Collection Agency Strategies

Creditors that are unsuccessful in getting debtors to pay their bills often resort to hiring third-party collection agencies to continue collection efforts. Bill collectors typically use a variety of strategies to get debtors to pay up, including contacting a debtor by mail or phone, placing negative information on the debtor's credit report, and even filing lawsuits. However, both state and federal law place restrictions on these tactics and how they can be used to secure payment on a debt.

Phone Calls

Many collection agencies begin their collection efforts by calling a debtor both at home and at work. If a debt collector is unable to locate a current phone number or address for a debtor, the collector may also attempt to call the debtor's neighbors or relatives in order to track down the debtor.

There are legal limitations on when and where a bill collector can call a debtor. If a debtor tells a bill collector that her employer does not permit personal calls, the bill collector can no longer call the debtor at work. Bill collectors cannot call during unreasonable hours (usually before 8 am or after 9 pm).
Collectors are prohibited by law from threatening or harassing debtors by phone. In addition, after a collection agency contacts a debtor by phone, it is required to send the debtor a written notice that states the amount of the debt, the name of the original creditor, and instructions on how the recipient can dispute the debt.

Letters

Another common collection tactic is to send letters that demand payment to debtors. The language used will usually increase in severity with each letter sent. It is illegal for a collection agency to contact a debtor via postcard, and the envelopes used must not be printed with information that reveals that it was sent by a bill collector. It is against the law for a collection agency to try and make it appear as though its letters are being sent from an attorney or by a government agency.

Debtors can stop both phone and mail contact from a collection agency by sending a letter via certified mail that requests that the bill collector cease all contact. By federal law, the bill collector can only contact the debtor one more time to inform the debtor that it either plans to file a lawsuit or that it will end all collection activity.

Credit Reporting

Collection agencies can and do report accounts to credit reporting agencies, which can result in a lowered credit score for the debtor. Under the Fair and Accurate Credit Transactions Act (FACTA), consumers are entitled to request one free copy of their credit report each year from each of the three major credit bureaus. The debtor has the right to dispute information on the credit report, and can demand that a collection agency investigate and verify all information that it has placed on the report.

Going to Court

In some cases, a collection agency will file a lawsuit against a debtor. A debtor has the right to appear in court and to challenge the validity of a debt. It is a good idea for a debtor to check on the date on which the debt originally went into default (usually 6 months after the last payment on the account was made): If the debt is older than the state's statute of limitations on debt, the debtor can ask that the lawsuit be dismissed.