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Consult an attorney when dealing with aggressive debt collectors

A collector who threatens to sue over an unpaid debt may be in violation of fair debt collection practices laws. Also, some companies other than lenders may request your Social Security number to check for creditworthiness.

March 20, 2011|Liz Weston | Money Talk

Dear Liz: I had a mobile home that was repossessed in 2003 after I was unable to make the payments. In 2005, I was contacted by a debt collector saying that I owed $20,000. They were very aggressive and threatening, saying that they could sue me. I told them I did not have that money, and they kept harassing me, telling me that I could borrow it from my bank. I finally agreed to send them $50 a month. I just received a letter stating that I have not met my contractual obligations and if I don't take care of the balance, I could be sued. This surprised me since I had been sending $50 a month. I called them and they demanded the full balance, about $17,500. I asked them if they would settle for $5,000. They said no. To settle for any amount, they said I would need to send them two months' worth of bank statements, my last two income tax filings and my last two pay stubs. I said no because I really didn't think they needed all this information. They said that anyone who refuses to send these details usually has the money to pay. Now someone at work said that since I sent them $50 a month, I inadvertently reopened the statute of limitations (the existence of which I was not aware). So all in all, I really don't know what to do. It seems I did everything wrong.

Answer: So you're surprised that a "very aggressive and threatening" collector suddenly changed the rules on you? It's time to wise up and realize you're not dealing with an ethical company.

You need to make an appointment immediately with an attorney who is familiar with the credit and collection laws of your state. You can find a referral through the National Assn. of Consumer Bankruptcy Attorneys at Many of these attorneys offer free or discounted initial sessions.

All too often, rogue collection agents violate federal and state fair debt collection practices by threatening to sue when they have no intention of doing so or when they are legally barred from filing lawsuits. Your state's statute of limitations limits how long a creditor can sue over a debt. In some states, people who lose homes to foreclosure also are protected against lawsuits over any remaining mortgage debt.

But your payments may well have extended the statute of limitations under which the collector would be allowed to sue you. That's why you need an attorney to advise you. You also might want to consult, a site run by debt expert and consumer advocate Gerri Detweiler, for more help in dealing with collectors.

You were smart not to send the financial information they demanded, because none of that is necessary for a settlement discussion and because the data could easily be used against you. If they're unethical enough, they could use the bank account information to raid your accounts.

Dear Liz: I want to get satellite television, but the company wants my Social Security number to check my creditworthiness. I dislike giving out my Social Security number to anyone in this climate of identity theft. Are there any laws that can help me?

Answer: You're smart to be careful with your Social Security number, but if you want this company's service, you'll probably have to cough up the number.

Lenders are not the only businesses that want to check your creditworthiness before they'll do business with you. Cellphone carriers, landlords, utilities and employers often want a look at your credit reports or credit scores as well. Some states have passed laws restricting how credit information is used in certain circumstances, but in many cases, individuals have just two choices: comply with the request for Social Security numbers or don't do business with these companies.

That's not to say you should hand out your number to any business that asks. If the business isn't establishing a credit relationship with you, and isn't in financial services — which are required to have your Social Security number to report tax information to the IRS — you should find out why they're asking for the number and consider declining.

Liz Weston is the author of the upcoming book "The 10 Commandments of Money: Survive and Thrive in the New Economy." Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon Blvd., No. 238, Studio City, CA 91604 or via the "Contact Liz" form at Distributed by No More Red Inc.

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