Debt collecting up in Missouri over past two years combined

JEFFERSON CITY -- It's one of the few industries thriving in this recession - debt collection - and some are using deceptive, even illegal tactics to get you to pay up.

For some mid-Missourians, like Danny and Sherry Sanford, the phone won't stop ringing. They were stunned when, out of the blue, debt collectors called saying they owed almost $700.

"The [debt collector] tells us...we're gonna pay it no matter what," said Sherry Sanford.

The Sanford's aren't alone. Aggressive debt collectors are on the rise.  Nationally, the Federal Trade Commission has seen over 45,000 complaints in the first six months of the year, up 20 percent over last year.

In Missouri, there have been eight times as many complaints this year than in the past two years combined.

"In the midst of an economic downturn there's no doubt that unscrupulous debt collectors or mortgage refinance companies are coming into the market," said Attorney General Chris Koster. "And [they] are making threatening statements to people because they know they are in difficult financial straits."

Danny Sanford says that's what's happening to him. He thought he closed out his checking account in October 2006. But then a payment tried to clear his account. The bank rejected it and charged him a $26 overdraft fee.

The $26 fee ballooned to almost $660 after three years of fees and interest. His phone started ringing once the bank sold the debt to a collection company out of California.

"You're saying the judge is just gonna say, 'Well too bad for you?' Pretty Much?," Danny Sanford said, as he spoke with a debt collector over the phone from his home in Tebbetts.

The Sanford's say collectors threatened to cancel their new bank accounts, garnish their wages and even take their house.

The debt collector said "the judge was gonna side for him no matter what," said Sherry. "That nothing we said was gonna make a difference."

"They don't want to hear your side of the story, it doesn't matter if you have proof," said Danny, who disputes the charges. "It's like holding a gun to our head saying, 'You're gonna pay this and if you don't pay this we're gonna take everything you have."

So how do you know if you're being taken advantage of by an abusive debt collector?

"Federal law protects consumers against these ridiculous threats that some of these debt collectors are making," said Koster.

First, debt collectors can't contact you before 8 a.m. or after 9 p.m. They can't use threats, like saying you'll be arrested. And they can't make your phone ring continuously.

They can call you at home or work but if you don't want any phone calls, a certified letter can get them to stop. However, sometimes that can speed up the legal process. Experts suggest trying to work things out first.

One final tip: Experts say never pay a debt that's not yours. Some pay off small debts just to get a collection agency to stop calling. This can backfire because it's considered acknowledgment that you owe the debt and it can affect your credit.

This summer Koster filed lawsuits against two debt collection companies he said were acting fraudulently.

After hearing about the Sanford's situation, he called them personally and sent a letter to the debt collectors on their behalf.