I read an interesting article in the New York Times about illegal collection tactics used by collection agencies. Collection agencies sometimes buy old debt from established companies for pennies on the dollar, then pursue aggressive collection against the consumer, even including lawsuits.
Sometimes, however, the debt itself is stale (meaning the statute of limitations for collections has run) or was never valid in the first place.
Often consumers are misled by the aggressive collectors and agree to pay without confirmation that the debt is collectible. I have seen several instances where a consumer will authorize the collection agency to draft the consumer’s bank account – which is always a bad idea.
If you receive a call or a letter from a debt collector about a debt that you don’t recognize or that you dispute, you must assert your rights. First, demand a written verification of the debt so you can review whatever documentation exists. Second, never authorize the debt collector to access your bank account or a credit card. Third, you can assert your rights under the Fair Debt Collection Procedures Act to stop all phone calls and communication. Fourth, if you do get served with a lawsuit, contact a lawyer immediately for guidance – it is far easier to stop a judgment than to undo one.
As a rule, if you receive a call or letter about an old debt, do not assume that the bill collector is accurate or truthful. Get a copy of your credit report to conduct your own investigation. If you owe the money, you can usually negotiate a payment for pennies on the dollar – I have done this type of negotiation and we usually end up at 40 to 60 cents on the dollar for recent, verified debt.