When a borrower falls behind on payments to a lender, the lender will take action to collect the debt. The first actions that the lender usually takes are collection letters and phone calls. Borrowers should be prepared for these letters and calls and know what to expect.
The debt collector will try to create a sense of urgency by demanding payment in full immediately. If the borrower doesn’t agree to pay in full immediately, the collector will usually threaten some kind of “further collection action,” which just means more phone calls.
Sometimes debt collectors call very early or late at night. If they don’t reach the borrower, they will call the borrower’s friends or relatives and leave a message for the borrower. They will call the borrower at work, as well. These nuisance calls are intended to pressure the borrower into making payment arrangements.
Borrowers who are getting calls from collection agencies need to be aware of the FDCPA. The FDCPA is a federal law designed to protect borrowers from collection agencies. It only applies to collection agencies – the creditors themselves can call all they want, and are not bound by the FDCPA.
The FDCPA prohibits calls before 8am or after 9pm. The FDCPA requires collectors to stop calling and sending letters after they receive written notice that the consumer does not want further communications from them (but they can file suit to collect the money). Collectors can’t call the debtor’s place of employment after they get written or verbal notice that this is unacceptable. The FDCPA also prohibits many other actions, listed here: http://en.wikipedia.org/wiki/Fair_Debt_Collection_Practices_Act
In recent years, some creditors have sent their delinquent accounts to agencies overseas. These agencies are often evasive and may refuse to identify themselves. Some of my bankruptcy clients have had to deal with these agencies, who routinely violate the FDCPA by threatening to arrest the consumer.
Borrowers who are getting calls from collection agencies should document the dates and times of all calls and the names of the individual collector, the agency, and the creditor they are calling for. If a collection agency violates the FDCPA, the borrower can file suit against them.