4 Annoying Things Bill Collectors Can't Do -- And How to Stop Them

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There are some scary and crazy debt collectors stories out there. For example:

• A California debt collector threatened a woman by claiming that they'd dig up her daughter if she didn't pay her debt to a funeral home.
   
• A man received several racially-charged and profane voicemail messages from a Pennsylvania-based collections agency.
   
• A Texas-based debt collector used scare tactics, such as threatening to take away children.

You don't have to tolerate abusive behavior from unscrupulous debt collectors. Here is how to stop four annoying things that bill collectors absolutely can't do.

1. Report Late Payments to Credit Bureaus Within 30 Days

Missing a payment deadline is something that can happen to even the most meticulous person. When this happens, some bill collectors may start calling to scare you into believing that if you don't make the payment right away, they'll notify the credit reporting bureaus.

You've worked hard to build up your credit score, so the mere thought of being reported for a late payment may send shivers down your spine. There's no need to panic. As long as you make your missed required minimum payment before the 30th day after your due date, you'll prevent any creditor from reporting delinquency to any of the credit bureaus.

While you may still be liable for a late payment fee (ranging from $25 to $35) and may be charged a penalty APR (as high as 29.99%), you can't be reported to a credit bureau before you're a full 30 days past due.

How to Stop It

If a bill collector threatens to report you to a credit bureau for anything earlier than a 30-day late payment, tell them that is a violation of federal law. The collector would be knowingly providing incorrect information. If you receive a late payment fee and penalty APR, and are in good terms with your credit card company, call its customer service line to check if they can remove both penalties.

2. No Harassing Phone Calls

While it may be funny to look up crazy calls from debt collectors on YouTube, it's definitely not fun to receive them. Debt collectors don't want you to know that you have the legal right to not answer their calls.

Under the Fair Debt Collection Practices Act, debt collectors can't:

• Call you between 9:00 p.m. and 8:00 a.m. in your local time.
• Contact you at unusual or inconvenient places.
• Try to circumvent your lawyer, if one is representing you regarding the debt.
• Attempt to reach you at your place of employment if no incoming calls are allowed.

How to Stop It

Request in writing that they not call you, and keep a copy for your records. When you mail the letter, ask for a return receipt. If the collectors keep on calling you, you have ammunition to file a complaint with the Federal Trade Commision. The more FTC complaints a collection agency has, the more likely that the FTC will sue the agency or, in case of egregious violations, shut it down. (See also: Dealing With Nasty Debt Collectors)

3. No "Taking It All"

Bill collectors will say anything to get your attention. The reality is much different.

• The Consumer Credit Protection Act limits the amount that can be garnished from your paycheck to the lesser of 25% of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage.
   
• In cases of economic hardship, creditors may not be allowed to garnish the full 25% of your disposable earning. Certain state wage garnishment laws may impose additional limits.
   
• Your state's collection laws and exemptions may provide additional protections. For example, my home state of Hawaii has a collection exemption of $2,575 on vehicles and up to $30,000 on real property.
   
• The Employee Retirement Income Security Act protects qualified retirement accounts, such as 401(k), deferred compensation, and profit sharing plans from most bill collectors.

How to Stop It

Know your rights and find out the relevant collections laws and exemptions for your state. In cases of abusive threats from debt collectors, file a complaint against them with the FTC.

4. No "Doomsday" Dates

Another common scare tactic from collection agencies is to anchor to a final deadline that would trigger lots of additional fees and legal problems if not met. Debt collectors know that the clock is working against them, so that's why they want to cash in as early as possible.

• Collection agents get commissions based on how big your first down payment is.
   
• Bill collectors buy debts at discounted prices, yet want to maximize their profit margins.
   
• Debts can become too old for a collector to sue. Depending on your state's statute of limitations for credit card debt, a creditor may be out of luck as early as three years.

How to Stop It

Always negotiate. You're not required to make a big down payment or forced to accept monthly repayment plan. When dealing with any debt collector, almost everything is negotiable, including payment schedules and deadlines.

Bill collectors are great at playing hardball, but they know that it's in their best interest to negotiate a repayment plan that you can realistically stick to. Don't be caught off guard by malicious collection agents and keep them in check.

What is your craziest story about bill collectors? Please share in the comments.

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