Debt collection is a multibillion-dollar-a-year industry that affects thousands of people in the United States every year, according to Marwan Kashou.

Debt collection is a multibillion-dollar-a-year industry that affects thousands of people in the United States every year, according to Marwan Kashou.

And he would know. As president and CEO of Fidelity Credit Management, a national debt collection company based in Southern California, Kashou's people are just a few of the many collectors calling people in debt, trying to recover money for credit card companies, hospitals, doctors' offices, and a number of other business that need to be paid.

"I know the reputation collections agencies have, but a good collections agency doesn't just demand payment and make threats," Kashou said. "What we pride ourselves on is working with people to figure out how they can get their debts paid off. Sometimes people we call claim we're rude because they just don't like that we called them. We record most of our conversations, and everyone has information at their desk explaining how to handle a call, what they can and cannot say, and so on. Our goal is to get the debt paid - we aren't out to 'get' anyone."

Scott Maurer, on the other hand, is a an attorney and clinical professor for Santa Clara University of Law's Alexander Community Law Center. As a specialist in consumer protection, he's very familiar with cases concerning debt collectors calling a consumer, making threats and breaking consumer protection laws - the kind of cases that have earned debt collectors a bad reputation and have put collections agencies at the top of consumer-complaint lists at both the Federal Trade Commission and Better Business Bureaus, Inc.

"Being insolvent is not any kind of crime, so debt collectors don't have license to harass people," Maurer said. "I think there are three reasons for a collections agency to contact a consumer. The first is to advise them that the debt exists and how much money is owed. The second is to explain their options of payment. The third is to advise them of potential consequences of continued debt. Beyond those three reasons, I can't think of any reason a debt collector should be calling a consumer."

With the many different kinds of debt, state and federal laws about debt collection practices and the inherently sensitive nature of the topic, it's easy to feel buried by details. What holds true for one kind of debt may not hold for others. In general, though, for common debts such as credit card debt, not only do consumers have rights, but so do the debt collectors.



DEBT COLLECTORS' RIGHTS

A collections agency must first inform a consumer that that person owes a debt by mail. In the letter, the agency representative must explain what and how much the debt is. After the letter is sent and the debt remains, the agency can contact the consumer by phone.

"I think there are three kinds of people we end up calling," Kashou said. "First, there are the people who are genuinely trying to get out of paying for something. Next, there are the people who are just having some cash-flow problems of varying degrees, and they just need us to work with them to figure out how to get the bill paid in a timely fashion. Finally, there are the people who are just confused by the debt. Maybe they thought insurance was going to pay for something, or they moved and forgot to change the address on a bill - those kinds of simple mistakes that are often easily sorted out."

Though debt collectors may have to be tough at times, Kashou explained, they are never allowed to be rude. Not only is it illegal, but it often impedes the process of getting debts paid.

"Often, it's the other way around, I find," he said. "The people we call will curse us and hang up on us. That doesn't leave us with very many options if we can't talk about how to get the debt taken care of. If people talk to us, we can try and work things out. If someone owes $5,000 and wants to pay $10 a month toward it, we can't do that. But we can try to find a payment plan that will work."

When collections agencies have exhausted all options of contacting consumers and working out payment plans, and the debt still remains, then the agency can turn to the legal system.

"We can't threaten anything we won't follow up on, we can't use abusive language, but debt can end up in litigation," Kashou said. "If the debt is legitimate, you have an obligation to pay. Debt costs companies money, and those costs get passed on to consumers, and that has an effect on the overall economy. To prevent that, we can take a debt through the legal system. People can get sued to do a lien or garnish wages. But that is almost always the last resort. We're part of the grease that keeps the economic engine running."

Despite his company's efforts to follow the Fair Debt Collection Practices Act - a legal act that outlines what agencies can and can't do - Kashou said he wasn't surprised there are so many complaints about collections agencies.

"It would stagger you to know just how much debt there is in this country. The number of complaints are really just a tiny percentage of all the business we do. It's all relative," Kashou said. "Think about it - just one phone company can assign $500,000 of delinquent accounts to a collections agency in just one month. That's just one company and one month. Multiply that by all the phone companies and 12 months, and you have an unbelievable amount of debt. With such a huge amount of debt, you're going to get a lot of complaints compared to other companies that don't deal with nearly as many consumers as we do."



CONSUMERS' RIGHTS

When contacted by a debt collector, it's important to keep records. Whether an agency is guilty of harassment or if their actions are reasonable is often determined on a case-by-case basis, Maurer said.

"Can a debt collector call you every day? No. What new information could they possibly expect to get from you?" he explained. "They can certainly call you to work out how to pay the debt. But they don't have the right to call you continuously just to be a burr. If they don't have a legitimate reason to call, even if it's infrequently, that's not appropriate."

If a debt collector calls, and the consumer tells the caller he has to pay his rent before he can put money toward the debt, and tells the collector to call back on a certain date, the debt collector needs to honor that reasonable request, Maurer said.

"Let's say I tell the collector, 'Look, there's no possible way for me to give you any money (for two weeks). In two weeks I can give you half, so call me back then,'" he explained. "In this case, the collector knows there is no point in calling until that date two weeks from now. To call before then would be pointless. I've already said I can't pay anything before then."

Consumers can also demand that debt collectors cease communication, but the request must be made in writing. Maurer suggests sending the request certified mail with a return receipt request to prove the letter was sent.

Debt collectors are never permitted to use abusive or obscene language. They can't tell someone to do something illegal, such as sell drugs or prostitute themselves, to get the money for the debt. But these are all things Maurer said he has heard debt collectors have said - he even has recordings of such conversations.