Workplace Calls From Debt Collectors Doubled in 2008

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Debt settlement is a strategy more and more consumers are turning to in an effort to eliminate consumer debt. Those that are most drawn to debt settlement are those that are already behind on payments or soon will be. It’s often looked at as an alternative to Chapter 13 bankruptcy. One of the biggest downsides to debt settlement is the inevitable interaction with debt collectors.

Debt settlement requires, in most cases, that you cease making payments to your creditors. After the debt has been charged off, the creditor will assign your debt or sell your debt to a third party collection agency.  

Debt collectors don’t have the best reputation. While there are certainly those that operate ethically and professionally, the industry has been tarnished by those that operate without decency and regularly violate laws pertaining to debt collection.

Last month the FTC released its list of of top consumer complaints in 2008. Second, only to identity theft, were “Third Party and Creditor Debt Collection” complaints.

Dateline recently featured a story where debt collectors were recorded on hidden camera discussing their business at a bar after work. They were caught saying that that they led consumers to believe lawsuit filings were imminent, called consumers’ supervisors, and even reveled in the fact that illegal actions were necessary to effectively do their jobs.

The Fair Debt Collection Practices Act, or FDCPA, prohibits third-party debt collectors from contacting consumers at their place of employment “if the collector knows or has reason to know that the consumer’s employer prohibits such contacts.” The reasoning for this rule is that such calls could jeopardize the consumer’s job.

Despite this rule, The FTC received 8,092 complaints from consumers receiving calls at work in 2008, which is nearly double the number of such complaints in 2007.

Part of the problem is the current law only allows for statutory damages of $1,000 per violation. Also, the debt collection industry is booming. An influx of new and untrained collectors is certainly adding to the problem. Most are compensated based on performance (during a time many are unable to make good on past debts) and may be tempted to step outside the bounds of the law to get their job done.

Consumer advocacy groups are calling for stiffer fines and more industry regulation.  Such measures may help deter violations and provide relief for victims of abusive debt collection practices.

If you are being contacted by a debt collection agency, it is important that you understand your rights. If you feel your rights have been violated you should contact an attorney that specializes in debt collection related cases.

About Author:

Chris Rocks is the Regional Director of the National Credit Federation (NCF), a consumer advocacy group that assists small business owners and consumers overcome debt and credit challenges.

Post written by Chris Rocks

One Response to “Workplace Calls From Debt Collectors Doubled in 2008”

1. s2kreno Says:
   April 6th, 2009 at 3:54 pm

   Great information. If you start a debt settlement program, and your creditors send you into collections, then the collection agency sues you, do settlement options go out the window? How do you prevent that?

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