When You're In Debt

You probably know that a company that extends credit to consumers can hire a service to collect on past-due accounts. The targets of these collectors have bills overdue for an average of eight months, and often have moved or changed their phone numbers.

What you may not know is that if you cannot pay in full, a payment plan can be worked out, or you can be sued for payment, but you cannot be harassed or abused by a collector.

CBS This Morning Money Editors Ken and Daria Dolan have the details.

"It may be in person, by mail, by telephone, or by fax," Daria Dolan explains. "But a debt collector may not contact you at unreasonable times or places unless you agree to it."

• A debt collector may not contact you before 8 a.m. or after 9 p.m., or contact you at work if you make it known that your employer disapproves. You should inform the debt collector in writing that you cannot take these calls at work. But offer an another place where you can be contacted.
• You can stop a collector from calling at all. "You can write a letter to the collection agency asking them to stop calling you," says Ken Dolan. "By law they may not contact you again except to say that there will be no further contact. Another exception is if they notify you of some further legal action."
• A debt collector may contact your friends, co-workers, or neighbors, but only to find out where you live or work. They are prohibited from contacting these people more than once.
• Your assets cannot be taken away unless a court judgment is awarded against you. "Until a creditor sues you and wins, it generally may not take any of your assets to collect the debt," Ken Dolan says.
• If the creditor gets a judgment against you, your "nonexempt" property can be taken. What that means depends on state laws. Your home most likely is "exempt" from creditors. However, money in your bank account may be taken, with exceptions including your retirement accounts.
• An unscrupulous debt collector might try to pull some trick. "They may falsely imply that you have committed a crime, or indicate that the forms they are sending you are legal forms when they are not," Daria Dolan says.
• You can get help in dealing with a debt collector. Contact a local chapter of the Consumer Credit Counseling Service. A debt managment program can allow you to restructure payments to creditors and, eventually, get out of debt.

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