When it comes to financial collections, things are not always what they seem. All too often, consumers in Washington suffer at the hands of debt collection scams, some of which may lead to very real financial consequences, especially for those near bankruptcy. Although a variety of creditor protection measures exist during the collections process, borrowers also have rights. Today, we help you determine whether you are dealing with a legitimate -- or ethical -- collections representative. Make sure that you are talking to an actual collections agent before handing over any money, especially during a bankruptcy proceeding.
Debt collectors are required to provide borrowers with a written account of the debt for which they are seeking payment. If the collector refuses to provide you with such a document, you might be the victim of a scam. In some cases, the "agent" will tell you that a confirmation letter is already on the way. Do not take any action until you have the letter in your hands.
Fake debt collectors also tend to want wire transfers or payment through a prepaid card. Those going through a bankruptcy proceeding should be aware that legitimate debt collectors do not accept this type of payment. It is unlikely that you will be able to recover your money if you make such a payment.
Finally, debt collectors who are threatening you with serious action -- sometimes including jail or a lawsuit -- are likely fake or seriously unethical. The Fair Debt Collection Practices Act legally restricts collections companies from threatening borrowers. You can take action against such a collections representative by reporting the situation to the Consumer Financial Protection Bureau.
Although creditor protection is important during bankruptcy, borrowers still have rights that should be protected throughout the process. No one should be subject to abuse or illegal practices during their bankruptcy proceeding. Your legal team may be a good resource for helping you determine whether collections calls are legitimate.
Source: Credit.com, "How to Tell If You’re Talking to a Fake Debt Collector" Christine DiGangi, Sep. 08, 2014