By Mark E. Henze


Are you currently the subject of collection efforts? Sometimes the exaggerated claims and threats of collection agencies cause people to panic and file a bankruptcy case without giving proper consideration to timing and planning options. Many people who file on their own without the help of an attorney, do so under the mistaken impression that they must file immediately and do not have the time to gather together the fees necessary to retain counsel. Often, the panic leads to mistakes and causes irreparable harm. While collection agencies do have tools that can eventually yield results and make one’s life miserable, if you know your rights, you can normally stall for long enough to properly plan.

The following are some things to keep in mind when pursued by creditors:

1. Unsecured creditors can take NO action to forcibly take money from you until they have both taken you to court and obtained a Judgment from the court when they win their case. Note that some secured creditors (secured by monetary accounts, vehicles and real estate) may be able to take back their collateral prior to bringing a court suit.

2. When a creditor or collection agency attempts to collect a debt, they must provide certain disclosures to you upon request. These include the following:

• The amount of the debt that allegedly remains owed,

• The name of the original creditor (who provided the original credit). Remember that some collection agencies are collecting on behalf of the original creditor, while some have actually purchased the account from the original creditor and are now collecting for themselves,

• Documentation to verify the validity of the debt if it is disputed by you.

3. Procedurally, a collection agency typically begins its efforts with an introductory letter that informs you that they are attempting to collect a debt and that any information it gathers from you or other sources will be used for that purpose. At this time, it is recommended that you follow up with a letter requesting verification of the debt. At that point, the collection agency may not continue their collection effort until the debt information is confirmed with the original creditor and the verification information has been sent to you. Once you receive this information, you have thirty days to dispute the debt in writing to the collection agency.

4. Under the Fair Debt Collection Practices Act, a collection agency may not do any of the following:

Contact any person other than you, your attorney or a credit bureau for any reason except in an attempt to locate and discover how to contact you. Obviously, if you have previously written to request verification or to dispute the debt, they have no reason to be “locating you.” Should a collection agent contact other people, they must state their personal name and cannot indicate that they are attempting to collect a debt. They may only state that they are confirming or correcting information about your whereabouts. They may not contact another person repeatedly unless the have good reason to believe that the person’s earlier response was wrong or incomplete. Finally, they cannot use any form of written communication that discloses their collection motive or offer incentives to those who disclose information about you.

A collection agency cannot contact you without your express permission if you have retained legal counsel and you have informed the agency of that fact. Note that if they contact counsel and discover that counsel has not been retained, they will immediately recommence calling you.

A collection agent may not contact you before 8:00 a.m. or after 9:00 p.m. In addition, they may not contact you at work if they have been informed that your employer does not allow you to take personal calls while on the job. A collection call IS NOT an emergency call!

Collection agents may not call repeatedly or contact you in any way without specifically identifying themselves as bill collectors. The collection agency may not threaten the use violence against you or use obscene or profane language. They cannot threaten or act to publish your name on any private or public posting for the purpose of indicating that you are not paying your bills. Collection agents must be truthful. They may not lie about your debt, their identity, the documents they have in their possession, the amount owed, or the consequences of your failure to pay the debt.

They cannot send documents that mimic legal filings or court papers or otherwise suggest that legal proceedings are underway unless they have, in fact, been commenced.

Collection agents may not solicit payment by post-dated checks, threatening criminal prosecution, misrepresent the statute of limitations for filing a lawsuit to collect the debt, or claim a right to collect from collateral that the original debt documents do not give them actual right to.

5. Once you have told the collection agency that you dispute a debt, the agency must make a choice to either proceed to filing legal action through a collection lawsuit or cease their collection efforts. If a lawsuit is filed, you must be personally served with a Summons disclosing your right to file an Answer disputing the debt by a certain date. If you file an Answer (and pay the required filing fee) before the deadline or court date, your case will be set for trial and the creditor’s efforts to obtain a Judgment will be set off even further in the future. Since you probably owe the debt, the Answer will normally dispute the amount that the creditor or collection company claims to be owed.

6. Assuming that you, in fact, owe the debt, eventually the creditor will be granted a Judgment. And after passage of a few days while execution of the judgment is “stayed,” the creditor will validly be able to commence efforts to forcibly obtain payment on the judgment. This normally involves garnishing funds sitting in bank accounts or garnishing a portion of your regular paychecks. If the creditor is unaware of where your bank accounts are located or where you work, he will have the ability to bring you into court for a discovery meeting where you will be asked questions about these things (and what other assets you may own) under oath. By this time, your decision to file bankruptcy has become a bit more critical. A word about Statutes of Limitations: Although this is a difficulty area of the law, in general, creditors have a period of 6 years (this differs from state to state) to collect an overdue debt. However, this date is normally calculated from the last date that you have made a payment (or made a charge or withdrawal) on the account. Thus, if a collection agent can convince you to make a small payment towards an account that has been overdue for over 10 year, that payment will reset the statute of limitations and the collection agency will have another 6 years to try to collect from you. Be careful.

 For a free initial consultation, call Henze & Associates, P.C. at

(303) 830-2811

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We are a Federally designated Debt Relief Agency pursuant to
Title 11 of the U.S. Code (Bankruptcy Code) to help people file bankruptcy