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L.A. Consumer RIghts: How to Handle the Debt Collectors

August 20, 2012

Let's just go ahead and put it out there: Debt collectors are jerks.

They harass, they annoy, they chide, they infuriate. phonekeys.jpg

To be fair, it's their job. That doesn't mean you have to cave to their incessant requests - or even listen to them.

Los Angeles Chapter 7 Bankruptcy Attorney Vincent Howard wants you to understand a few things about your rights, what you can say and what you absolutely shouldn't.

First off, when you file for a bankruptcy, you get what is called an "automatic stay." That grants you automatic relief from these calls. It is intended to give you some time to sort through your affairs with your attorney to determine your next move. This is often a welcome respite for many people.

Secondly, the Fair Debt Collection Practices Act allows you to send written communication asking the collector to stop contacting you. By law, they must comply.

Of course, they often don't.

Other illegal practices by these agencies include repeated calls, threats of arrest and violence and the use of obscene language. You do have the right to sue them if they break the law, though they will only be held liable for about $1,000 in damages, plus attorneys' fees.

Most collection agencies have no problems breaking the law - despite the nearly 150,000 complaints filed against them annually. Of those complaints, about 50 percent were for harassment, 15 percent for abuse language and about 5 percent even said they were threatened with violence. And yet, collection companies often see to get a pass when those allegations are substantiated.

So that leaves us with the third point, which is what you should never say to a debt collector. To start, you never ever tell them - or anyone else - what your bank account number is. Same goes for your Social Security number or any other information related to your finances.

You're not obligated to do so, and you risk them taking out unauthorized payments. Also, providing such personal information over the phone sets you up as a possible victim of fraud.

Next, don't offer to post-date a check. Despite the fact that the federal collection practices act forbids misuse of post-dated checks, you have little recourse if they do so anyway, and then you're stuck with fees for bounced checks. Also, don't disclose to the collector that you intend to file for bankruptcy - or that you don't. It's frankly none of their business at that point, and you don't want to give them any leverage with you.

If you are dealing with multiple creditors, many people think they should just go ahead and pay off the smaller debts to get those creditors off their back. But beware that if you do so within the three-month window before you file, you could be setting yourself up to have to pay that money back to the bankruptcy trust. It's best to consult with your attorney before making ANY payments on ANYTHING after you've decided to file for bankruptcy.

Los Angeles Bankruptcy Attorney Vincent Howard at Howard Law can help. You can reach us toll-free at 1-800-872-5925 or send us a message online.

Additional Resources:
Three Things You Should Never Say to a Debt Collector, By Lynnette Khalfani-Cox, AOL Daily Finance

More Blog Entries:
More Seniors Filing for Chapter 7 Bankruptcy in L.A., July 16, 2012, Los Angeles Bankruptcy Lawyer Blog