Chapter 7 - Solutions for a Financial Crisis » Chapter 7 Bankruptcy

If you’ve ever been behind on your credit card bills, and received a call from a collection agency, you know how stressful the experience can be.

A new study conducted by Scripps Howard, using the Freedom of Information Act and extensive interviews, revealed that debt collectors often push the limits of the law or ignore them completely.

The 1977 Fair Debt Collection Practices Act outlines rules and regulations limiting the tactics collection agencies may use when contacting you. These includes limits on times of the day they can call, and ban certain types of threats.

The report, summarized by the Evansville Courier and Press, includes these violations, from the ECP:

The booming debt-collection industry is feasting on rising consumer credit default rates and is seeking easier ways to contact people on cell phones.

Collection companies face scant threats if they’re caught breaking the law, consumer advocates said.

The rise in complaints comes as Americans say they’re being contacted more frequently by debt collectors, according to a poll by Scripps Howard/Ohio University. The poll found that 30 percent of respondents said they or their family had been contacted before 8 a.m. or after 9 p.m. — times that are prohibited by law.

Overall, Americans filed nearly 228,000 objections about debt collectors from 2007 through this May, the last full month for which Scripps Howard received records.

So what happens when these companies overstep their bounds? It can certainly cause lots of stress for you, the consumer. And while you can complain and the FTC can leverage fines, many of the companies simply pay them and continue about business.

For example, here is the ECP’s info on NCO:

The FTC disciplined NCO in 2004, collecting $1.5 million for misreporting consumer information to credit-reporting agencies, according to the FTC. Barrist blamed the blunder on another collection company, now-defunct Commercial Financial Services, which had worked the debts before NCO.

In 2006, Pennsylvania authorities reprimanded NCO after the company generated 800 complaints over a two-year period. NCO paid the state $300,000 and promised to follow the law.

So what can you do? First, know your rights. If a creditor is calling you outside the proper hours, or threatening physical harm, know they are violating the law.

Second, you don’t have to put up with these tactics. Chapter 7 bankruptcy is designed to stop creditor harassment, and when you file the automatic stay may kick-in and put an instant end to creditor issues.