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Federal Law Takes The Sting Out Of Debt Collectors

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Federal law protects consumers from debt collectors' harassment and abusive, unfair, or deceptive tactics. NY1's Shazia Khan filed the following report.

If you're behind on your bills, you may be all too familiar with harassing phone calls and other abusive debt collection practices. In 2009, the Federal Trade Commission received nearly 120,000 complaints about debt collection, a 14-percent jump from the previous year.

"We had one instance where somebody called and told the consumer’s children that they were going to have the sheriff come and take them away because their parent was in debt. It's really, really awful," says Deborah Marrone of the FTC.

Such dealings are also illegal. Under the Fair Debt Collection Practices Act, consumers are protected from abusive, unfair or deceptive tactics. If a debt collector contacts you, get his or her information up front and verify the debt.

"Get everything in writing. Keep a paper trail. Keep a file -- this is very important so you can check out if this is a legitimate company. You don’t want to be a victim of identity theft," says Claire Rosenzweig of the Better Business Bureau. "It’s also important so you can find out who you owe the money to. Do you really owe this money?"

Check your credit report, because once you make a payment, you are assuming responsibility for the debt.

You have certain rights when it comes to debt collectors:
• They cannot use abusive language.
• They cannot call you before 8 a.m. and after 9 p.m.
• They cannot say they will arrest you, garnish your wages or seize your property.
• They cannot disclose information about your debt to a third party. Yet they can reach out to them to locate you, so be careful with the information you post on social networking sites.

"People are putting up everything about themselves, their names, their residences their relatives. They're putting all of this information up there for anybody to see. Well, anybody includes debt collectors," says Rosenzweig.

Under law, you can stop a debt collector from contacting you. Send a certified letter with a return receipt for your records. This, however, does not resolve the debt and could still affect your credit report.

Debt collectors are also prohibited from threatening legal action if they do not intend to take it. A little-known fact is that the state's statute of limitations to collect on a debt is up to six years, depending on the type of debt. However, it resets every time you make a payment.

Once the statute of limitations has expired, debt collectors can still contact you, but they would have lost their right to try and and collect in court.

To file a complaint or for more information on your rights, visit FTC.gov.

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