrant issued for your arrest.” Nonsense. Failure to pay a debt is a civil matter, not a criminal matter. Threatening a debtor with jail time or accusing them of committing a crime is totally against the rules.

“We don’t care that you sent a cease communication notice. We’re going to call you anyway.” The FDCPA gives you the right to terminate contact efforts by a debt collector. Failure to respect a cease communication notice is a clear violation of Federal law.

“We’re going to garnish your wages to recover this debt.” A collector can only threaten action it has the legal authority to take, and the vast majority of collection agencies have zero legal authority. Your wages can only be garnished by a creditor after they have won a judgment against you in a lawsuit.

“We know where you live, so you better pay up.” Yes, threats of violence still happen in this industry. Nearly 300 complaints against collectors received by the FTC last year cited the threat of violence as the cause of the complaint. This is absolutely illegal.

Aside from the usual bogus threats, collectors also use other tactics that are illegal. For example, discussing your debt with a third party is a clear violation of the FDCPA. Yet collectors routinely call neighbors, relatives, and employers to obtain information on debtors. So long as the collector does not discuss the actual matter of the debt, they still have their toes on the right side of the line. But as soon as they mention or even hint that they are calling about a debt, they have crossed the line.

Since many debtors have taken to screening their phone calls at home to cut down on the relentless barrage, debt collectors frequently call at work when they can obtain an office number. In theory, a consumer can get the collector to stop calling at the office simply by stating that they are not allowed to receive personal phone calls at work. That puts the collector on notice that such activity constitutes interference with the consumer’s employment, which is not permitted. In practice, however, collectors routinely ignore this rule and continue to call at work.

There are many other techniques of harassment and intimidation that cross the line from permissible to impermissible collection activity. Use of obscene or profane language, shouting, constant and unrelenting telephone calls, failure to respond to written disputes, and publication of debtor information all constitute illegal activity as defined by the FDCPA.

So if you are on the receiving end of illegal collection actions, what can you do to protect yourself? First and foremost, it’s important to know and understand your rights as a consumer. A description of your rights under The Fair Debt Collection Practices Act may be obtained directly from the FTC ( ftc.gov/bcp/conline/pubs/credit/fdc.htm).

If you believe that a collector has violated your rights in their attempt to collect from you, then you should not hesitate to file formal complaints with the Attorney General for your state (www.naag.org) as well as the Federal Trade Commission. If enough complaints are received about a particular collector, then these authorities are empowered to bring an enforcement action against them, which may result in expensive fines that will make the agency or collector think twice about using such tactics in the future. You also have the right to bring a lawsuit yourself against a collector that harasses or abuses you, or otherwise violates your rights under the law.

One final point. The FDCPA technically only applies to third-party debt collectors, which includes collection agencies and collection attorneys. It does not apply to the original creditor when collecting their own debt. For example, if you borrow money from a bank, the bank is not regulated by the FDCPA. However, numerous other public laws protect consumers from deceptive or abusive collection practices even by original creditors, and many states also have laws that parallel the FDCPA but go further and include original creditors in the definition of debt collector. So if an original creditor is harassing you or has crossed the line, you should still file a complaint with your state’s Attorney General as well as the FTC. If a clear pattern of abuse emerges, the original creditor can be charged with unfair or deceptive acts or practices, either under state law or under the FTC Act that governs conduct of commerce in our country.

To sum up, if you are on the receiving end of collection harassment, don’t just take it. Educate yourself on your rights as a consumer, vigorously dispute debts that you don’t believe you owe, and take action yourself in the form of complaints to your Attorney General and the Federal Trade Commission. By standing up for your rights, you can put a stop to bogus threats and illegal collection tactics.

