Before Bankruptcy -- Sample Letter to Debt Collectors and Collection Agencies
Note: When you consider whether to file for bankruptcy and start online gathering information, after starting your research, feel free to call me, bankruptcy attorney Laura Buchanan, at 323-686-5400 ext. 2 for more information.
The sample letter to Debt Collectors and Collection Agencies is at the end -- read the rest of this blog BEFORE you send the letter, so you understand what it WILL and WILL NOT do for you.
PLEASE NOTE: Stopping a debt collector from bugging you is only a little battle in the bigger war of getting your financial house in order. If you can't pay your bills, stop spending on anything you don't absolutely need -- cowboy up, or man up, or woman up, and GET UNSTUCK from the fear and stress of your financial problems! Start learning about your options NOW and seek advice from a bankruptcy attorney, who can help you see if you can avoid bankruptcy, or if bankruptcy is the responsible choice, which will allow you to get back on your feet and be a responsible American going forward. See Eleven Bankruptcy Commandment #1 - Thou shalt participate in your own rescue.
DEBT COLLECTORS
Many debt collectors act lawfully when they contact you, but some do not. What is "unlawful" is explained below. NOTE: A "debt collector" is a person, who works for a collection agency. "Debt collector" does NOT include people employed by the original creditor (which is the business or person who first gave you credit or loaned money to you).
You have two main options to stop an abusive debt collector . One way is to file for bankruptcy because bankruptcy (usually) puts the “automatic stay” in place. The automatic stay generally “stays” or stops creditors from trying to collect debts from you, though it does not stop everything, and bankruptcy sometimes only gives temporary relief. The big benefit of bankruptcy is that (if you qualify) you get a "discharge" of your personal liability for most of your old debts, which means you no longer have to pay those debts. Those large topics are for another day.
This blog's purpose is to help you stop a debt collector (or collection agency) from harrassing you. Federal law prohibits abusive, deceptive, and unfair debt collection practices by debt collectors -- see definition above.
The Fair Debt Collection Practices Act ("FDCPA") recognizes that "[a]busive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy." 15 U.S.C. § 1692(a). If you are getting abusive calls from debt collectors, and you want to try to stop them instead of filing for bankruptcy, you can send a letter that tells them you know you have rights against abusive collection practices. If you send a letter telling them to knock it off, but they continue using abusive practices, you can sue them for damages, as explained below.
DEBT COLLECTORS ARE NOT TO TAKE ANY OF THESE ILLEGAL, ABUSIVE ACTIONS:
- Call without identifying himself or herself as a bill collectors.
- Call you repeatedly or contact you at an unreasonable time -- the law says that before 8:00 a.m. or after 9:00 p.m. is unreasonable.
- Contact you at work if your employer prohibits it.
- Claim you owe more money than you actually owe.
- Use profane or obscene language.
- Threaten to use or actually use violence.
- Claim that you will be imprisoned or that your property will be seized.
- Add unauthorized fees, interest, or charges.
- Claim to be attorneys if they're not attorneys.
- Mail you a paper that resembles a legal document.
- Contact third parties (other than your attorney), a credit reporting bureau, or the original creditor, except for the limited purpose of getting information on where you are.
NOTE that unless you have asked collectors in writing to stop contacting you, they can contact your spouse and your co-debtors, and if you are a minor, they can contact your parents.
ACTION PLAN TO STOP ABUSIVE ACTIONS:
1. Send a letter to each debt collection agency telling them to stop -- A SAMPLE LETTER TO A DEBT COLLECTION AGENCY IS BELOW.
After the letter is received, all of the agency's employees are prohibited from contacting you, except to tell you that collection efforts have ended or that the original creditor or the collection agency intends to sue you or take some other legal action to seek a remedy against you.
NOTE: It's usually not a good idea to hide from debt collectors. You can tell a collector to stop calling even if the collector is not breaking the law. However, many debt counselors believe that unless you're judgment proof (meaning that you're broke for the foreseeable future) or truly plan to file for bankruptcy, the best approach is not to ignore the debt or to hide from a debt collector. Usually, the longer you put off resolving the issue, the worse the situation and the consequences will become. Whether you negotiate directly with the collector or obtain a lawyer's assistance, many counselors believe it is almost always best to talk to the collector.
2. Document Illegal Actions
If a debt collector breaks the law, document the violation right then. Start a log and write down what happened, when it happened, and who witnessed it. Then try to have another person with you or on the phone during all communications with the collector and have them write down what happened, too.
You can only record phone conversations without the debt collector's knowledge In some states. In other states, recording without their knowledge is illegal. Check with your state consumer protection agency to find out what is permitted where you live.
3. File Complaints
A. File an official complaint with the Federal Trade Commission (www.ftccomplaintassistant.gov). In your complaint, include the collection agency's name and address, the name of the debt collector(s), the dates and times of the conversations, and the names of any witnesses, and attach copies of all offending materials you received and a copy of any tape you made legally.
B. Send the complaint to the state's agency that regulates collection agencies for the state where the agency is located. To find the right state agency, call information in that state's capital city or check the state's website.
C. Send a copy of your complaint to the original creditor and the collection agency. The original creditor may be concerned about its own liability and offer to cancel the debt or a portion of it.
After your complaint is filed, don't expect immediate action. The FTC may take steps to sanction the agency if it has other complaints on record. The state agency may move more quickly to sue the collection agency or shut it down for egregious violations. From filing your complaints, ideally the creditor will offer to cancel the debt. That's a great result for you.
4. Sue the Debt Collector
If a debt collector has subjected you to repeated abusive behavior and if you can document it, consider suing the collection agency. But if the illegal behavior was merely annoying, don't bother. For example, if the collector called four times in a single day but never called again, you probably don't have a case.
To sue the debt collector, you can represent yourself in small claims court or hire a lawyer and go to regular court. The collection agency may have to pay your attorneys' fees and court costs if you win.
If you win in court, you are entitled to recover:
the amount of any actual financial losses you suffered, such as your therapy fees if you suffered extreme anxiety as a result of the collector's actions, or the amount you paid to switch to an unlisted number to avoid harassment, and
an additional amount (unrelated to actual losses) up to $1,000 for any violation of the FDCPA.
SAMPLE LETTER TO COLLECTION AGENCY
January 10, 20XX
Tough Guy Collection Service, Inc.
Attn: Joe Smith-Jones
111 Main St.,
Los Angeles, CA 9XXXX
Re: Account No. XXX-XXXX
Dear Mr. Smith-Jones:
Over the past four months, I have received several letters and telephone calls from you and/or other representatives of your company about a past due account with BigDeal Department Store.
This is my formal notice to you and your company under 15 U.S.C. § 1692(c) (which says that creditors must stop abusive debt collection practices for the collection of debts) to cease all communications with me except for the reasons that are specifically provided in applicable federal law.
This letter is not meant to acknowledge in any way that I owe any money.
Sincerely,
Jane Consumer
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