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Fighting an unethical debt collector

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Dear Liz: I think I'm being pursued illegally for a debt I don't owe. I visited a hospital in June 2007. It took my health insurer about six months to process the claim. Shortly after I received my benefits statement from the insurer, I received a call from a collection agency saying I had to call back immediately and give my credit card number to pay this debt. Instead, I called the doctor's office the next day. The receptionist told me my account was still open and had not been turned over to collections. I gave them my address and they sent me a bill, which I paid. A month later, I got another call from the collection agency, once again telling me I had to pay that very same day and that I had to call back with my credit card information. My requests to be faxed a bill have been ignored. When I asked that a bill be mailed to my home, the woman I talked to said the address I gave her was false (it wasn't). I just received another call, and the caller threatened to put this debt on my credit report if I don't pay. What is going on here? Is this fraud? I get really nervous with these calls, and I'm not sure what's going on here.

Answer: You've gotten plenty of signals that you're dealing with an unethical collector.

By federal law, a collection agency must send you a written notice within five days of its first contact with you. The Federal Trade Commission says this written notice must tell you the amount of money you owe, the name of the creditor involved and what action to take if you don't believe you owe the money.

The agency's failure to send that notice or honor your request to be sent a bill are bad signs. So is the accusation that you gave out a false address. It sounds as if the collector is doing its level best to evade the laws meant to protect consumers.

Federal law also prohibits debt collectors from reporting false information about you to the credit bureaus. If you find this bogus debt on your credit reports, you're entitled to sue the collector for $1,000. (You can find out more about your rights when dealing with collectors at the Federal Trade Commission site, www.ftc.gov /bcp/conline/pubs/credit/fdc .shtm.)

At this point, you should write a letter to the collection agency making it clear that you don't owe this debt and telling it to stop contacting you. You might also point out its violations of the Fair Debt Collection Practices Act and indicate your willingness to pursue the matter in court if there are future violations.

You should send this letter certified mail, return receipt requested, to establish a paper trail. Then send a copy to the doctor's office and ask that it notify the collector that you do not owe the debt.

Setting up fund accounts for kids

Dear Liz: My daughters, ages 4 and 6, have enough in savings to satisfy the minimums for purchasing a mutual fund. Should we invest their money directly or is there a better vehicle, such as a custodial account?

Answer: Your daughters are too young to open an investment account by themselves. You can establish a custodial account for them at most brokerages or you can set up a joint account.

Custodial accounts get terrible treatment in college financial aid formulas, however, so the joint account is a better option unless the money will be spent by then or you don't anticipate needing financial aid.

Can marketing lists be avoided?

Dear Liz: What can I do if I froze my credit report, received confirmation and my credit report was released to a marketing company?

Answer: A credit freeze may prevent lenders from pulling your reports without your permission, but it doesn't necessarily remove you from the marketing lists credit bureaus sell to various businesses.

For that, you need to contact the bureaus' opt-out service at www.optoutprescreen.com or by calling (888) 567-8688. You'll need to provide your Social Security number and other identifying information to sign up for the service, which is free.

Liz Pulliam Weston is the author of "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life." Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon Blvd., No. 238, Studio City, CA 91604, or via the "Contact Liz" form at www.asklizweston .com. Distributed by No More Red Inc.

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