Confessions of a Debt Collector

There’s at least one business making a killing right now: debt collection. With the credit-card default rate expected to surge to 10% in 2009 – double the average rate over the last decade – collectors have plenty of phone calls to make and plenty of illegal scare tactics to use.

Fred Williams, a reporter in Buffalo, N.Y., took a leave of absence from his job to work as a debt collector for three months. In that time, he was privy to all the dirty tricks – from lying to peoples’ family members to get them to pay up to recommending they skip mortgage payments to pay a credit-card balance. Some debt collectors would identify themselves as ‘fraud investigators’ on the phone, Williams said, in an effort to imply that they were connected to law enforcement.

This kind of thing happens all the time in the world of debt collection, according to Joe Ridout of watchdog group Consumer Action. The law is so antiquated that even if collectors are civilly penalized, the fine is only $1000 – the same it was when the law was enacted in 1970. Nothing more than the cost of doing business these days.

There are things that collectors cannot do by law:

-They cannot call you before 8 a.m. or after 9 p.m.

-They cannot threaten to have you arrested or charged with a crime if you don’t pay

-They can’t continue to call after you have indicated you want them to stop

-They can’t call friends, family members or colleagues repeatedly in order to get you to pay (they may call your acquaintances once in order to track you down though)

Sometimes, the debts they say you owe are bogus or mistakes. If you doubt your debt, ask for the request in writing from the collector. After you receive this, you have 30 days to make them prove it (debt validation). You should also request your credit report from all three agencies to see if they match up if you're skeptical, which you can do for free only at