Collection Agency Rules and How to Respond to Harassment

Looking for a Credit Card for Christmas Shopping? Before you submit a credit card application, first review the main points which will help you choose the right credit card for your needs.

What Charges You'll Make - If you're going to use the credit card mainly for booking airline reservations and hotels, it might be best for you to get a travel credit card that offers sky miles and hotel points or cashback. If this will be an emergency credit card only, then your main concern may be for a low interest rate credit card with low fees.

When You'll Repay Charges - Will you pay off credit card charges in full every month, or will you carry a balance month to month? If you're going to carry a balance, you want the lowest possible interest rate as well as a low introductory rate. But if you'll payoff balances in full every month, then interest rate really doesn't matter so no annual fee and/or a long grace period would be a bigger concern. If you're going to carry a balance, be concerned about how the finance charge is calculated. The most common method is the Average Daily Balance, which means that the daily balances are added together and then divided by the number of days in the billing cycle. Stay away from credit cards that compute the balance using two billing cycles, as this method costs more money in financing fees.

What Amount You'll Charge - If you're going to use the credit card for all your monthly expenses, then you need a card that has a high credit limit and a high cashback percentage.

More info about Interest Rates, Credit Limits, Incentives, Fees and Penalties

Interest Rates - The interest rate (Annual Percentage Rate) APR can either be a fixed rate or a variable rate that is tied to another financial indicator, most commonly the prime rate. With a fixed rate credit card you know what the interest rate will be every month, whereas a card with a variable rate can fluctuate. Of course, even the interest of a fixed rate card can change based on certain events, such as paying your credit card bill late, exceeding your limit, or simply because the credit card issuer decides to change it after providing you ample advance notice.

Credit Limit - This is the amount of money the credit card company will let you charge to the card. This amount varies depending upon the card offer and your credit history. Be sure to get a credit card with an ample limit, because getting close to your max can hurt your credit score. Just remember that you don't have to max out your limit just because it's available.

Incentives - To compete for and to gain customers, many credit card companies offer rewards. Even if you normally use cash, why not use your credit card and then use the cash to make the payment during the grace period? You still won't pay interest and meanwhile you'll rack-up rewards. A credit card with 5% cashback will earn you $5 for every $100 charged. If your total bills come to $2,000 per month, you'll earn a free $100 every month. Look for a rewards program that you'll use and which offers flexibility, such as cashback or travel.

Fees and Penalties - Compare common charges such as late fees, overlimit fees, balance transfers, cash advances, and for making payments by telephone. Regarding balance transfers, look for credit card offers with no transaction fees and zero percent interest for at least 12 months.

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Collection Agency Rules and How to Respond to Harassment

By David | Published 10/10/2005

Article: Collection Agency Harassment and Rules. Is a collection agency harassing you?

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6 ways to fight collection agency harassment:

#1: Don't take the calls. You can hang up, screen calls or stop them from calling entirely with what's known as a "cease and desist letter." If you send a "cease and desist," include your name, address and account number, and tell the company "do not contact me further about this debt." Send the letter certified so that you have proof the company received it. But this move doesn't cancel your debt. The original creditor or the collection agency may decide to sue, or the creditor can simply hire another third-party collector.

#2: Keep a diary. If you do take the calls, write everything down: dates, times, names (even if it's the ubiquitous Ms. Smith or Mr. Jones) and what is said. If it's legal in your state, tape the exchange. And if you tell them you're taping the call; whether you are or not, they'll be more likely to behave.

#3: Negotiate to pay the debt. Once a debt goes to collections, you may be able to work out a deal to pay less than the full amount. A collections agency is always authorized to take something less than 100 percent, usually 50 to 60 percent.

Whether you pay in full, negotiate for a percentage of the debt or accept a payment plan, and get everything in writing before you give them any money.

Make them stipulate that they will not report anything negative to the credit bureaus regarding the debt. And have your original creditor sign off on the deal. A collection agency could offer to settle that $1,000 credit card bill for just $500. But once they're paid, the original creditor can still come after you for the other $500.

One warning: If you negotiate a settlement for less than you owe, you could end up paying taxes on the unpaid portion. But if the unpaid amount is less than $600, a collection agency does not have to report it to the IRS. Make this part of your written agreement.

Always pay with paper checks, not electronic bank drafts by phone or debit cards. It's to your advantage to have a physical record that you've paid, plus you control exactly what you're paying and when.

