
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, December 26, 1994                   TAG: 9412270044
SECTION: BUSINESS                    PAGE: A6   EDITION: METRO 
SOURCE: MAT POFF
DATELINE:                                 LENGTH: Medium

HERE'S WHAT COLLECTION AGENCIES CAN AND CANNOT DO

Q: Sometimes, things happen beyond our control and we're forced to let one bill go in order to take care of another more important responsibility such as rent, utilities or child support. It doesn't make you a bad person. Times are hard, and money is tight.

What is the best way to handle a collection agency that calls and tries to make you feel like a lowlife or criminal? Is the agency under any restriction as far as how often, the time of day or day of the week it can call? Is it allowed to harass you with phone calls or tell you that "you've just bought yourself a lawsuit" when you tell the caller you just can't afford to send them the $100 a month and he or she says nothing less is acceptable? Does the agency have to accept an amount I can afford as long as I attempt to send something?

I've heard that by the time a company turns a loan over to a collection agency, they've already written it off to a bad-debt account, and the collection agency actually keeps a much larger percentage of what is collected.

For those of us who want to improve our somewhat tarnished credit record, how do we make it shine again?

A: The collection agency keeps a large percentage of anything it can get, or it may already have purchased the debt at a deep discount. Nevertheless, you still owe the full amount of the bill unless you can negotiate a lower payoff.

Frank N. Perkinson Jr., a collections expert with the Roanoke law firm of Perkinson and Perkinson, said a third party (such as the collection agency) cannot institute a suit against you in its own name. It would have to go back to the creditor to have the creditor sue you. That is not to say a lot of collusion doesn't go on, with the collection agency doing the actual filing in the creditor's name.

Perkinson said creditors can accept any money you pay them and still take you to court. An exception would be an installment contract in which payments are still being made. But if the debt is an open account, or if all of it is due, you can be sued for the entire amount. The creditor does not have to accept installments at all, much less in any amount.

Under the Fair Debt Collection Practices Act, Perkinson said, the collection agency cannot call you at unreasonable times of the day. Reasonable time is not defined by the law, but it is generally considered to be 8 a.m. to 9 p.m., Perkinson said. An exception is made for people who work nontraditional hours.

The agency cannot call another person to report your delinquency, he said. And the collection agency cannot call you at work if such a practice is prohibited by your employer.

Perkinson said the agency cannot talk to people outside your household, communicate by postcard or show on an envelope that you are delinquent in a debt. Exceptions to these rules are communications to lawyers, credit reporting agencies and the like.

You can advise the agency in writing to terminate contact, but then you would probably be sued.

The Fair Debt Collection Practices Act applies to collection agencies, but not to the actual creditor. Creditors are not bound by the restrictions.

You will have a hard time making your credit rating shine while you still owe money. Slow payments will stay on your credit report for seven years. You must pay off your debts by budgeting strictly. If you need help doing this, contact Consumer Credit Counseling in Roanoke for advice on handling your debts. The phone number is 563-0076.

When it is time to start rebuilding your credit, you might begin with a store credit card. They are easier to obtain because the store retains direct control over every use.

Or, you might try to obtain a secured credit card. That means you would deposit a certain amount of money in a bank savings account, and the bank would issue a card with a line in that amount. You could not withdraw the money unless the account was paid in full, but you would earn interest on the money. Signet Bank offers such a program.

You might also build a favorable history through buying a car or furniture on the installment plan, then make regular payments absolutely on time. But don't go into debt unnecessarily just to create a new record.

by CNB