Debt Rights

Older Americans now carry debt well into retirement. And debt collectors are circling.

Just ask Shirley Latham, 70, of Northern Liberties. She had to file a complaint with the federal Consumer Financial Protection Bureau after an unscrupulous dentist contracted debt collectors to try to make her pay for dental work he never performed.

The share of older Americans carrying debt into their retirement years is the highest since 1989. A record 66 percent of households in debt are headed by people age 65 to 74, according to 2013 Federal Reserve data.

"Consumers told us that debt collectors threatened to garnish their benefits from Supplemental Security Income, Social Security Disability Insurance, and VA benefits, even though these funds usually can't be garnished," the CFPB's Nora Eisenhower and Holly Petraeus wrote last month.

Learn your rights and fight back.

Don't be intimidated. Threatening calls at odd hours, abusive language, and revealing account information to others are tactics debt collectors use that violate consumer rights. Widow or widower? Debt collectors may harass you over "decedent debt" from your spouse, medical or other debt that does not belong to you, or that has been paid already.

Federal benefits are off-limits. Debt collectors cannot garnish all your Social Security income or your veterans' benefits. Some collectors lie and threaten that they can.

If you receive Social Security, Social Security Disability Insurance, or VA benefits, your bank or credit union must protect two months' worth from garnishment. (Garnishment happens when a collector wins a lawsuit against you for a debt and can ask your bank or credit union to turn over money in your account to pay it.) Your bank must send you a notice to freeze your account. Then a judge decides whether the money should be turned over.

There are exceptions, such as government debts including back taxes, federal student loans, and debts for child or spousal support. But need-based benefits, such as Supplemental Security Income, are protected from garnishment - even to pay a government debt, child support, or spousal support.

Seek legal help. That's what Latham did. She said that she was proud of her "very good" credit and that debt collectors could have damaged that. So Latham worked with Clarifi, a Philadelphia-based credit-counseling nonprofit, to file a complaint against the dental office and Citi Financial.

"The $3,250 he charged was too high. They browbeat me to death," she recalls. "I couldn't get out of the chair before he had the papers for me to sign. I tried to cancel the contract, but they told me I had to pay the total amount because I signed the contract even though they only did the one molding," she says. And she never got the dentures.

Clarifi helped Latham file a complaint with CFPB and the Pennsylvania Office of Attorney General, claiming predatory practices. The collectors stopped calling.

If you can't afford a lawyer, you may qualify for free legal services. The Center for Elder Rights Advocacy can refer you to a local agency. Call at 1-866-949-2372 or visit www.legalhotlines.org.

Speak with a credit counselor. "Being uninformed or misinformed about basic consumer protections can leave a consumer vulnerable to financial abuse," says Bruce McClary, spokesman for the nonprofit National Foundation for Credit Counseling. To speak to a certified counselor or locate an NFCC member agency near you, call 1-800-388-2227 or visit www.nfcc.org.

Send a sample letter.Reports of abusive debt collector phone calls, in which profanity, condescension, indignation, or rage are employed, are the most common complaints the CFPB receives.

Top things seniors should know, according to Beverly Yang, policy analyst in the agency's Office for Older Americans: "Seniors have the right to tell a debt collector, 'Stop contacting me,' though that will not get rid of the debt. Or they can say, 'Give me more information about this debt. Prove that it's mine.' "

The CFPB has created sample letters both for requesting that debt collectors cease communication or that they send proof of a debt. The sample letters are available by calling 1-855-411-2372, by visiting www.consumerfinance.gov, or by writing to Consumer Financial Protection Bureau, Box 4503, Iowa City, Iowa 52244.

215-854-2808 @erinarvedlund