Collectors on your back?

Many industries are hurting these days, but not the debt collections business.

A look at the numbers tells why:

Consumer bankruptcies soared 38 percent last year, compared with 2006, according to the American Bankruptcy Institute and the Administrative Office of the U.S. Courts.

Consumer credit delinquencies in the fourth quarter of 2007 reached their highest levels since 1992, according to the American Bankers Association.

Many of those late on their bills have gotten calls from debt collectors and have had less-than-pleasant experiences.

Consumer complaints to the Federal Trade Commission about debt collectors have consistently ranked No. 1 among all industries for several years in a row.

The FTC enforces the Fair Debt Collection Practices Act, which prohibits deceptive, unfair and abusive practices by third-party collectors.

The law “permits reasonable collection efforts that promote repayment of legitimate debts.”

The act doesn't apply to a company's in-house debt collectors, but the FTC can go after in-house collectors by wielding a provision of the Federal Trade Commission Act that prohibits “unfair and deceptive acts in commerce.”

“It's a great catchall,” said Thomas Kane, senior attorney in the FTC's Division of Financial Practices.

No one likes to be dogged by a bill collector, and there are steps you should take to ensure that you resolve your situation quickly and aren't bullied by unscrupulous collecting firms:

1. Don't ignore calls or written communications from collectors.

“As long as the collector is not being abusive, it's a good idea to communicate with the collector because if you don't owe the money, you'll be able to convince the collector to go away,” Kane said.

“If you do owe the money, you may be able to work out some partial payment or long-term payment.”

2. Make the collector prove you owe the debt.

Within five days after you're first contacted, the collector must send you a written notice telling you the amount you owe, the creditor to whom you owe the money and what action to take if you believe you don't owe the money.

3. If a collector calls about a bill you already paid, show proof that you met that obligation.

Respond in writing and provide documents showing the account has been paid or settled in full. Keep documents that prove you've paid a debt for as long as you think a debt collector can come after you.

4. Don't tolerate abuse from debt collectors.

Collectors are barred from threatening violence, from publishing a list of consumers who refuse to pay their debts (except to credit bureaus), from using obscene or profane language, or from repeatedly using the telephone to annoy you.

Collectors may contact you in person and by mail, telephone, telegram or fax. However, the law says they may not contact you at “inconvenient times or places,” such as before 8 a.m. or after 9 p.m., unless you agree.

5. Take action if collection calls go over the top.

You have the right to send a debt collector written notice to cease communications in connection with the debt or you may send written notice that you refuse to pay it.

Once the collection firm receives your notice, it must stop contacting you, other than to tell you that the collector or creditor may invoke further specified legal steps to collect the debt.

The bottom line: The best way to deal with debt collectors is to communicate with them quickly and to try to work out a payment plan. But don't let them abuse or disrespect you.