Since a debt collector's job involves getting people to pay money they owe, you'd think every collection company would keep careful track of those outstanding balances.
Nope.
In some states debt collectors aren't required to tell you how much you owe, writes Karin Price Mueller in her Bamboozled column in The Star-Ledger.
The column considers Jacqueline Halsey, a New Jersey woman who's been trying to pay off a $1,200 debt. According to The Star-Ledger, Halsey was chipping away at her debt through two channels at once. Her paycheck was garnished for a regular amount, and she was also sending $100 to the court every month (a judgment was levied against her for nonpayment of her credit card bill).
But the debt collection firm in charge of Halsey's account wasn't adding those sums together. Every two weeks an account balance would show up on Halsey's paycheck that did not match her accounting of what was owed. While Halsey thought she was making progress, there was no record of her payments. Just as she thought she was about to pay off her debt, she started making calls.
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The collection company, it seems, was not paying attention to the money going to the court. When Halsey asked for an explanation she essentially got the run around, according to The Star-Ledger.
It took some work talking to the court to get the mess straightened out, but along the way The Star Ledger's Mueller learned that there's no federal regulation requiring debt collectors to give debtors updated account balances. Instead that's left to state law, and in New Jersey it's not covered. "Maybe it should [be]," writes Mueller.
It's not uncommon for debt collectors to ask people to pay up -- after they've already paid up. Creditors often sell off outstanding debt to third-party collection agencies and don't always note which debts have been paid off. Former debtors often end up hearing about outstanding balances they've already put to bed.
That's what allegedly happened recently to one woman whom Bank of America sent to a collections agency even though she says she paid off her credit card debt.
Some collection agencies have been accused of pursuing debtors for expired debt -- balances that occurred many years in the past, and that agencies are legally forbidden from trying to collect on. The statute of limitations for debt collection vary from state to state, but the Federal Trade Commission has lately been taking an interest in collection agencies that violate these rules.