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Debt Collection Business Is Booming in Sour Economy

[Dec 2, 2008.]

 

The debt collection business is booming as more people fall behind on payments for personal loans and types of debt. Each year debt collectors put more than $40 billion back into the U.S. economy, according to ACA International, a trade group for the debt collection industry.


According to CNN Money, growth of debt collections of personal loans and other debts  is partly due to 2005 changes in the bankruptcy law that make it more difficult to erase debt. The debt collection process also has become more efficient. Some consumer debts are packaged together and traded between firms, so it’s more likely that older debts will resurface.


The troubled economy is making it harder for many people to make monthly payments on everything from small personal loans to credit cards to mortgages. As a result, David Polino, president of the Better Business Bureau, told CNN Money that the collection industry is likely to see significant growth.


“It’s going to take time to see a real spike in collections," he said. "But, it's obvious that we have a national economic crisis on our hands and that's going to force those that are behind on their payments into collections."


If you are contacted by a debt collection agency because of an unpaid small personal loan or other debts, it’s important to know your rights under the Fair Debt Collection Practices Act.




  • Debt collectors can only call between 8 a.m. and 9 p.m.

  • Collectors can’t call you at work, but are allowed to contact your employer to verify employment.

  • Collection agencies can’t disclose information about your debts to your family, friends, or associates unless you have authorized that in writing. However, they can ask for your phone number, address, or place of employment.

  • Debt collectors may not threaten you with violence or harm, or use profanity.


 If you have an attorney helping you settle your debts, collection agencies must contact them instead of you.


 

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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