Keeping the debt collector at bay

NEW YORK (CNNMoney.com) -- Americans are swimming in debt. And complaints against debt collectors are on the rise. In fact, the FTC has more complaints against the collection industry than any other. So if you've been getting calls from collection agencies about old debts or debts you don't even owe anymore, we'll tell you what you're rights are and how you can fight back.

According to a recent FTC report, some debt collectors are trying to collect more than they're legally allowed to. 21 percent of complaints allege collectors were harassing. 12 percent say debt collectors used obscene or abusive language. And 2.3 percent complained that collectors called at odd hours.

You don't have to put up with this. Here are your rights: Collectors cannot call you before 8 a.m. or after 9 p.m. If you don't want to be contacted by phone, outline your request in a letter and send it certified mail.

Keep in mind that telling the collection agency not to contact you should stop the phone calls, but it won't stop the collection efforts. A collector is not allowed to threaten you with a lawsuit just to get you to pay the debt. The collector also can't threaten to garnish your wages, sell your property or threaten you with an arrest.

If you're over six months late on a credit card bill, your card issuer will try to get you to pay up. But if that doesn't work, your debt is given to a collection agency. If that collection agency isn't successful, your debt can be sold again to a second - and even a third - collection agency.

So here you have three waves of people calling you on the same debt. And the spiral continues. "The easiest debt to collect is within 6 months," says Spencer Nilson of the Nilson Report, a payment systems newsletter. And of course, the older the debt, the harder it is to collect.

If you don't owe any debt, you can dispute it in writing within 30 days of being notified. The creditor has to hold off on contacting you until it sends you a written clarification of the debt in question. Don't be coerced into paying a debt you don't owe. If you do pay just to get rid of the debt collectors, it's an admission of guilt, and it will have a very negative impact on your credit score.

There is a limit to how long collectors can legally collect your debt. Generally this limit - called the statue of limitations - is 7-10 years according to Reilly Dolan of the FTC. You'll want to check in with your state's attorney general to see what laws apply in your state. You can find out who to contact at http://www.naag.org/.

One note of caution here: don't accept a new credit offer from a creditor you never repaid. Once that creditor renews your credit relationship, the clock starts ticking all over again on your state's statute of limitations, according to Nilson.

If you think your rights have been violated by a debt collector, you should contact your local state Attorney General's office and the Federal Trade Commission at 1-877-FTC-HELP. You also have the right to sue a collector in a state or federal court within one year from the date the law was violated. You'll want to look for a lawyer that specializes in the Fair Debt Collection Practices Act.

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