A New Shakedown?

Then there's "zombie debt"--old debts that may be too musty to collect on. "Some of this is 10 years old or more, and beyond the statute of limitations for collection," says Swanson. Yet she's seeing more consumer complaints about agencies dredging up debts that are so old they're difficult, if not impossible, to prove. Or have already been discharged in bankruptcy. Debt collecting agencies say that the oldest debts tend to be followed by debt purchasers, a slice of the industry that buys past-due accounts and then tries to collect them for themselves, instead of simply working on commissions or fees.

The Kinder, Gentler Approach?
The ACA's Andersen says her industry is trying hard to be clean so that regulators and lawmakers will trust it to become a self-regulating entity that polices its own members. Part of the ACA's charm offensive includes a new YouTube channel with videos aimed at humanizing collectors. With videos they hope to go viral, the trade group is also publicizing the fact that the $40-billion in debts it does collect is money that bill-paying consumers don't have to fork over in the form of higher prices.

Increasingly, collectors say they are making an effort to collect partial payments and negotiate easier repayment plans with consumers. According to industry watchers, that makes sense on many levels. "Financial institutions are recognizing that their customer base, even the delinquent ones, are the ones that they want to keep. These consumers will come around to financial health and will be good consumers again," says Rob Fite, an industry consultant with LexisNexis Risk & Information Analytics Group.

What To Do When Debt Collectors Call
The Fair Debt Reporting Act, the Fair Debt Collection Practices Act, and a host of Federal and state rules govern what bill collectors can and can't say and do. The short version: They have to identify themselves and, if you request it, prove that the debt is indeed yours. For more information on your rights, go to:

FTC.gov --Here you'll find specifics on how to handle debt collectors from the agency tasked with regulating them.
Privacyrights.org--A consumer friendly guide that explains debt collection practices.
Stopcollectionharassment.com--If you think you're being bothered about debt that's not yours and don't know how best to respond, check out this site's sample letters.
Askdoctordebt.com--The industry's own web site about its debt collection standards.

© 2008