Thursday 30 July 2009

Bill collector abuses and how to deal with them

Collection agency abuse and harassment is unfortunate but it is a common occurrence. In today's economy, one can lose their job at the drop of a hat. To make matters even worse, consumers who face economic difficulties through no fault of their own can expect collectors to ring their phones off the hook demanding payment.

A collection agency works for the creditor in return for a fee or a percentage of any money collected. In-house collectors that are affiliated with the original creditor work on behalf of the company directly. Because the creditor has taken a loss on the debtor’s account or because the debtors are late with making payments, this negative information may show up on their credit reports.

Even after such consumers financially recover, they come to find that their credit reports have been unduly damaged by collection reports. For example, in Canada, a rating of 9 is the lowest rating you can get in your credit report and yet, despite the fact that your credit rating has always been excellent, one collection agency rating can place you at the 9 level since anything sent to a collection agency rates a 9 rating. I will advise you how to correct that problem later in this essay.

It is indeed unfortunate that some collection agencies have terrible people working in them. Some were bullies in school and later in their jobs so it follows that they will bully those who they phone and make demands for money. Before I get to these abuses, I will give you some idea of how collection agencies work.

I speak as an authority on this subject. I worked for several collection agencies in the last century and was the collection manager of one of them. Some acted properly but some didn’t. Collection agencies are required to be licenced just as the collectors are and for the most part, the government keeps them in line. But sometimes, bad agencies and bad collectors slip through the cracks.

Before I go further, let me say that there is a need for collection agencies. There are many deadbeats in society who have the means but not the desire to pay their debts. The creditors are not in the collection business (although I worked for a furniture store and later an electronics store that hired me to collect their debts) so they call on third parties (collection agencies) to collect their debts for them. Collection agencies generally have skip tracers who will in many cases, locate the deadbeats so that the collectors can go after them.

I have always maintained that collecting money from people is an art. It comes down to salesmanship. The collector has to sell the idea that it is in the best interests of the debtor to pay his or her debt. When I worked in the field, I was well aware that many of the debtors were not deadbeats and shouldn’t be treated as such. However, they still owed the money and if they were working, they had to pay some of their earnings towards their debts.

Many of them went to Credit Counselling for help. Those agencies play an important role with respect to debtors paying off their debts. They meet with the debtors and go over their finances and plan their finances so that a portion of their earnings can be applied to their debts.

If a client came to me, I insisted that they bring me a copy of their pay stub, their rent or mortgage receipts, their hydro and heating bills along with their telephone bills. I knew what the courts accept as food expenses for various numbers of people so I worked out repayment plans with my clients.

Once I was in possession of the documents and had worked the repayment plans that met with my client’s approvals, I then contacted the collection agencies. If they sent me a confirmation letter saying that they would accept the payments as proposed and also freeze the interest, I sent them copies of the documents.

The copies of the documents my clients gave me including their pay slips. Once I had the collection agencies’ commitments to my client's proposal, I included copies of their pay stubs as an incentive for my clients to keep their promise to the agencies that they would faithfully make their payments because if they didn’t, the agencies would know where they worked and sue them and garnishee their wages. Only one of my clients failed to keep up his payments.

If the agencies refused to accept my client's proposals, (and that was rare) I insisted that they sue my client in the small claims court. The Rules of the court permits the defendants to file a request to pay the debt over a period of time. A hearing is conducted and if the judge is satisfied with the proposal, he would order that the payments be paid to the court and as long as my clients made their payments on time, no judgment was signed against them. Not only that, but as long as my clients were keeping their payments up to date, the interest was frozen, even when the payment schedule lasted for several years.

If any of my clients had credit cards, I insisted that they give them to me and permit me to cut them up in front of them. If they refused, I refused to assist them. If they cooperated, I cut up the cards and then I wrote a letter to each of the credit card companies saying that my client has run into financial problem and wishes to return the cards and that later, my clients would contact them again when they were in a better financial position to handle the cards.

Credit card companies don’t wish to deny their customers the use of their cards on a permanent basis unless they are convinced that they are deadbeats.

