Valley man: Debt collector told me to pay up or go to jail

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MESA - “He says you either pay me or get arrested and you can tell the judge your story,” Jay Phillips recalled.

Phillips said he got a disturbing phone call at work one morning, telling him he had less than an hour to repay a debt.

“He says yea, I'm on my way to court and I've got to be there in 40 minutes, and I have to have payment in my office before I go to court or the sheriff's waiting on you,” he said.

Four years ago, Jay took out a payday advance loan for $500 dollars.

With interest, that amount ballooned to $700.

Phillips said he'd been making payments until the bank went out of business.

So he said the phone call came as a surprise. Fearful he might be arrested, he wired the money. 

“Came home, and the first thing I did was get on the computer,” he said.

That's when Phillips realized, the person who'd called him wasn't law enforcement, but rather a debt collector with a Florida-based business named Smith, Dean and Associates.

“I just got angrier and angrier,” Phillips said.

3 On Your Side began looking into Smith Dean and Associates and its owner Lisa Smith.

We found the Illinois Attorney General's Office sued Smith's former company, United Processing, accusing it of, “Employing deceptive collection practices and using threatening and abusive language while attempting to collect on alleged debts on behalf of payday loan companies.”

United Processing is now banned from attempting to collect debt from Illinois residents.

Lisa Smith said allegations about her current company are false.

In a statement, she wrote: "We maintain that we follow the letter and the spirit of the law in every instance in attempting to collect the debt. The ridiculous nature of Mr. Phillips complaints is that he does not take an ounce of responsibility for the fact that he borrowed money and did not pay it back."

“Probably on a daily basis, we get calls from people who have been harassed by debt collectors,” Mike Sullivan with Take Charge America explained.

Sullivan owns the Valley debt management agency and said the key to avoid being victimized is to know your rights.

The Fair Debt Collection Practice Act says debt collectors cannot harass, lie or threaten you with jail.

If you do get a call like Phillips said he received, don't panic.

“The trick is get your wits about you, ask for everything in writing,” Sullivan said. “Make sure this is really your debt that their talking about, make sure you really owe it, make sure you're able to pay it, and then come up with a strategy for dealing with it.”

Consumers who feel they’ve become a victim of an abusive debt collector should file a complaint with the Federal Trade Commission and their state attorney general’s office.

The FTC also offers these tips.