The nation’s poor economy has impacted nearly all segments of American life and business. One industry that has seen marked changes is debt collection.

As more and more people are struggling to make payments on loans, mortgages and other debt, creditors are selling the rights to collect those debts to debt-collection agencies. In these tough economic times, though, debt-collection agencies also are finding it hard to collect the money, sometimes leading to abusive – and illegal – behavior from debt collectors.

The Federal Trade Commission (FTC) receives more complaints about debt-collection agencies than any other industry. According to the Associated Press, the FTC gathered more than 140,000 complaints about debt collectors’ behavior in 2010, an increase from just under 120,000 complaints in 2009.

Frequent Debt Collection Complaints

The most frequent complaints are about illegal debt-collector behavior such as:

  • Calling people repeatedly
  • Misrepresenting the status or amount of a debt owed
  • Not notifying people of their rights in writing

Moreover, at least 20,000 complaints were made by people who said debt collectors threatened to take their property or have them arrested. That is simply not permissible.

On the other hand, however, some debt-collection agencies today are more open to negotiating payment plans with consumers. For example, according to the Associated Press, people have made agreements with debt collectors to pay as little as $5 or $10 a month.

New York Bankruptcy Protection

Succumbing to debt collectors’ abusive threats or making a payment plan with a collection agency is not the only way to stop the harassment. According to some New York bankruptcy lawyers, seeking protecting under the U.S. bankruptcy laws is another way. Filing for bankruptcy will automatically stop creditors from making further collection efforts. It can also be a valuable tool in getting people back on the right financial track.