In the agency where I was the collection manager, I often got calls from banks whose debtors we were collecting from with respect to their overdue cards. The debts had been paid and the banks wanted to know how they paid off their debts and if their payments were regular. The reason for their inquiries was that they were going to give them new cards if they paid their debts on time.

When I was the manager of a collection agency, I insisted that my collectors make the same promise to their debtors if their debtors kept up their payments. However, if they missed two payments, then the accrued interest would be added to the debt.

On one occasion, I had a debtor who I told that I would cancel the existing interest and would freeze future interest if he made his payments on time. He didn’t make a payment. A month later, I began calling him at supper time but every time I called for him, his wife said he didn’t want to talk to me even though he didn’t know who was calling. Each day I told her that I was fining him a hundred dollars each time he refused to come to the phone. It didn’t get a response from him at all. I wasn’t fining him of course. What I was doing was adding one hundred dollars of the previous accrued interest each day he refused to come to the phone until all of the accrued interest was added to the debt. It came to nine hundred dollars in interest. Then I sued him. The trial didn’t take place for a year. At his trial, the judge ordered that the accrued interest that was added was to be part of the debt along with another three-hundred dollars in interest that had accumulated while he waited for his trial. Upon judgment, I then garnisheed his wages and was unsympathetic when he complained that I was creating a hardship on him and his family. If the deadbeat had worked with me on the reasonable repayment plan we had agreed with, his debt would have been paid less the interest I was stuck him with.

I had another debtor whose bank account was still with the creditor who wanted us to collect on her unpaid credit card debt. We had judgment against her and after getting the judgment, I contacted her and asked her to make her payments directly to us and we worked out a repayment plan. She didn’t keep it. I slapped a garnishee against her bank account and the bank that was our client was happy to take the money from her bank account in honouring the garnishee.

Back in the 1970s, our agency had a debtor who was 80 years of age. We had judgment against her but she refused to show up for a judgment debtor’s examination. Normally that would mean that she would be arrested and sent to jail for three days. However, because of her age, the judge refused to sign the order. I knew she had a bank account so I spent approximately seven hours calling all the banks in the area telling them that I had a cheque from her (I lied) but I wasn’t sure if it was any good. I finally found a bank that said that her account was in good standing and that it would honour her thousand-dollar cheque. I then garnisheed her bank account. When she learned that the money was gone and that her account was closed, she phoned me. I won’t tell you what she said to me but I was surprised to hear so many different expletives. All the time she was screaming at me, there was a sardonic smile on my face.

Truly one of the great coups I performed as a collector of accounts was when I had ten thousand dollars seized from the debtor. He owed fourteen thousand dollars to one of our clients that was a bank. He didn’t pay any of it back. The bank had a judgment against him for the fourteen thousand dollars plus interest but they couldn’t collect it because he skipped and they had no idea where he was. The bank turned the account over to us but alas, we couldn’t find him either.

Well as luck would have it, he showed up ten years later in one of the bank’s branches. He wanted to borrow a hundred thousand dollars. The bank said that they would need a ten-thousand dollar deposit as a sign that he had at least some money. Two days later, he showed up at the branch with a ten-thousand dollar money order made out to him. The bank said that they would hold onto the money order temporarily while they decided as to whether or not they would give him the loan.

The banks head office contacted me and told me what had occurred. I learned from them that the branch was in Whitby, Ontario but the bank that he borrowed the money was in Toronto. This meant that if I wanted to grab the money, I could send a Toronto sheriff’s officer to a Toronto branch to pick up the money since he and the court didn’t have jurisdiction in Whitby. The branch in Whitby told the deadbeat that one of their Toronto branches would give him the money and then he was asked if the money order could be taken by a bank courier to the branch in Toronto. The deadbeat said that would be OK. He was told that it would take five days to process the loan and that he could pick up the loan and his money order from the Toronto branch then.

