DEBT COLLECTION
If you are behind in paying your bills, you can expect to hear from a debt collector.
A debt collector is someone, other than the creditor, who regularly collects debts
owed to someone else. Lawyers who collect debts on a regular basis are considered
debt collectors, too.
What You Need to Know
You have rights: Federal law requires that debt collectors treat you fairly. In short, that means:
The FTC at Work Debt collectors generate more complaints to the FTC than any other industry group.
In its lawsuits alleging illegal debt collection practices, the FTC has been able to ban some debt collectors from the debt
collection business forever, and has gotten millions of dollars back for consumers. The agency held a workshop in 2007 to
review the debt collection industry 30 years after the Fair Debt Collection Practices Act became law. Industry members,
consumer advocates, state regulators, and academic researchers looked at changes in the industry, and whether the law is
keeping pace with developments in the marketplace.
If you are behind in paying your bills, you can expect to hear from a debt collector.
A debt collector is someone, other than the creditor, who regularly collects debts
owed to someone else. Lawyers who collect debts on a regular basis are considered
debt collectors, too.
What You Need to Know
You have rights: Federal law requires that debt collectors treat you fairly. In short, that means:
- A debt collector may contact you in person, by mail, telephone, telegram, or fax, but may not contact you at inconvenient
times or places – for example, before 8 a.m. or after 9 p.m – unless you agree. A debt collector may not contact you at
work if the collector is aware that your employer prohibits it.
- If you have an attorney, the debt collector must contact the attorney, not you. If you don’t have an attorney, a collector
may contact other people only to find out your address, your phone number, and where you work.
- A debt collector may not harass, oppress, or abuse you or any third parties they contact about you.
- A debt collector may not lie or mislead anyone when collecting a debt.
The FTC at Work Debt collectors generate more complaints to the FTC than any other industry group.
In its lawsuits alleging illegal debt collection practices, the FTC has been able to ban some debt collectors from the debt
collection business forever, and has gotten millions of dollars back for consumers. The agency held a workshop in 2007 to
review the debt collection industry 30 years after the Fair Debt Collection Practices Act became law. Industry members,
consumer advocates, state regulators, and academic researchers looked at changes in the industry, and whether the law is
keeping pace with developments in the marketplace.
DEALING WITH DEBT
DEBT RELIEF SERVICES
If you’ve maxed out your credit cards and don’t know how you’re going to pay off your debts, you may think that a company that
promises to erase the debt for pennies on the dollar is the answer to your prayers. Not true! Debt negotiation can be risky, and it
can have serious, long-term consequences for your credit report and your ability to get credit in the future.
What To Do
If you get a sales pitch from a debt relief firm, pay attention to the details. Stay away from any company that:
The FTC at Work
The FTC has prosecuted more than a dozen companies that claimed to offer debt relief but lied about the cost or nature of their
services. One of its biggest cases involved AmeriDebt, Inc., a company that claimed to be a non-profit credit counseling
organization. The FTC alleged that the company funneled its profits to other people and affiliated for-profit entities, and deceived
its customers about charging an up-front fee. The agency said that AmeriDebt kept its clients’ initial payment as a fee rather than
making good on its promise to disburse the money to creditors. On the eve of the trial, AmeriDebt’s founder agreed to settle the
case for $35 million.
If you’ve maxed out your credit cards and don’t know how you’re going to pay off your debts, you may think that a company that
promises to erase the debt for pennies on the dollar is the answer to your prayers. Not true! Debt negotiation can be risky, and it
can have serious, long-term consequences for your credit report and your ability to get credit in the future.
What To Do
If you get a sales pitch from a debt relief firm, pay attention to the details. Stay away from any company that:
- Promises that unsecured debts can be paid off for pennies on the dollar
- The truth is that there is no guarantee that any creditor will accept partial payment of a legitimate debt. Your
best bet always is to contact your creditor directly and as soon as you are having problems making payments.
requires substantial monthly service fees and demands payment of a percentage of what they’ve supposedly saved you.
