Dealing with debt collectors is draining. Dealing with debt collection harassment is infuriating. Abusive debt collection calls and letters feel invasive and even intimidating. If you’re being subjected to debt collection harassment, it’s in your best interest to understand the debt collection process, the big players in the industry, and how the law protects you and empowers you to fight back.
The Big Picture of Debt Collection
When you receive a debt collection letter or call, it’s likely from a company that’s completely unfamiliar to you. To understand how that’s possible, it’s necessary to understand the lifecycle of a debt. Let’s say that you owe money on a credit card. If the debt becomes delinquent, you’ll likely receive payment demands from the company. You might even get a call from an employee of the company. Calls and letters from the creditor to whom you owe money are considered first-party debt collection.
After 6 or 12 months, the credit card company engages the services of an unrelated company – a third-party debt collector. The third-party debt collection agency collects on behalf of the credit card company, and typically keeps a percentage of the amount they collect. If time passes and the third-party debt collection agency is unsuccessful, the credit card company likely bundles your debt with other old debts, writes the debt off, and sells the debt for pennies on the dollar to debt buyers. The debt buyer then tries to collect the debt, restarting the cycle of collection letters and calls.
A Snapshot of Consumer Debt
The Federal Reserve Bank of New York tracks household debt and credit. Looking at the numbers, it’s easy to see why debt collection is such a big business. By December 2019, Americans’ debt balances totaled a whopping, all-time high of $14.15 trillion. Even after subtracting mortgages ($9.62 trillion), home equity lines of credit ($425 billion), and auto loans ($1.27 trillion), that leaves $2.84 trillion worth of debt. That number includes $849 billion in credit card debt and $1.56 trillion in student loan debt.
At the end of 2019, about 4.7 percent of all debt was delinquent, including $444 billion that was 90 days or more late. That’s the debt that ends up in the hands of debt collection agencies. Indeed, according to the federal Consumer Financial Protection Bureau (CFPB), 28 percent of Americans have at least one debt in collection with a third-party debt collector.
The Largest U.S. Debt Collection Agencies
According to the CFPB, there are about 9,330 debt collection agencies and debt buyers in the U.S. However, a fairly small number of companies account for a huge chunk of the debt collection pie. To be a big player, a company typically has multiple offices in the U.S. and around the world and hires hundreds or thousands of debt collection agents. If you’re on the receiving end of debt collection calls, there’s a good chance that you’re being contacted by one of these debt collection giants:
Account Control Technology: Headquartered in Woodland Hills, California, ACT collects consumer finance, healthcare, telecom, and utility debt. It has a profitable contract with the U.S. Department of Education to collect on delinquent and defaulted federal student loans. The company that owns ACT also owns debt collection agencies Convergent Outsourcing, Convergent Revenue Cycle Management, and Convergent Healthcare Recoveries.
AllianceOne Receivables Management: Based in Trevose, Pennsylvania, AllianceOne collects auto, healthcare, retail, telecom, utility, and consumer finance debt. It has eight offices in the U.S., one in Canada, one in Jamaica, three in the Philippines, and two in India.
CBE Group: Headquartered in Waterloo, Iowa, CBE Group collects medical, credit card, utility, student loan, and telecom debt. It has 1,300 employees in three offices in Iowa, one in Texas, and one in the Philippines.
ConServe: Based in Fairport, New York, ConServe primarily collects student loan and consumer financial debt. ConServe’s revenue comes primarily from contracting with the U.S. Department of Education to collect federal student loan debt.
Encore Capital Group: Headquartered in San Diego, California, Encore Capital Group is a publicly traded company (NASDAQ: ECPG) that is the parent company of Midland Credit Management. It has offices in seven states and Puerto Rico, along with India, Cost Rica, the Philippines, Australia, and New Zealand. In 2018, the company’s net revenue was $1.4 billion.
Enhanced Recovery Company: Based in Jacksonville, Florida, ERC collects telecom, utility, cable, student loan, and bank loan debt. It employs 5,000 debt collectors in the U.S., Dominican Republic, India, and South Africa. It also has debt collectors working from home in 13 states.
GC Services Ltd.: Headquartered in Houston, Texas, GC Services collects auto, retail, student loan, telecom, and utility debt. It boasts 30 offices across the U.S.
LVNV Funding: Headquartered in Greenville, South Carolina, LVNV Funding is a debt buyer, meaning they purchase portfolios of debt from creditors and other debt buyers. Its subsidiary, Resurgent Capital Services, collects on the debt owned by LVNV Funding. Resurgent has offices in South Carolina and Ohio.
Midland Credit Management: Owned by Encore Capital Group, MCM collects on behalf of Midland Funding, a debt buyer that purchases bundles of old debt.
Pioneer Credit Recovery: A subsidiary of Navient Corporation (NASDAQ: NAVI), Pioneer Credit Recovery specializes in collecting student loan debt. Navient owns $94.5 billion in student loans and Pioneer has a contract with the U.S. Department of Education to collect delinquent and defaulted federal student loans.