I immediately contacted our law office and they prepared the execution (seizure document) and filed it in the court and then took the copy directly to the sheriff's office in Toronto. The money order was seized at nine the next morning by the sheriff’s officer and at ten in the morning, the deadbeat showed up expecting the hundred thousand dollars and his ten-thousand dollar money order back. I would have given anything at that moment to be a fly on the wall of the manager of the bank when the deadbeat was told that not only would he not get the loan but that his money order had just been seized by the Sheriff’s Department. To make things worse for him, he also owed the other bank he borrowed the ten thousand dollars from for a money order he no longer had. Further, we now had his place of employment and since he was a car salesman, I could garnishee 100% of his earnings. After his first garnishee deducted his full pay for the month, he contacted me and made arrangements for monthly payments. He kept them up and on time. With the accumulated interest and the ten thousand dollar loss, he paid dearly for being a deadbeat.

I remember in the 1960s, a woman telling me that if I called her once more, she would come to my office and cut my heart out. I called her again and asked her what time we could expect her. She hung up. I called back ten minutes later and her small daughter answered the phone. She said that her mother had gone downtown to meet a man. I immediately called the police. Two big cops showed up and they waited in an ante room next to the door to our office. Half an hour later, she showed up and asked for me. The two cops came out of the ante room and searched her and found a butcher knife in her possession. She was arrested and charged with carrying a dangerous weapon and threatening.

One time a debtor with a tiny squeaky voice phoned me at the office and threatened to beat me black and blue. I figured that anyone with a tiny squeaky voice is hardly a threat to me so I told him to come if that was his pleasure. He came. He was over six feet tall and weighed more than three hundred pounds. He reminded me of some of the muscular wrestlers we see on TV. The difference between rape and seduction is salesmanship. I was always good with my command of the English language and that being as it is, I am a good salesman. I sold him on the idea that beating me black and blue wasn’t going to reduce the debt and that if he worked out a repayment plan with me, we would both benefit from it. He agreed and he kept his payments up and I managed to keep my bones intact.

One day, we had a debtor who was a short man and approximately fifty-years old. One of the other collectors threatened him with court action. I told the collector to be careful as I suspect that the man was a gangster. He wasn’t of course. I was just having fun with the collector. As fate would have it, the man showed up carrying a violin case with him. Apparently he had just bought a violin for one of his grandchildren. When the collector went into the ante room to meet with him, the debtor began to open his violin case to retrieve something. The collector thought the man was carrying a machine gun in the case and immediately fainted right on the spot.

Another time I was collecting money off of a member of the adult son of a crime figure. I was mindful as to who he was so I was careful as to what I said to him. I even apologized to him for having to sue him but I said it was my job and my responsibility was to my client and not to him. He accepted that without any qualms and eventually he paid the debt the debt in full.

One day a woman debtor returned my call and after I asked her to make payments on her debt, she said that she didn't have any money. When I insisted that she make a payment, even if it was a minor payment, she asked, "What do you want me to do to get you the money, rob a bank?" I replied, "Madam, I don't care how you get the money." Would you believe it, the very next day, she went into a bank and held it up. She was caught shortly after that when she was escaping riding a bicycle on the side walk in front of the bank. A nearby kid has just drop a banana peel on the sidewalk and her front wheel skidded on it and she fell to the sidewalk. She was immediately pounced on by a police officer nearby and arrested. For weeks, I was in total fear that she had told the police that I told her to rob a bank. My fear was for naught but we never did get any money from her so we closed her file.

Another time I spoke to a man who was heavily indebted and tried to get him to make a payment, even if it was a small payment. He started to cry so I said, "Well, lets deal with this at another time." About a week later I phoned his number and his wife answered the phone. I asked for her husband. She began to cry. I asked her what was wrong. The next voice I heard was that of a police detective. Apparently the debtor had hanged himself earlier in the morning. I felt terrible and talked the creditor into closing the account. About two months later, a cheque for the debt from his estate arrived in the mail.

Now I will return you to abusive collection agencies and collectors.

This abuse stems with the employees of abusive collection agencies of which some of them are poorly trained and are not advised by the laws that protect consumers. They know that they will only receive their commission if the debt is collected, so they are willing to resort to any means possible to collect the money owed to their clients.