Charles J. Phelan has been helping consumers become debt-free without bankruptcy since 1997. A former senior executive with one of the nation’s largest debt settlement firms, he is the author of the Debt Elimination Success Seminar™, a five-hour audio-CD course that teaches consumers how to choose between debt program options based on their financial situation. The course focuses on comprehensive instruction in do-it-yourself debt negotiation & settlement designed to save $1,000s. Personal coaching and follow-up support is included. Achieves the same results as professional firms for a tiny fraction of the cost. zipdebt.com zipdebt.com

Fast expanding economy and facilities like credit cards or other means allows the modern day buyers the liberty to purchase almost every thing they set their eyes on. As a net result, the debt mounts on and to pay that more money is borrowed and more debt accumulates. This vicious circle can be broken only when one decides to follow debt consolidation tips well. We offer you some vital suggestions here.

First of all do some calculations regarding your debt. See how much of total debts can you pay right away to lessen the burden.

Things are bad, really bad. They have to be for you to be considering bankruptcy. It’s true that bankruptcy can wipe away your debts, or most of them anyway. Taxes are exempt from bankruptcy protection. You can declare bankruptcy, but if a substantial portion of your outstanding debt is back taxes, interest and penalties, you are not going to escape. If, however, most of your debt is credit card debt, mortgage, car loans and other consumer or business debt, there is a chance you may successfully escape most or all of your financial obligations.

Even so, is bankruptcy the best alternative for you? If you do declare bankruptcy, which type of bankruptcy should you consider? How will the new federal bankruptcy reform statute that goes into effect on October 17, 2005 affect you? In most cases you should be seeking qualified legal counsel for the answers to these questions. The devil, as they say, is in the details. You don’t want to make a small mistake when declaring bankruptcy, only to lose some of the protection to which you are entitled. You only want to do this once. It will for follow you around for 10 years in the case of a Chapter 7 bankruptcy. Make sure your attorney is a bankruptcy specialist. Just using your uncle Joe who happens to be a lawyer may be a big mistake.

There are two types of bankruptcy for private individuals, chapter 7 and chapter 13. With Chapter 7 you can generally escape from all debt with a few exceptions such as state and federal taxes. You can keep certain exempt property as well. There is a federal exemption list Most states have an exemption list too. Most states require you use the state list but some allow you to choose from either the state or federal list. Property not on the list is sold to satisfy pay creditors.

Chapter 13 bankruptcy will require renegotiation and repayment of your debts. You will first file a petition for bankruptcy with the court and a trustee will be appointed. If your income exceeds your expenses, you will usually be required by the court to use the Chapter 13 option.

You will want to examine which alternative is the correct one for you. In fact, there are other alternatives to serious debt problems besides bankruptcy. One of these is a debt consolidation loan. Debt consolidation loans are growing in popularity due to many factors including the rise in homeowner’s equity, record low interest rates, and a dramatic increase in the level of consumer debt. This option can be much more attractive than bankruptcy. If you can keep from declaring bankruptcy, you will not have the social stigma and long term credit issues to deal with. There are literally hundreds of debt consolidation options available from many different lenders.

A debt consolidation loan is basically just a home equity loan used to pay off your higher interest debts. Because the loan is secured by real estate or some other valuable collateral, you get a substantially lower interest rate than can be had for most unsecured debts, such as credit cards. This contributes to a lower payment. In addition the term of the loan is usually longer than a credit card, contributing further to lowering the monthly payment. The decrease in monthly outflow can be just what the doctor ordered and can prevent bankruptcy. Be advised however, if the conditions that caused your monthly payments to rise are not corrected, you risk ending up facing bad credit problems again.

There are downsides to debt consolidation loans as well. First, you could lose your home. Also, you use up the equity in your home so you won’t have to bail you out a second time.

Another alternative to bankruptcy is credit counseling. With this option, a credit counseling firm works with you and your creditors to arrange lower payments, make your debts current (called re-aging), and even possibly forgo a portion of your debt. This is an attractive option for many. It is being mandated by the new federal bankruptcy legislation as a step before bankruptcy in many occasions.

You may have to declare bankruptcy. It may even be the best course of action for you. However, bankruptcy may not be the best way to go and there are other alternatives. Do careful research on opportunitiesaplenty.com/debt_and_loan_consolidation.html bankruptcy and the alternatives and evaluate your personal situation carefully before you make your decision.

Steve writes about a multitude of business and finance topics.
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