Portfolio Recovery Associates: PRA Group is publicly traded (NASDAQ: PRAA) and is one of the largest debt buyers in the country. It owns debt in more than 16 countries. Portfolio Recovery collects on that debt. PRA Group has over 5,000 employees. In 2018, PRA group had $908 million in revenues that generated $66 million in net income.
Transworld Systems Inc.: Based in Ft. Washington, Pennsylvania, Transworld Systems employs more than 5,000 debt collectors in 29 offices to recover student loan, credit card, and medical debt. It had over 23 million accounts placed in 2019 and collected more than $725 million.
Williams & Fudge: Headquartered in Rock Hill, South Carolina, Williams & Fudge specializes in collecting late and delinquent student loans. It employs more than 325 debt collectors.
Windham Professionals: Based in Salem, New Hampshire, Windham Professionals collects medical, student loan, telecom, and retail debt. It employs 400 debt collectors to work in offices in Nevada, New Hampshire, New Jersey, Pennsylvania, and Texas.
Federal Protection Against Debt Collection Abuse
If you’ve been on the receiving end of debt collection harassment, it’s important to know that you have rights under the law. The Fair Debt Collection Practices Act (FDCPA) is a federal law enacted in 1977 to prevent debt collectors from abusing consumers and to punish debt collection agencies that break the law.
Here’s a FAQ outlining the most important provisions of the FDCPA:
Can a debt collector contact people I know and ask about me?
A debt collector can call people you know in order to find out how to contact you. For example, a debt collector can contact your Aunt Mary to ask for your address. However, they can only contact Aunt Mary once, unless she asks them to call back. The debt collector can’t reveal that you owe a debt.
Are there restrictions regarding when a debt collector can contact me?
A debt collector can’t call you before 8:00 a.m. or after 9:00 p.m., and can’t call at a time you’ve told them is inconvenient. If you work the graveyard shift, for example, and you tell a debt collector not to call from 9:00 a.m. to 5:00 p.m. because that’s when you sleep, then they’re prohibited from calling during that timeframe. Similarly, if your employer doesn’t allow you to take personal calls at work, once you inform the debt collector of your workplace policy, then they’re not allowed to call you at work. Finally, if you inform the debt collector that you’re represented by an attorney, then they have to speak directly with your lawyer and not contact you at all.
Does the law protect me if a debt collector calls the wrong number?
The FDCPA protects you even if you don’t owe the debt in question. For example, a debt collector may repeatedly call your cell phone, asking for someone you don’t know – perhaps the person who previously had your phone number. Or maybe your name is Joe Jones, Jr. and the debt collector is calling for your dad, Joe Jones, Sr. You have redress under the FDCPA even for wrong number calls.
Does the law protect me if I don’t owe the debt?
The short answer is yes. There are two parts of the law that apply to disputed debts. The first is that the debt collection agency has an obligation to notify you of the amount of the debt in question and to whom the debt is owed. They must send you the notice within five days of first calling you. The second is that, once you receive the notice, you have 30 days to dispute the debt. When you dispute the debt, the debt collector can’t try to collect the money until they’ve provided you with verification of the debt.
Under the law, what’s considered debt collection harassment?
There are a number of behaviors that are prohibited under the law. A debt collector can’t use obscenities when talking to you, and can’t threaten to hurt you or destroy your property. The law says that a collector can’t call you to the point of harassment, but doesn’t specify how many calls are allowed. Typically, if they’re calling several times per week, that’s considered harassment.
What other types of debt collection practices are prohibited?
The law outlines a number of tactics that debt collectors sometimes use in order to mislead you. For example, if you owe a $1,000 credit card debt, it’s illegal for the debt collector to tell you that you owe $2,000. A debt collection agency can’t send you a letter implying that it’s a law office if it’s not. Similarly, a debt collector can’t threaten to take you to court if they’re not intending to sue you or don’t have the means to sue you. They aren’t allowed to send you documents that appear to be from the government or the courts when they aren’t actually from the government.
Can a debt collector trick me into talking to them?
Under the FDCPA, a debt collector has to tell you that they’re trying to collect a debt and that any information you provide will be used to that end. This is often referred to as a “mini Miranda” warning.
How can I get a debt collector to stop calling?
You can send the debt collection agency a cease and desist letter, telling them to stop communicating with you. Once they receive the letter, the law says that there are only two circumstances under which they can contact you: to tell you that they’re no longer collecting the debt or to inform you that they’re taking legal action against you.
Fighting Back Against Debt Collectors
One of the most important provisions of the Fair Debt Collection Practices Act is the one that gives you the ability to sue debt collection agencies. While the FDCPA empowers the Federal Trade Commission (FTC) to take action against rogue debt collectors, it doesn’t represent individual consumers. Instead, the FTC usually brings a general lawsuit and then the debt collector agrees to pay a fine and they settle out of court.
In contrast, any individual consumer can sue a debt collection agency that has violated the FDCPA. The law provides for statutory damages of up to $1,000, plus court costs and attorney fees. This fee-shifting provision levels the playing field, allowing consumer attorneys to take cases without charging their clients because they know that the debt collection agency will pay their fees.
The bottom line is that, if you have experienced debt collection harassment, you have rights. You deserve to assert your rights and receive compensation for the hassle.