I remember one of the collection agencies I worked for that had an unusual method of collecting money. We were required to remain standing while we spoke on the phone to the debtor. The theory of the agency was that we would be angry having to stand all the time the debtor was telling us why he couldn’t pay. The debtor would sense our anger and want to pay up lest we get angrier. I was angry alright. I was angry at the agency that made me do this stupid thing. I quit in the first week I was there. Another agency insisted that we demand the entire balance of the debt right away. If a man owed ten thousand dollars, we were to ask, “What time can you be in my office today with the ten thousand dollars?” A month was the most I could take working with that agency. When I was the collection manager of another agency, I taught my collectors to approach the debtor’s debt in a different manner. They would ask the debtor; “How much of that debt can you pay on your next payday?” That invariably got the debtors into discussing their financial situations and during those conversations; a repayment plan was worked out for them.

Before I retired from practicing law, I had a number of clients come to me complaining that they were being harassed unfairly by collectors who were phoning them. If I was satisfied that the abuses were legitimate, I contacted the collection managers and advised them that if my clients got another call from the agencies, the collectors, the collection managers and the agencies would be sued in the small claims court for $10,000. That generally put an end to the abuses. In one case, the matter was taken to the small claims court. The court awarded my client $700 plus costs and my fee. He had only received three abusive calls late at night. In Ontario, it is against the law to phone a debtor late at night.

I remember reading an article in which a collection agency in California had a collector who changed his first name to Marshal so that every time he left a message for a debtor to call and the debtor returned his call, he would answer with, “Marshal Davis here”. The debtor thought he was dealing with a federal marshal and when told of the debt, he was most willing to settle. That practice was finally stopped when the government stepped in.

One of the problems facing collection agencies is when they don’t have the home phone numbers of the debtors and are not sure if the debtors are still living at their last known addresses. I solved part of that problem when I would spend my Fridays going to all those homes where I had mailed letters and the letters weren’t returned and I didn’t get a response. I was able to establish for the most part, that they lived there or had moved. I hired a friend of mine who weighed three hundred and thirty pounds to visit each of those homes to deliver the letters personally. He would then ask, “Do you wish to make a payment?” Often, they would give him a cheque made payable to the creditor. I finally had to put an end to this practice because the registrar said that it could be construed as being intimidating.

Collection agencies are known to call several times each day, sometimes within the time frame that's allowed by the law, and sometimes not. It doesn't matter whether you answer the phone or let the machine get it; they will continue to call, and sometimes they use illegal and abusive tactics to attempt to collect the money they're owed.

Coming into force in June 2006, the Collection Agency Regulation adopted in Ontario the nationally ratified list of prohibited practices, which included: banning the use of threatening or profane language, strengthening limits on contacting employers, limiting contact with debtors who have referred the matter to their legal counsel or who suggest the matter be taken to court and the Regulation clarifying definitions of harassment. To help address the issue of consumer complaints about collection agencies, the regulation also provides a specific limit of no more than three calls to a debtor in any seven-day period.

One of my clients came to my office with a tape recording he had made of a conversation he had with a bill collector who continuously screamed and used profane language during the conversation. We made a copy of it and sent it to the registrar of collection agencies. My client never received another phone call from the collector of the collection agency he worked for.

When the abusive collection agency calls repeatedly, tell them very clearly that you do not want to be contacted at work or at home again. It is usually best to ask to speak with a supervisor, and to make your request with them. Ask that your request be notated in their computer system, and inform them that further steps will be taken if you continue to receive calls. Follow the telephone conversation with a letter. This way, if the abuse continues, you have written proof that you sent them a letter asking them to desist. If your first contact with a collector is by telephone, tell the caller that you want all future contact in writing rather than by phone. You can also instruct the collector not to call you at work or at all if that is your choice. I should add that in Ontario, it is against the law for a collector in a collection agency to discuss the debt of an employee of a firm with his employer unless the creditor has judgment and has issued a garnishee.

At the first contact from a collection agency, start a file. Your file should include: dates and times of all phone calls received, a brief reference to what was discussed, the name of the collector making the call, and any offensive or threatening statements made by the collector and most important, when you told the collector that he was to write you in the future and when you told him that you either didn’t owe the money or that you couldn’t pay the debt. If you have to take him and his agency to court, you have evidence in written form that will match his records as to when he made the calls.

Sometimes, a bill collector doesn’t have to be licenced by the government. When that happens, there is a risk of abuse. Let me give you an example that will really shock you.

