Here’s a hypothetical case that is all too real.
Our consumer (let’s call her Sara) has worked for the past several years to restore her credit rating. Sara had fallen on hard times and ran up a number of bills. Then her wallet was stolen and the thief used a credit card inside to run up hundreds of dollars in charges.
Now that her credit score is heading back up, Sara is doing all she can to keep her financial record clean. Then comes the telephone call announcing that she is still liable for some of those old debts.
The call comes from what are known as scavenger debt collectors. Their companies buy old debts that creditors have written off for a variety of reasons. The scavengers make the rounds to collect cash from people who no longer are obligated to pay those old debts.
The scavenger collection agencies purchase what sometimes are called “zombie debts” from all sorts of lending sources, usually at pennies or even fractions of a cent on the dollar. The scavengers are out to make whatever they can above their costs — which are minimal in relation to the total dollar value of the original loans — often by any means necessary.
Those methods may include misrepresentation, pressure and threats. The debt collectors might call and suggest they’re ready to start legal proceedings if you don’t pay a sizable part of your “debt” right now. They might haggle, offering first to take 80 percent of the original debt, then lowering the amount to 70 percent. More resistance might lead to a conference with “the manager,” who then will agree to 50 percent — if you send a check within five days.
Initial reluctance might prompt the collectors to call back and turn up the heat. They might call at odd hours, or phone your neighbors or your employer. It’s time to fight back.
The Fair Debt Collection Practices Act is a federal law (administered by Maine’s Bureau of Consumer Credit Protection, 800-332-8529) that regulates debt collection. It prohibits threats, coercion and harassment. It states that collectors can call only between 8 a.m. and 9 p.m., and they can’t call you at work if you tell them not to.
You might want to talk with the debt collector the first time you’re called to get the specifics: how much do you allegedly owe, when and for what, and to whom is the money owed. Don’t admit to owing anything; instead, ask for all the details in writing. By law the collector has to mail you the specifics within five days of that call.
Check the written details against your credit report. You might discover that the debt is so old the statute of limitations has run out (check with someone with legal expertise on this point). If you believe you do not owe the money, write a certified letter to the collection agency and pay for a return receipt so you can prove your letter was delivered. In the letter, demand that the company stop contacting you.
Do all you can to avoid problems by paying your bills on time. Keep an eye on your credit score; you’re allowed one free report each year from each of the major rating firms (Equifax, Experian and Trans Union). By getting one report every four months, you can keep an eye on your credit history — and help keep the scavengers at bay.
Consumer Forum is a collaboration of the Bangor Daily News and Northeast CONTACT, Maine’s membership-funded, nonprofit consumer organization. Individual and business memberships are available at modest rates.
For assistance with consumer-related issues, including consumer fraud and identity theft, or for more information, write: Consumer Forum, P.O. Box 486, Brewer 04412, or e-mail firstname.lastname@example.org.