March 3 2009|03.42 PM UTC

Samantha Eckles

How To Avoid Collection Agencies’ Worst Case Scenarios

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Most individuals will deal with a collections agency at least once in their lifetime. For many, this might be the present, and this is as bad of time as ever. What is certain, is that having to deal with an account in collections is about the last thing anyone would want to endure. The process can be stressful, and the experience can leave one feeling like they have been taken advantage of. The following are examples of extreme collections techniques that are both unethical and unlawful. They serve as worse case scenarios, however, but they are useful in highlighting the methods by which collections agencies regularly and aggressively pursue debtors, should you find yourself in such a position.



Collections agencies use fear in order to get debtors to pay their bills. One of the ways they intimidate people is by through the use of harassment.

“Debt Collector: “Whatever way you want to handle this thing, you handle it, but as of today, I’m going to handle it my way.”
Consumer: “I’m going to make sure my rights are not violated.”
Debt Collector: “No, no, you going to get violated, sir.”
Debt collector: “What I’m going to do? I know where you’re at. I’m going to have my investigators come to your place of employment and drag you out, OK? Good day, big guy.”

Collections agencies are prohibited from harassing debtors. It is unlawful for bill collectors to bully their clients, or to use threatening or disparaging language in order collect an unsettled debt.


Threatening Wage Garnishment or Criminal Prosecution


Collections agencies operate with the presupposition that most people don’t know the law, and make empty threats against debtors. The most common being the threat of wage garnishment or criminal prosecution.


Recently a Texas-based consumer attorney, John Frugate reported that his friend’s 9-yr old daughter was the victim of an illegal threat issued by a bill collector. Upon answering the phone, the little girl was told that her mother was going to be arrested and thrown in jail if the debt was unsettled. In Texas, there is no such thing as a debtor’s prison; at worst, a court may issue a judgment against a debtor, which equates to a court-ordered repayment.

Not being able to pay bills is not a criminal offense, punishable by imprisonment. Nor can a private company unilaterally impose a wage garnishment. This is up to a court to decide, if a suit is pursued, and a judgment issued. Additionally, it is unlawful for collections agencies to pose as law firms. Sometimes these lines may be blurred by a collections agency and the nature of the discussion can be confusing.


Verbal Abuse


In some extreme cases, collections agencies verbally abuse debtors in an attempt to get the to pay.

Merchant’s Retail Credit Association, a fairly large collection firm that has represented CitiGroup, among others, recently made headlines for their work. The firm was recently found guilty of abusive collections techniques employed in an effort to collect a repayment by Delores Maddux. During the process, MRCA used abusive language, including racial epithets and an admission that they would do what they could do ruin Maddux and her family’s lives, if she did not pay them.

The Fair Debt Collection Practices Act defines the above collections efforts as not only unethical, but also illegal. In Maddux’s case, she was able to successfully sue MRCA, and was awarded close to $1 Million. While this type of behavior is becoming more common among collection agencies, it is something that consumers are not obliged to endure.


Overcharging or Attempting to Collect an Already Settled Debt


Collections agencies often seek payment for a debt that has already been paid, or for an amount that exceeds what is owed. Many collections agencies try to add interest, fees and penalties to a balance in an effort to collect more, or hassle debtors for debts that have already been settled. They often work on the assumption that many people can be intimidated into paying, even if they do not owe anything.

Collections agencies often try to settle with clients over the phone, and urge the debtor to give the agency authorization to charge their credit card. Once approval is given, hidden ‘processing’ fees, late penalties and even interest may be charged on top of the principal amount, without additional authorization or admission that these may be applied. This could place the debtor in a position of trying to collect the overpaid amount from the collections agency, sending documents and following up, etc. It also places the onus on the debtor to prove they were overcharged, or that the transaction in its entirety was unauthorized.

It is unlawful for a collections agency to seek repayment of a dollar amount that exceeds the original debt, or for a debt that has already been paid. If any interest, fees or penalties are to be added to an debt, it must have been clearly laid out in writing on documents, signed by the debtor. This would include user agreements related to loans, credit cards, etc.


