Got bills? Attack the stack

With the economy on the fritz and consumer debt at record-high levels, does it surprise you that debt collection complaints are on the rise? The Better Business Bureau logged 18,000 complaints in 2007, up 26 percent compared with 2006; the Federal Trade Commission logged 70,951 in 2007, up 2.5 percent. Given that there are millions of contacts made by collectors each year, those numbers don't sound terribly high. But what if you're the one being harassed? Being sworn at and called names? Humiliated at work by collectors looking for you?

Minnesota Attorney General Lori Swanson recently filed a lawsuit against AFNI Inc. of Bloomington, Ill., alleging that the company was badgering Minnesotans into paying debts they didn't owe.

Swanson says she's seeing more aggressive collection behavior because the collection firms are feeling the pain of the economic slowdown, too. But that's no excuse for breaking the law. "Consumers need to be able to communicate in a safe environment with debt collectors," said Rozanne Andersen, general counsel for the national trade group the American Collectors Association, based in Edina.

So how do you do that?

Deal with the debt collector

It's a common gut reaction to let mail pile up for credit card bills or collections notices you can't afford to pay. But doing so won't make the debt disappear. In fact, failing to respond after several weeks can become an admission of guilt. If you have any doubts about what a document means, contact a consumer attorney through the National Association of Consumer Advocates (www.naca.net). If you have questions about any of your rights, and you probably will, consult with an attorney well-versed in collections law.

Also, know what type of collector you're dealing with. For example, there are first-party and third-party collectors. An example of a first-party collector is the in-house collections department for a credit card company, and they're generally not covered by the Fair Debt Collection Practices Act. A third party-collector, who collects money on behalf of a company, is covered under the collections act.

Know your rights

Under the Fair Debt Collection Practices Act, a debt collector can't swear at a debtor or make false statements designed to bully someone into paying. Making threats about "dire consequences," such as arresting someone for failure to pay debts, taking away their house or ruining their reputation are no-nos. So are phone calls made at inconvenient times or places, or calls at work if it's known that the employer doesn't allow them. Collectors must also stop contacting a debtor who writes a letter telling individual creditors to cease communications; but that won't stop them from potentially filing a lawsuit in an attempt to collect a debt.

Read the act's fine print at www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf, or head to Swanson's website: www.ag.state.mn.us/consumer/finance/debfactsheet.asp. But the bottom line is that "debt collectors are required by federal law -- and have been since 1977 -- to treat you the same way the Wal-Mart greeter treats you: with truth, fairness, dignity and respect," Minneapolis consumer attorney Pete Barry said.

Be careful what you say

When collectors call, they will read you your "mini- Miranda" warning -- "This is an attempt to collect a debt and any information obtained will be used for that purpose" -- and try to collect as much information as possible. They'll try for work details, bank account information, even Social Security numbers -- to help them keep tabs on you and your money.

If it's not your debt, don't pay

Thanks to technology, there's a growing debt-buying industry where collectors purchase debt from companies for pennies on the dollar. The debts can be old or inaccurate, meaning more people are being contacted about debt that's already been settled or is invalid to begin with.

The act requires collectors to send written notice of the amount of money owed and the creditor's name, plus details about the next steps in the collection process, within five days after the first contact. If it turns out that you don't owe the dough, send the collection agency a letter within 30 days of receiving that first notice saying it's not yours in order to stop the collector from contacting you again without proof of the debt.

Harassed? Make a complaint

If you're being harassed, tell the Federal Trade Commission (www.ftc.gov or 1-877-382-4357), the Better Business Bureau (www.bbb.org), your state's attorney general (www.ag.state.mn.us) or the Minnesota Department of Commerce (e-mail market.assurance@state.mn.us, or call 1-800-657-3602). The American Collectors Association (www.acainternational.org) is the national trade group for third-party collectors. The association also investigates ethics complaints about its members because there is a "very, very real need for debt collectors to take the public's perception of the industry very seriously," Andersen said.