Be sure to get something in writing when the debt is paid. That way, if it does come up on your credit report, you have something to prove it was paid.

#4: Understand the laws in your state. Garnishment, lawsuits and property seizure are illegal in some places, which gives you a little more leverage to work out a deal. To learn what is and isn't allowed, call your state Attorney General's office or the state consumer protection office.

But third party collectors have a choice: they can operate under the laws of your state or those of the state where the debt originated, usually interpreted as where you were living when you opened the account.

Also, time may have run out on the debt. While there is no federal statute of limitations on debts, most states limit the amount of time a creditor has to collect a debt. However, that deadline varies from state to state.

There is also a question of which state's rules govern the transaction, yours or the creditor's. That's a very gray area. Check with your local state authority or an attorney in your state who specializes in this kind of law.

#5: File a complaint. If you suspect that a collection agent has crossed the line, call the FTC and your state's governing office and file complaints. (Yet another reason it's good to keep a written or tape-recorded diary.)

#6: Sue. If a third-party collection agency violates your rights, you can sue for actual damages and punitive damages, as well as attorneys' fees and court costs.

Collection Agency rules:

The Fair Debt Collection Practices Act was passed in 1977 to protect consumers from abusive debt collectors. Here are rules a third-party debt collector must follow when collecting a debt.

Contacting a debtor. A collector may contact you in person, by mail, telephone, telegram or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.

Contacting a third party about your debt. If you have an attorney, the debt collector must contact the attorney rather than you. If you don't have an attorney, a collector may contact other people but only to find out where you live, what your phone number is and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases the collector may not tell anyone other than you and your attorney that you owe money.

Giving written notice. Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe, the name of the creditor to whom you owe the money and what action to take if you believe you do not owe the money.

When a consumer doesn't owe the money. A collector may not contact you if within 30 days after you receive the written notice you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.

No harassment. Debt collectors may not harass, oppress or abuse you or any third party they contact.

Debt collectors may not:
Threaten violence or harm.
Use obscene or profane language.
Repeatedly use the telephone to annoy someone.
No lying.
Use any false or misleading statements when collecting a debt.
Falsely imply that they are attorneys or government representatives.
Falsely imply that you have committed a crime.
Falsely represent they operate or work for a credit bureau.
Misrepresent the amount of your debt.
Give false credit information about you to anyone, including a credit bureau.
Send you anything that looks like an official document from a court or government agency when it is not.
Use a false name.

Debt collectors may not state that:
You will be arrested if you do not pay your debt.
They will seize, garnish, attach or sell your property or wages unless the collection agency or creditor intends to do so and it is legal to do so.
Actions, such as a lawsuit, will be taken against you when such action legally may not be taken or when they do not intend to take such action.

No unfair practices. A debt collector may not engage in unfair practices when they try to collect a debt from you.

Debt collectors may not:
Collect any amount greater than your debt, unless your state law permits such a charge.
Deposit a postdated check prematurely.
Use deception to make you accept collect calls or pay for telegrams.
Take or threaten to take your property unless this can be done legally.

Source: Fair Debt Collection, the Federal Trade Commission.