I had a chance to look into the past of a man who operates Cando Credit Consulting, a firm that was at that time located in Brampton, Ontario by reading his past and found a Toronto Star article written about him that was published on July 12, 2003. Let me quote from that article; "I don't do anything illegal," Cannon says with a laugh. "I do unusual things — all legal but borderline crazy sometimes. Like the time one of his clients needed to evict delinquent tenants in order to develop his property. "They were 1 1/2 years in arrears," Cannon says. "The sheriff's office hadn't come over, so when they were out, we loaded up all their stuff with a moving company and put it in storage; phoned the humane society who took their three dogs, and then bulldozed the house — end of problem."

The man also suggests posting flyers on hydro polls and on windshields of cars near the debtor’s home and workplace, addressing the debtor by name and reminding him of the fact that he owes money. Aside from being convicted of being a nuisance, the author of such a flyer can be successfully sued for invasion of privacy and also for any loss of income the alleged debtor might have earned, had the flyers not been posted. Further, the debtor, if he really doesn’t owe the money will not have to prove that he suffered damages because anything published in printed form by anyone that is false, leaves the author of the flyers liable to damages without proof of damages being required as evidence in court and no doubt punitive damages that can run into thousands of more dollars will also be awarded against the author of the flyers.

In the article, he describes going to a golf course and yelling in a megaphone to one of the persons on the golf course, “Did you pay your caddy yet or are you going to stiff him like you stiffed my client?” Anyone who does that could find himself in serious trouble if it turns out that the alleged debtor really doesn’t owe the money as determined by a court of law. If his fellow golfers hear that false allegation but believe that it is true and then decide not to do business with the alleged debtor, the man who hollered in the megaphone could be successfully sued for defamation of character and end up paying thousands of dollars in damages.

This man even suggested that creditors should send small claims court documents to a debtor’s place of worship. That is really sinking to the depths of depravity. Would any creditor do such a thing knowing that if his actions became public, he would be condemned by his contemporaries. He even suggested that creditors should contact the debtor’s suppliers and tell them that the alleged debtor isn’t paying his bills. If there was ever grounds for a suit in the Superior Court, that certainly is a good one.

The trouble is that it is not a member of the Ontario Society of Collection Agencies because the firm isn’t classed as a collection agency. In fact, he claims he is an alternative to collection agencies and for this reason, the Society and the government can’t step in and do something about the firm and its antics. But private citizens who are abused by this firm can sue if they feel that the firm’s methods of collection go beyond what is acceptable.

My final message to my readers is this. If you owe money and have fallen behind in your payments, contact the creditor and offer a repayment plan. Only once did I become aware of a creditor refusing the repayment plan of a debtor. She owed eight hundred dollars on a TV. The creditor demanded the entire eight hundred dollars all at once. I spoke to the creditor on behalf of my client and said that the most she could pay was twenty-five dollars a month as she was on welfare. The collector in the department store said that it was all or nothing. The store got nothing and eventually closed the account.

If a collection agency contacts you about a debt and you owe it, you have to deal with the agency. If you call the creditor, they will probably tell you that they don’t have the file as it is in the hands of the collection agency. Sometimes however, it is better to contact the creditor directly. Recently, I got a letter from an American collection agency about a debt I didn’t think I owed. I called the toll free number of the creditor whose office was in England. The man I spoke to agreed that I didn’t owe the money and sent me an email confirming this. He said that he would contact the collection agency and inform them of his decision.

If a bill collector contacts you on the phone and speaks to you about an outstanding bill and he or she is polite, be polite in return. Reasonable people can generally solve problems when they are polite to one another. Remember, bill collectors are doing a necessary job. If people didn’t pay their bills, those of us who do would end up having to pay more for the goods we buy in order that the creditors can recover their losses.

I promised that I would tell you how to save your credit rating even if you have a 9. The manner is quite simple. Send a letter along with proof that the debt is paid in full. The letter will be placed in your file and any creditor who is considering your application for a loan will have the opportunity to read your letter and the proof you have sent stating that the debt is paid in full. If you have no other nines in your file, you should have no further problem in getting a loan providing you are not asking for a million dollar loan without collateral.

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