The truth is that most debt relief companies charge hefty fees for their services, including a fee to establish the account
with the debt negotiator, a monthly service fee, and a final fee – a percentage of the money you’ve supposedly saved.
- Tells you to stop making payments to or communicating with your creditors
- The truth is that if you stop making payments on a credit card, expect late fees and interest to be added to
the amount you owe each month. If you exceed your credit limit, expect additional fees and charges to be
added. Your credit score also will be hurt by not making payments.
- Claims that creditors never sue people for not paying their unsecured debts
- The truth is that creditors may have the right to sue you to recover the money you owe. And sometimes, when
creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home.
- Claims that they can remove accurate negative information from your credit report
- The truth is that no company or person can remove negative information from your credit report that is accurate and
timely. It’s illegal.
The FTC at Work
The FTC has prosecuted more than a dozen companies that claimed to offer debt relief but lied about the cost or nature of their
services. One of its biggest cases involved AmeriDebt, Inc., a company that claimed to be a non-profit credit counseling
organization. The FTC alleged that the company funneled its profits to other people and affiliated for-profit entities, and deceived
its customers about charging an up-front fee. The agency said that AmeriDebt kept its clients’ initial payment as a fee rather than
making good on its promise to disburse the money to creditors. On the eve of the trial, AmeriDebt’s founder agreed to settle the
case for $35 million.
CREDIT REPORT
Everyday, companies target people who have poor credit histories with promises to clean up their credit reports so they can get
a car loan, a home mortgage, insurance, or even a job – after paying a fee for the service. The truth is that no one can remove
accurate negative information from your credit report. It's illegal.
What You Need to Know
When negative information in your report is accurate, only the passage of time can assure that it will be removed. A consumer
reporting company can report most accurate negative information for seven years and can report bankruptcy information for 10
years.
If you get an offer to repair or fix your credit, how can you know if it’s legit? Here are some signs that should set off alarms in your
head – and make you put the offer in the trash:
they have completed the credit repair services they promised.
inaccurate or incomplete. This investigation doesn’t cost any money.
loan or credit application, to misrepresent your Social Security number, or to get an Employer
Identification Number from the Internal Revenue Service under false pretenses.
You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to
apply for credit and provide false information.
The FTC at Work
The FTC acts aggressively against “credit repair” scams, which are marketed as quick and easy ways to rid individual credit
reports of negative information. In the last 10 years, the Commission has brought more than 40 cases against con artists that
allegedly lied about their credit-related services. In one recent case, the FTC charged Bad Credit B Gone, LLC, with violating
federal laws by claiming it could improve most consumers’ credit reports by removing negative information that was accurate and
not obsolete. The court ordered the company to pay more than $322,000 in equitable monetary relief.
Everyday, companies target people who have poor credit histories with promises to clean up their credit reports so they can get
a car loan, a home mortgage, insurance, or even a job – after paying a fee for the service. The truth is that no one can remove
accurate negative information from your credit report. It's illegal.
What You Need to Know
When negative information in your report is accurate, only the passage of time can assure that it will be removed. A consumer
reporting company can report most accurate negative information for seven years and can report bankruptcy information for 10
years.
If you get an offer to repair or fix your credit, how can you know if it’s legit? Here are some signs that should set off alarms in your
head – and make you put the offer in the trash:
- The company wants you to pay for credit repair services before they provide any services
they have completed the credit repair services they promised.
- The company doesn’t tell you your rights and what you can do for yourself for free
inaccurate or incomplete. This investigation doesn’t cost any money.
- The company recommends that you don’t contact any of the three major national consumer reporting
companies (Equifax, Experian, and TransUnion) directly
- Fact: Under the Fair Credit Reporting Act (FCRA), the consumer reporting company and the information
provider (the person, company, or organization that provides information about you to the consumer
reporting company) must correct inaccurate or incomplete information in your report. To take advantage
of all your rights under the FCRA, contact the consumer reporting company and the information provider
in writing.