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Collection Agency Rules and How to Respond to Harassment - by <a href=http://creditfederal.com>CreditFederal.com</a> Article: Collection Agency Harassment and Rules. Is a collection agency harassing you? <a href="http://creditfederal.com/free-debt-settlement.html">Apply for Debt Settlement</A> <a href="http://creditfederal.com/credit-counseling.html">Apply for Credit Counseling</A> 6 ways to fight collection agency harassment: #1: Don't take the calls. You can hang up, screen calls or stop them from calling entirely with what's known as a "cease and desist letter." If you send a "cease and desist," include your name, address and account number, and tell the company "do not contact me further about this debt." Send the letter certified so that you have proof the company received it. But this move doesn't cancel your debt. The original creditor or the collection agency may decide to sue, or the creditor can simply hire another third-party collector. #2: Keep a diary. If you do take the calls, write everything down: dates, times, names (even if it's the ubiquitous Ms. Smith or Mr. Jones) and what is said. If it's legal in your state, tape the exchange. And if you tell them you're taping the call; whether you are or not, they'll be more likely to behave. #3: Negotiate to pay the debt. Once a debt goes to collections, you may be able to work out a deal to pay less than the full amount. A collections agency is always authorized to take something less than 100 percent, usually 50 to 60 percent. Whether you pay in full, negotiate for a percentage of the debt or accept a payment plan, and get everything in writing before you give them any money. Make them stipulate that they will not report anything negative to the credit bureaus regarding the debt. And have your original creditor sign off on the deal. A collection agency could offer to settle that $1,000 credit card bill for just $500. But once they're paid, the original creditor can still come after you for the other $500. One warning: If you negotiate a settlement for less than you owe, you could end up paying taxes on the unpaid portion. But if the unpaid amount is less than $600, a collection agency does not have to report it to the IRS. Make this part of your written agreement. Always pay with paper checks, not electronic bank drafts by phone or debit cards. It's to your advantage to have a physical record that you've paid, plus you control exactly what you're paying and when. Be sure to get something in writing when the debt is paid. That way, if it does come up on your credit report, you have something to prove it was paid. #4: Understand the laws in your state. Garnishment, lawsuits and property seizure are illegal in some places, which gives you a little more leverage to work out a deal. To learn what is and isn't allowed, call your state Attorney General's office or the state consumer protection office. But third party collectors have a choice: they can operate under the laws of your state or those of the state where the debt originated, usually interpreted as where you were living when you opened the account. Also, time may have run out on the debt. While there is no federal statute of limitations on debts, most states limit the amount of time a creditor has to collect a debt. However, that deadline varies from state to state. There is also a question of which state's rules govern the transaction, yours or the creditor's. That's a very gray area. Check with your local state authority or an attorney in your state who specializes in this kind of law. #5: File a complaint. If you suspect that a collection agent has crossed the line, call the FTC and your state's governing office and file complaints. (Yet another reason it's good to keep a written or tape-recorded diary.) #6: Sue. If a third-party collection agency violates your rights, you can sue for actual damages and punitive damages, as well as attorneys' fees and court costs. Collection Agency rules: The Fair Debt Collection Practices Act was passed in 1977 to protect consumers from abusive debt collectors. Here are rules a third-party debt collector must follow when collecting a debt. Contacting a debtor. A collector may contact you in person, by mail, telephone, telegram or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts. Contacting a third party about your debt. If you have an attorney, the debt collector must contact the attorney rather than you. If you don't have an attorney, a collector may contact other people but only to find out where you live, what your phone number is and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases the collector may not tell anyone other than you and your attorney that you owe money. Giving written notice. Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe, the name of the creditor to whom you owe the money and what action to take if you believe you do not owe the money. When a consumer doesn't owe the money. A collector may not contact you if within 30 days after you receive the written notice you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed. No harassment. Debt collectors may not harass, oppress or abuse you or any third party they contact. Debt collectors may not: Threaten violence or harm. Use obscene or profane language. Repeatedly use the telephone to annoy someone. No lying. Use any false or misleading statements when collecting a debt. Falsely imply that they are attorneys or government representatives. Falsely imply that you have committed a crime. Falsely represent they operate or work for a credit bureau. Misrepresent the amount of your debt. Give false credit information about you to anyone, including a credit bureau. Send you anything that looks like an official document from a court or government agency when it is not. Use a false name. Debt collectors may not state that: You will be arrested if you do not pay your debt. They will seize, garnish, attach or sell your property or wages unless the collection agency or creditor intends to do so and it is legal to do so. Actions, such as a lawsuit, will be taken against you when such action legally may not be taken or when they do not intend to take such action. No unfair practices. A debt collector may not engage in unfair practices when they try to collect a debt from you. Debt collectors may not: Collect any amount greater than your debt, unless your state law permits such a charge. Deposit a postdated check prematurely. Use deception to make you accept collect calls or pay for telegrams. Take or threaten to take your property unless this can be done legally. Source: Fair Debt Collection, the Federal Trade Commission. <a href="http://creditfederal.com/free-debt-settlement.html">Apply for Debt Settlement</A> <a href="http://creditfederal.com/credit-counseling.html">Apply for Credit Counseling</A> This article provided courtesy of <a href=http://creditfederal.com target=_new>www.CreditFederal.com</a>, a personal credit resource of good or bad credit credit cards and loans.

Credit Tip: Need a high limit for Christmas credit card charges? If you have bad credit, consider a personal loan by refinancing your mortgage. Even if you have cash to buy Christmas presents, we recommend using a prepaid card to make purchases because it's safer than carrying cash.