Question: What is the first thing a consumer should do when they receive a call from a bill collector?

Answer: Consumers need to know they are protected by very important federal and state laws.

Ignoring a creditor or debt collector does not make the debt go away. In fact, it can make the situation worse.

Communication is a way to take control and work to resolve the debt. It’s a critical step in finding a solution. If the consumer who receives the call is not the right person, it’s important to correct this information. Similarly, communication provides an opportunity to resolve concerns or complaints.

Debt collection professionals have created a resource called www.askdoctordebt.org to provide important information about their rights if contacted about a delinquent or defaulted debt.

Q: In this day and age of telephone scams, how can a consumer be certain the collector is legitimate and not a scammer?

A: Within the Hawaii State Professional Vocational Licensing Board, there is a collection agency board, and so (consumers) can look online to see that the agency’s license is up to date. It doesn’t endorse how they do business, but the consumer can see that they are legitimate.

Consumers can also call the client, as in "We’re collecting for XYZ Bank," and the consumer says, "I don’t know if you guys are for real, I’m going to call the bank." And please do call back, because we need to get this resolved.

The same is true for customers who are unaware of the debt and may be getting the phone call by mistake.

Q: What are a consumer’s rights in the third-party bill collection proc ess?

A: The Collectors Association has a really detailed website (www.askdoctordebt.org) that’s written in plain English and explains everything in black and white.

Third-party debt collectors work on behalf of their creditor clients to recover rightfully owed consumer obligations. By law the collector has to inform consumers of their right to dispute the debt, and provide written verification if the consumer disputes it in writing. Typically, collection activity stops until this verification is provided.

Q: Are there allowances for active-duty military personnel?

A: There’s a very specific law (the Servicemembers Civil Relief Act) that protects military members.

If service members are deployed, (collectors) can actually collect, but they can’t get a default judgment against them. That also doesn’t mean the service member can ignore their financial obligations.

Q: Does getting a call from a collector mean a consumer’s credit rating is damaged?

A: No, not usually. It depends on when the client wants the agency to report it to the credit bureau. With our clients, the vast majority, we’ll report it to creditors after (a longer period) than our competitors do. Cases are referred to credit bureaus only after a collection agency has had an account assigned to them for 30 days.

What happens is, when we get an account to collect from Mr. Smith a $100 bill from Dr. Jones, we send out a letter. Some businesses make a call first. Consumers have a federal dispute period of 30 days, and after that 30 days, that’s when the credit bureau will accept a report from an agency. The two laws work together.

A property management company would want us to make the credit report as soon as possible. If the tenant didn’t pay rent and dug out on the lease, they would want other property management companies to know this person is not reliable.

Q: What recourse does a consumer have if an employee of a debt collection company becomes condescending or, worse, threatening?

A: This is where it gets into I guess what you call a gray area. They’re not doing anything illegal, but where is that line, where it’s too rude and a court will find in favor of the consumer that the collector crossed the line?

I guarantee, if the collector is swearing at the consumer or screaming at the person — we hear horror stories — or calling every five minutes just to hassle the person, that’s a slam dunk, the consumer wins.

The court level is really the only regulation for an agency, besides licensing. The potential is they could lose their client because they get too many complaints (from consumers whose accounts are delinquent). Clients could decide to use a different company, so it’s a marketplace and court remedy.

The consumer can ask to speak to a manager.

Q: In your line of work, you must have heard every possible excuse for a person’s inability to pay.

A: A physician who was reluctant to send his patient accounts to collection actually ran into the patient at a shopping center. The patient acknowledged the debt to the doctor but said "no mo’ money nowadays," after which the patient got into a brand-new luxury SUV with paper license plates. The doctor submitted several patient accounts to collection.

Interviewed by Erika Engle