Best Practices and Your Bill of Rights

These are some of the most extreme examples of the methods used by collections agency, individual experiences will vary. The following are examples of general ways to deal with collections agencies, if you already have cause for concern, or if the current economic climate suggests that you ought to read up on this type of thing. In any case, if you are contacted by a collections agency, do not panic. Make sure you know your rights, and calmly and collectively deal with outstanding debts per what is required by law.

Make Sure Your Account Cannot be Misused or Abused.

Be wary of trusting collections agencies. You can avoid worsening the situation by declining to disclose information not pertinent to owed debt. Information such as your Social Security or Drivers License numbers, or your bank/credit account number, is this type of information. For remitting payment, use a bank-issued cashier’s check, which the bank can verify deposit of, per request (keep your own records to be safe).

Don’t Pay More Than You Need to, When You Need to

When collections agencies have not purchased debt, they work on commission. Meaning they are only paid upon receipt of repayment to the creditor. One way to work things out, is to settle on a repayment plan. By law, you are afforded 30 days within receiving a notice of collections to settle a debt, prove the debt has been paid, or set up a payment plan, before any further legal action may be taken. Once an account goes to collections, it is likely to have already been reported to the credit reporting agencies. If the damage has been done, pay what is affordable and stretch out the repayment schedule for as long as possible.

Understand the Nature of the Collections Process

Collections agents, are in essence salesmen – they attempt to sell an idea that people have to pay or else. They often do whatever they can to take advantage of debtors, and get them to pay more than is necessary. They may try to sell you on more than what is owed– in this case, they may simply create more debt (in the form of fees or penalties). These extra fees can typically be negotiated away (if documentation cannot be furnished), or upon request. Everything is negotiable.

Request Documentation

Detailed documentation regarding collectible debt should always be requested, including an itemized list of outstanding debts, interest, fees etc. This would include verbiage regarding the ability by any party to impose additional fees and/or interest. Additionally, if they are unable to furnish documentation that the original debt is unpaid, then there is effectively is no debt. If there was an error on the part of the original creditor, or if the records are lost, the debtor could find themselves in the clear. Speculation does not typically hold up in a court of law.

Educate Yourself

Every state has a statue of limitations on most kinds of debt that is usually 3-6 years, meaning that an agency really can’t collect on a debt after that window. This doesn’t stop them from trying, and for whatever reason, they may sue for an expired debt. Of course, if you do not show up in court, you may find yourself facing a judgment. In this case, you will be required to pay. Also, The Fair Debt Collection Practices Act demands that a collector send you a 5-day letter telling you how much your debt is, why you owe it, and how much they are charging. There are many other laws regarding the collections process, and the rights of individuals. More information can be found at the Federal Trade Commission website.

Correspond With Collections Agencies in a Way That Works For You.

If you send a written request to a collections agency to stop calling you at home, or at your workplace, they are required by law to oblige. Failing to do so could be considered threatening and abusive collections, and/or harassment – you would then have grounds for a lawsuit against them. You can demand that all future communication by a collections agency be in letter form; but it is imperative that you send this request in writing, via certified letter. Keep receipt of delivery with your records, should any legal action escalate.

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{ 2 comments… read them below or add one }

Nonchalant Savant March 15, 2009 at 6:25 am

Consumer advocate Ben Dover (yeah, that’s his name) published a wonderful Cease and Desist letter that I’ve used several times. Works like a charm.

Follow its exact wording and you have effectively “fired” the collection agency that’s bothering you. Federal law backs it up. It should be noted that you still are responsible for your debt, but at that point it goes back to the original creditor.

Letter can be found here:


Susan Anderson September 27, 2012 at 6:48 pm

I have a bill in dispute so much so that attorney’s are involved. I don’t want it to go to collections and/or ruin my credit. What is the minimum I have to pay each month to avoid a CA or a drop in my credit score? Thank you.


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