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A Classic Debt Collection Story

Last week I asked email newsletter subscribers for their experiences with debt collection agencies. I’ve been fortunate never to have crossed paths with a debt collector so I was looking for stories to help put me in the shoes of those who have.

I read about stories of people paying off debts but through some clerical error, the debt was incorrectly sold to a collector. I read stories about legitimate debts that suddenly went to a collector and stories of people who simply didn’t pay up.

If you thought debt collectors only went after “deadbeats,” you’re wrong. There are as many stories of people current on their debts as there are those who are behind.

Here’s one story and Craig’s advice on what he would’ve done differently:

I have had a bad experience with a debt collection agency. I was behind in my payments to [a credit card company]. I worked with a debt management company to get my interest rates reduced on other cards and make payments through the debt management company, but [this credit card company] was the only company who refused to participate in the program. They would not reduce the interest and would not accept payment through the management company.

They set their loan collection agency on me, and these people were horrible. I was told I had to pay immediately or they would take me to court. After initially being really shaken up, I reviewed the “credit card bill of rights” that I found online, and the next time I spoke to the guy, I told him I was familiar with my rights. He backed off somewhat after that.

Then there were the daily phone calls to my home and work, until I finally told him to stop calling because I was working on pulling together the money to pay it.

He stopped, but then on the day I had promised to FedEx it, he called me to make sure I was going to do it. I wrote them a check and FedEx’d it, just like I said I would. Then I found out that rather than cash the one large check (for approximately $10,000), the company made two unauthorized withdrawals from my checking account and then charged me for doing so.

When I called to complain, they told me that they couldn’t accept a check that large (although no one had told me ahead of time), so they had to take it from my account. I pointed out that I had never authorized them to remove money from my account and that they had broken the law.

The person I spoke to said fine, do you want us to put it back? At that point, I was feeling so harassed and tired of the whole process that I just wanted to get it over with and so I said no. But to this day I regret not saying yes, and then filing a police report against them.

What would Craig, our anti-debt collector, have done?

Yes, you have not had a good experience with debt collectors, and I wanted to impart a few things you could have done differently and some things that you may be able to do now.

First of all, if a company won’t take your payments, I would not push the issue. At some point, they will come around and play ball if they want to get paid.

As far as the collection agency, if this happened less than a year ago, you need to sue them. If not, then the statute of limitations has passed, but you will be wiser next time.

As far as things you can do differently, if you ever get a call from a collector or anyone you might need to reference again, record the call! Many Nokia cell phones have recorders built in to them. You can get recorder attachments from Radio shack for around $100 including the recorder and connections for a typical phone. There are cell phone connection devices as well. For smart phones there are also recording apps and software that you can download. Lastly, you can record from skype as well. I don’t care how you do it, but you need to have the capability to record the call! Trust me, you can thank me later.

Secondly if you are in a one party state, which most states are, you do not have to tell them you are recording and you should not tell them you are recording. Resist the temptation. Let them violate away and sue their butts off.

Third, kudos for looking up the credit card bill of rights, but you should become more familiar with the FDCPA and your state law equivalents. Google consumer protection laws and your state and see what requirements and penalties are in place. Does your state require bonding? A license? Does this company have one? If they are not compliant, the money they took from you was illegally gained and you have every right to get it back.

Now, as far as what you can do now:

  • When you told them to stop calling and they called you back, that was a violation of your rights under the FDCPA, and they owe you at least 1,000 in statutory damages, plus arguably whatever you paid them. State law may impose enhanced damages under deceptive trade practice laws doubling or tripling your damages.
  • If they called with an auto dialer or pre-recorded voice, that likely violated the TCPA as well. They owe you $500-1500 per call.
  • The unauthorized withdrawals are fraud/theft, and you again have a legitimate claim against them for that. To add insult to injury, they charged you for the unauthorized transactions. I would sue them on principal just for that. Unless you agreed to the charge, it is an unauthorized fee, and I believe they are just trying to pad their profits.
  • I wouldn’t entertain any of this business about not being able to take a large check. I would call them back and demand every penny to be repaid. Like today.

You can probably see why I asked Craig to author a series on how to deal with debt collectors, right? 🙂