- The company tells you they can get rid of most or all the negative credit information in your credit report,
even if the information is accurate and current
- Fact: Any credit repair company that claims to be able to legally remove accurate and timely information
from your credit report is lying. There’s no easy fix for bad credit. Improving your credit takes time and a
conscious effort to pay your debts.
- The company suggests that you apply for an Employer Identification Number to use instead of your Social
Security number so you can invent a “new” credit identity – and then, a new credit report
loan or credit application, to misrepresent your Social Security number, or to get an Employer
Identification Number from the Internal Revenue Service under false pretenses.
You could be charged and prosecuted for mail or wire fraud if you use the mail, telephone, or Internet to
apply for credit and provide false information.
The FTC at Work
The FTC acts aggressively against “credit repair” scams, which are marketed as quick and easy ways to rid individual credit
reports of negative information. In the last 10 years, the Commission has brought more than 40 cases against con artists that
allegedly lied about their credit-related services. In one recent case, the FTC charged Bad Credit B Gone, LLC, with violating
federal laws by claiming it could improve most consumers’ credit reports by removing negative information that was accurate and
not obsolete. The court ordered the company to pay more than $322,000 in equitable monetary relief.
ADVANCE FEE LOANS
If you’re looking for a loan or credit card but don’t think you’ll qualify – or if you’ve been turned down by a bank because of your
credit history – you may be tempted by ads and websites that guarantee loans or credit cards, regardless of your credit history.
Should you apply, you’ll likely find out that you have to pay a fee just for the promise of the loan. Best to ignore these ads or
sites.
If you have to pay a fee for the promise of a loan or credit card, you’re dealing with a scam artist. More than likely, you’ll get just
an application for a credit card, a stored value or debit card, or a card that has so many strings attached, it’s practically
worthless.
To Do
Be alert to tricks of the advance fee loan trade so you can avoid them. For example,
If you’re looking for a loan or credit card but don’t think you’ll qualify – or if you’ve been turned down by a bank because of your
credit history – you may be tempted by ads and websites that guarantee loans or credit cards, regardless of your credit history.
Should you apply, you’ll likely find out that you have to pay a fee just for the promise of the loan. Best to ignore these ads or
sites.
If you have to pay a fee for the promise of a loan or credit card, you’re dealing with a scam artist. More than likely, you’ll get just
an application for a credit card, a stored value or debit card, or a card that has so many strings attached, it’s practically
worthless.
To Do
Be alert to tricks of the advance fee loan trade so you can avoid them. For example,
- A lender who isn’t interested in your credit history is cause for concern
- Ads that say “Bad credit? No problem,” “We don’t care about your past. You deserve a loan,” “Get money fast,” or even
“No hassle – guaranteed” often indicate a scam.
- If disclosures about fees aren’t clear and prominent, take your business elsewhere
- Scam lenders may say you’ve been approved for a loan, then call or email demanding a fee before you can get access to
any money.
- If the offer of the loan is made by phone but you have to pay before you get access to any money, it’s illegal.
- It’s illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before they
make good on their promise.
- A lender who uses a copy-cat or ‘wanna-be’ name is a reason for you to be suspicious
- Crooks give their companies names that sound like well-known or respected organizations and create fancy-looking
websites. Some scam artists pretend to be the Better Business Bureau or another reputable organization, and some
produce forged paperwork or pay people who pretend to be references.
- A lender who is not registered in your state is a red flag
- Lenders and loan brokers are required to register in the states where they do business. To check registration, call your
state Attorney General’s office or your state’s Department of Banking or Financial Regulation. The numbers are listed in
the Blue Pages of your telephone directory.
- A lender who asks you to wire money or pay an individual is questionable at best
- Don’t pay a person for a loan or credit card directly; legitimate lenders don’t ask you to do that. In addition, don’t use a
wire transfer service or send money orders for the promise of a loan. You have little recourse if there’s a problem with a
wire transaction, and legitimate lenders don’t pressure their customers to wire funds or send them by courier.
 | |  | |  | |  | |  | |  | |  | |  | |  |
Custom Search
