So, this morning I got a call from a long-time friend and he said that he got a call from a collection agency claiming that he owed a debt from many years ago and they were pursuing legal action against him.
This particular friend has really cleaned up his financial situation of the past several years and it did not make sense that he would have such a large outstanding debt that he was unaware of. So, I called this “collection agency” to get more information.
I thought that this experience might be worth discussing because most people are not lawyers and are not used to dealing with such people. I have been dealing with collection agencies for years and frankly most of them are rude and aggressive, but that is the nature of their business. In fact, years ago I had one of those agents call me to file a personal Bankruptcy for him, and in real life he was actually a very friendly fellow, but there is no doubt that when he is at work, he can be a jerk.
In any event, today this particular fellow left me on hold for about ten minutes and then hung up on me. When I called a second time, I finally got through to the agent that called my client and it became quite obvious that this was a scam. He had simply used some online database to get enough information about my client to scare him into trying to give him a payment for a non-existent debt over the phone. Usually, these scammers will use correct information about very old debts (sometimes 20 years old) that you remember, but may have forgotten the details about. Then they will claim that they have instituted legal action against you, which is when they will try to scam you for money.
Collection agencies are, sadly, a necessary part of our economy as they allow small businesses to collect on delinquent accounts without having to spend the high dollars associated with an attorney. The “reputable” collection agencies may be aggressive and unpleasant to deal with but if you ask the right questions, it will be very obvious that they are collecting on a legitimate debt.
Rule #1: Don't give them any personal information. Whether you are dealing with a scam artist or a legitimate collector, they need information about you, such as your current address, your current employer, or your current bank in order to harm your interests. Don't help them to hurt you.
Rule #2: They need to provide you with specific information about the debt, including, who the original creditor was, when the debt was incurred, and how much the debt currently is. If they are threatening legal proceedings, or claim to have a judgment, they need to provide you with the name of their attorney, the court that the lawsuit is in, and the case number for that lawsuit. If they can't provide that information, they are probably a scam.
Rule #3: If they threaten to have you arrested or put in jail, hang up, because they are a scam. If they claim to be working with the IRS, the FBI, or the Marshalls service related to a debt, hang up, because they are a scam. If they claim that they are going to take away your Social Security, or other government benefits, over a non-government related debt, hang up, because they are a scam.
Rule #4: Never pay them over the phone when they call. If they are a legitimate collector, they need to send you information about the debt in writing, either by mail or by email. If you decided to make a deal with them, the terms of the deal need to be in writing, again either by mail or email, and then you can make a payment to them. If they are trying to push you to make a quick payment over the phone, they could be a scam, or they may not honor the terms of the deal that they gave you over the phone.
Rule #5: Unless you know for a 100% fact that you only owe this one debt, don't make any deals with them until you have spoken to a Bankruptcy attorney. Oftentimes, people will come to my office after having paid several of these collectors off piece meal, and then they realize that it will simply not stop. The reason for this is that once you identify yourself as someone who is susceptible to a phone call intimidation, they will contact your other creditors in order to work that new account against you. For example, if you owe ABC company money and they hire Nasty & Associates to pursue you, and you pay that debt off. Nasty & Associates will run your credit, find out who else you owe money to, and then they will call you representing DEF company in the hopes that you will pay on that too.
Rule #6: If you file for Bankruptcy, even if you did not list that particular creditor or that particular collection agency, do not talk to these people. Call your Bankruptcy attorney immediately. Filing for Bankruptcy gives you tremendous protections against the predations of collectors and you need to take advantage of those protections.
Remember, if it doesn't feel right, it is probably a scam. If you feel pressured, it is probably a scam, or at the very least, not in your best interests. If you make a decision without have 100% of the facts, you could be setting yourself up for failure.
Most Bankruptcy attorneys offer free consultations, and so there is simply nothing to lose by exploring your options before making a decision about sending money to a collector. Don't pay an attorney's hourly rate unless you have a legitimate legal defense to a purported debt…a Bankruptcy will always be cheaper and easier. Don't fall victim to a scam artist who calls you over the phone. The fellow I spoke to today was sophisticated enough to intimidate an ordinary person into paying him money for no reason, and if I had my way, he'd be behind bars for the way he takes advantage of people. Until that happens, you have to be your best defense.