Phone lines at the Federal Trade Commission and the Better Business Bureau have been ringing off the hook with consumer complaints about over-zealous bill collectors. As a bankruptcy attorney in Indiana for two and a half decades, I’ve heard more than my share of horror stories about bill collectors over-stepping their legal boundaries in their debt collection efforts. With the downturn in the economy, these problems seem to be getting worse. In my earlier bankruptcy blog Creditors Calling…And Calling? Rig Up The Recorder, I reviewed the rules of the Fair Debt Collection Practices Act which bill collectors must follow.
Creditors may not call repeatedly, or call before 8 AM, after 9PM, or on a Sunday. They’re not allowed to use bad language or threats to have a debtor arrested. They’re not allowed to harass relatives or contact employers. What collectors can do is go to court and, after obtaining a judgment, freeze a debtor’s bank account.
According to the FTC (see Indianapolis Star, 11/3/08), nearly 39% of those who called to complain about aggressive bill collectors claimed they were being dunned for more money than they owed! In order to back up a complaint you have about aggressive bill collecting tactics, you need proof. That’s why I suggested recording the phone conversations, which is legal in Indiana so long as one of the parties agrees.
Filing bankruptcy, as I brought out in Oh, Yes, You Can Stop Being Harassed!, puts an automatic stay into effect, which is an order from the bankruptcy court telling your creditors to leave you alone. The automatic stay buys time for debtors to deal with their financial issues through the court system.