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When Debt Collectors Call: What You Need to Know

George Doyle/Thinkstock(NEW YORK) -- With many Americans struggling to pay their bills, one business is booming: debt collectors.

But many consumers say the collectors are taking their tactics too far.  The Federal Trade Commission received a record number of complaints about debt collectors last year -- nearly 181,000 -- second only to complaints about identity theft.

In response to the complaints, the FTC has been cracking down on collectors who don't follow the rules.

As Tim Bond of Montgomery, Ohio, learned, consumers have to be very careful.  The 56-year-old said he was shocked one day to open his mail box and find a letter saying he was being sued by Asset Acceptance over a debt he wasn't even sure was his.

"I received a certified letter from the courthouse that said I was being sued for over $7,000," Bond said.  "I felt really suffocated and trapped."

Bond said he wasn't even sure he owed the credit card debt, and if he did, it was 14 years past due.

"My fiancé and I did a lot of research," he said.  "What we found out -- if you said anything at all, just a wrong phrase or anything, it would start statute of limitations over again."

Asset Acceptance allegedly broke the law by threatening lawsuits on expired debts and reporting those old debts to credit agencies.  The company has paid a $2.5 million fine to the government, even as it denies any wrongdoing.

Reilly Dolan of the FTC said that consumers need to be aware of the statutes in their states governing the ability of collectors to sue over old debts.  It may be that for some older debts, there is no way collectors can legally force a consumer to pay.

If the debt is large, offering to pay it off little by little to get the collector off your back might seem like a good idea, but Dolan said that is not necessarily true.

"In most states if you pay a little bit of the debt it actually restarts the clock," Dolan said.

That means the old debt is suddenly reactivated and you can face a lawsuit after all.

Copyright 2012 ABC News Radio

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