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Do Debt Collectors Push The Legal And Moral Envelope Beyond The Limit?

Dollar PictureDebt collectors are not always looked upon favorably.  They are annoying, rude, and aggressive.  Some will even tell flat out lies to achieve their goal.  Whats worst, is that they seem to forget or simply not care that the person they are “speaking” to on the other end of the line is another human being.  One that expects to be treated and spoken to with respect.   Perhaps bill collectors would accomplish a lot more if they treated their ‘target’ audience with a bit of dignity and respect.
Unfortunately, most are on the opposite end of the spectrum.  In fact, they are so unpleasant, that many will actual push an individual to file for bankruptcy.  According to a recent survey, Americans incurred more debt in the last quarter of 2012, and did so by a greater sum than they did in the last such period.   That eventually translates into more work for bill collectors, as well as more bankruptcy filings.
It has been estimated that the bill collection industry generates just over twelve billion dollars a year in revenue among the several thousand firms in the industry.  They collect this sum from debtors that owe money on such items as credit cards, to pay day loans, auto loans, and personal unsecured loans.
The federal government has laws in place to try to protect borrowers in this area.  This includes protection from such acts as calling many times a day, calling very early or late in the day, etc.  Some of the rights afforded debts arise from the recent initiatives by the CFPB, which is a watchdog agency set up by the federal government.  Other rights and restrictions upon the collection industry arises out of the Fair Debt Collection Practices Act, and other similar acts.
There are several ways to protect yourself here.  First, you can file a complaint against them if you discover that they are violating some law, such as by threatening you with violence, or calling you at odd hours of the day or night or even after you have instructed them to stop calling you.  The FTC recommends that you send any demand to cease future calls in writing via certified mail.  You can also file a complaint on the CFPB website.
Next, you should not ignore their demands.  Rather, it is something that needs to be dealt with and responded to.  But you should remember that there is a certain time period after which your debt is no longer legally collectible.  This is know as the Statute of Limitations.   It is different from state to state.  So you should look up the specific statute for the state you are in.  A list can be found at the Bankrate website.
 You should also probably avoid debt settlement programs at any cost.  Many are run by for profit firms that may leave you in a worst position than you were in prior to retaining them.   Some may also advise borrowers to stop paying their creditors for some time.  This can lead to more interest and fees.
In the event that all other efforts to negotiate the debt fails, or there is simply too much debt to deal with, bankruptcy may be the next best option.  For those individuals with excess income, Chapter 13 may be the way to go.  Here, even though some court determined portion may need to be paid back, this sum is often less than would need to be paid outside of Chapter 13.
Alternatively, if your annual income is not too high, you can qualify for and file a Chapter 7, which will discharge (erase) all your unsecured debts.  A qualified bankruptcy attorney can help you decide which, if any is the best Chapter of bankruptcy for you to file. Devin Sawdayi has experience in both Chapter 13 and Chapter 7 cases, and has been representing debtors since starting his office in 1997. For a free consultation by phone and/or in person, please contact us at (310) 475-9399 or via this web site.