Check to see if debt collectors are required to be licensed in your state. If so, find out how to complain to the state agency that regulates them.

I live in Arizona, and debt collectors are required to be licensed. If there are laws requiring a debt collector to be licensed and you can’t find the debt collector on the list of licensees in your state, they are breaking the law.

Use this to your advantage when filing complaints! 

I recently had an issue with an abusive debt collector calling me for someone in my family. I told the guy to stop calling and he became verbally abusive. I filed a complaint with the Arizona Department of Financial Institutions and they got involved.

Interestingly enough, the Department acted as an intermediary between me and the debt collection agency. Their compliance department got involved, which made it really interesting. Their compliance officer said all the right things to the Department, but the outcome was what I wanted – their abusive phone calls to stop. I never heard from them again.

A debt collector should also be registered with your Secretary of State’s office as a corporate entity, either domestic, meaning they exist under the laws of your state, or foreign, which means they are formed under the laws of a state besides yours. Most foreign companies should obtain authority to conduct business in your state if they are operating as a debt collector there.

If they are not registered to do business in your state, you should be sure to report that information to any regulatory authorities who you may involve in your situation.

Also, don’t forget to file a consumer complaint with your State’s Attorney General. These agencies exist to protect consumers. Many times, their office will serve as an intermediary between you and the debt collector and they will make sure they aren’t doing anything illegal going forward if you have the State’s Attorney General’s office involved.

Finally, don’t forget the Better Business Bureau. File a complaint with them as well.

File a complaint with anyone who has a procedure set up to intervene on your behalf and keep good records of the interactions between the agencies.

Create a paper trail and watch for admissions of wrongdoing in the letters from the debt collectors and keep that information in your arsenal in case things escalate further.

So what do you do if the debt collector refuses to validate the debt and continues to call despite being asked to stop?

What about the really abusive debt collectors who make threats that violate the law?

When this happens, it’s time to pull out the big guns in your arsenal.

Start complaining and threatening collection agents with lawsuits! 

Yes, it sucks that you have to file lawsuits before companies stop acting inappropriately. But you can’t just roll over and let the debt collectors win!

Your first stop to complain should be to the Federal Trade Commission at www.FTC.gov. You will most likely never hear from anyone at the FTC about your complaint, but don’t let that stop you from filling out the complaint form.

You see, if a debt collector is abusive and the FTC gets enough complaints about a particular collector, they will eventually investigate the complaint and possibly sue the abusive debt collectors on behalf of the citizens of the United States. The FTC can’t take any action unless YOU let them know you’re being abused.

ALWAYS send letters to collection agencies by certified mail, return receipt requested. If you don’t send a letter by certified mail, the debt collection agency will ALWAYS tell you they never received your letter. It’s amazing to me how things are instantly found when you have proof that they were received.

Oftentimes, you don’t get the benefit of a letter or anything written from the debt collection agency before the calls begin. The calls might just start, and many times a debt collector will not identify themselves on the phone or give you any information. This is why the internet search is so valuable.

If you send the debt collector a certified letter, you’re essentially beating them to the punch. You’re telling them that you expect them to verify the debt or leave you alone.

If you notify a collection agent in writing that you dispute a debt, they must verify the debt within thirty days. This might buy you some, but don’t count on it.
This brings me to another point: so what exactly constitutes “verification” of a debt?

In many cases, the debt collector just sends you a letter saying they investigated the debt and they found it to be legitimate. I have received my fair share of debt collection notices, and they never fully validate a debt. You can keep this back and forth going on as long as you like – you can send them another letter telling them that you have requested that they verify the debt and provide supporting documentation, and ask them to stop calling them until they do.

The Internet is a fabulous tool to find out information about debt collectors. Once you find out the collection agency’s name in your phone number search, you can run a Google search by the company’s name.

In more than one instance, I’ve found dirt on a collection agency that I ultimately used to make them stop calling. Many years ago, a debt collector started harassing me over a gym membership from several years prior that I had cancelled pursuant to the termination provisions in the contract.

When I ran a search on the internet, I quickly learned that the debt collection agency had been sued by the Georgia Attorney General’s office and paid a ridiculous fine for a regulatory violation.

The next time they called, I mentioned that I knew they had been fined by a state’s attorney general and threatened to contact the attorney general’s office to let them know that the fine apparently wasn’t enough because they continued to violate the law.

A few weeks later I received a nice little note apologizing for the harassing phone calls and stating that they had removed me from their database. I never heard from them again.

One of the best tricks I’ve found for figuring out who’s calling me, especially if I don’t recognize the number, is to Google the phone number.

This works for all phone numbers except for private numbers.

If a call is from a collection agency, there are usually forums on the internet, such as www.whocalledme.com, where people post the caller’s name to the sites to tell everyone else who called them from that number.

This is really easy to do on a BlackBerry: just copy the number from the caller ID and drop it into Google on the web browser on your phone.

You can then program the number into the phone and assign a silent ringer so you never hear the phone ring. This will buy you some peace of mind until you figure out how you’re going to deal with the collection agency.
 
If you do decide to speak to a debt collector on the phone, they must identify themselves as such and state that “any information obtained is for collecting a debt and will be used for that purpose.” They must also tell you the name of the company they are calling from.

I can tell you from personal experience that most collection agencies don’t identify themselves when you initially answer the phone, so just be prepared and don’t bother arguing with them.

Like the lady from the MVD, most people don’t bother fighting back against the collection agencies.

They think that just because someone called and said they owed a debt that they legitimately owe the money.

Or, they know they owe the debt, and they believe they’re a bad person for not paying it, and therefore deserving of the abuse from collection agents.

It doesn’t matter if you owe the debt or not. There are laws in this country to protect debtors and collection agents aren’t allowed to abuse debtors.

In addition, many times collection agents are just WRONG, and if you pay them money without making them do what they’re supposed to do under the law, you’re rewarding them for bad behavior.

The reason dirtbag debt collectors still exist is because most people don’t bother to fight back! If enough people who were being harassed got tired of it and took action against the collection agencies, the abuse would stop.

Make the collection agencies do their work. Don’t pay them anything until they prove that the debt is legitimately owed, and force them to treat you with respect.

Interestingly enough, you might learn that the debt collector can’t verify the debt and wind up not owing anything as a result.

A debt collector buys debt from the original owner of the debt for pennies on the dollar. As such, if you put up a big enough fight, they’re eventually going to leave you alone.

If you have a debt that’s under the small claims court limits, they’re even less likely to pursue you. Debt collection agencies might call you repeatedly and send you nasty letters in the mail because it’s cheap to do so.

Many times, once they figure out you’re going to make them comply with the law, they’ll leave you alone.

If it’s going to cost more to collect the debt than the actual amount of the debt, the collection agency isn’t going to be filing lawsuits anytime soon. They just want to shake the tree to see what falls out.

More info here

This is really important: many times, debt collectors like to dig up zombie debt, which is really, really old debt – usually the statute of limitations on these debts has expired long, long ago.

Go here for a list of states and their respective statutes of limitations.

As I mentioned before, debt collectors are bottom feeders and just looking to see who they can shake down for money. When this happens, be very careful how you engage with them because you could inadvertently start the statute of limitations running again.

Don’t communicate with them in any meaningful way on the telephone. If the statute has expired, hang up on the debt collector! If they continue to harass you, send them a certified letter telling them to stop contacting you, and specifically state that you’re not acknowledging that you owe the debt.