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You owe us!

What should you do if a travel company sends a collection agency after you? Here’s what you need to know, according to the experts.

It wasn’t John Martellaro’s fault. His rental car’s registration had expired, so he was pulled over twice and ticked on his way to the Philadelphia airport. “Clearly, that was Hertz’ responsibility,” he says. “Not mine.”

Or was it? Martellaro handed the citations to a rental agent, who assured him she would “take care of it,” he says. But a few weeks later, he received an unpaid ticket notice from the state of Pennsylvania, and although he contacted Hertz and was again assured that the ticket would be fixed, nothing happened.

Fast-forward eight months. Hertz’ collection agency, ATS Processing Services, sent Martellaro a letter demanding he reimburse the car rental company for the tickets. “I called them and was told that I had to call the district court in Pennsylvania, get a copy of the ticket, and prove to them that it was for something over which I had no control — in other words, that it was their failure to get the vehicle properly inspected,” he says.

Remarkably, Martellaro had done everything in his power to fix the problem. As a public relations professional, he had even contacted Hertz’ press representative, who passed the complaint along to the company’s customer service department. Not so remarkable is the fact that this happened. Travel companies are sending collection agencies after their customers with greater frequency.

“I see more travel companies using collection agencies,” says Jonathan Stein, an Elk Grove, Calif.-based attorney who specializes in debt collection. These collections apply to a broad range of charges, from unpaid parking tickets to tardy hotel bills.

Hertz says it never meant to go after Martellaro. “We were in the process of switching to an outside provider to handle the processing of traffic tickets and violations,” says company spokeswoman Paula Riviera. “Unfortunately, during the transition, we failed to properly handle the tickets associated with Mr. Martellaro's rental car.”

Hertz agreed to drop the matter and sent Martellaro a rental voucher as an apology. But not everyone is so lucky.

Consider what happened to Eehern Wong, who was scheduled to fly from Sacramento, Calif., to Boston by way of Los Angeles. When she arrived at the airport, she found out her flight had been moved up by nearly half a day. “By the time I checked on the flight, the plane had already left Sacramento and was already landing in Los Angeles,” Wong recalls.

Delta didn’t notify her of the change, and demanded that she buy a new ticket to Boston. She did, but disputed the charge when she arrived. Her credit card company sided with her, but Delta didn’t take the loss well. It sent a collection agency after her. “They are now threatening to go to the credit bureau and affect my record if I do not pay,” she says.

What’s going on here? And what should you do if a travel company sends a collection agency after you? Here’s what you need to know, according to the experts.

1. Know your rights.
If a debt isn’t yours, you have the right to not pay it. “If a consumer does not settle an account, the creditor has a right to hire a collection attorney and have the case brought into court,” says Robert Markoff, who is the president of the National Association of Retail Collection Attorneys and a partner at the Chicago law firm of Markoff & Krasny. What if the judge rules in the travel company’s favor? You could be ordered by the court to repay the debt or your wages could be garnished. But if a judge sides with you then the creditor is forever barred from attempting to collect that debt.

2. Know the rules.
A collection agency representative can’t just knock on your door and threaten to break your kneecaps if you don’t settle up. “If a debt collector contacts you about a debt by phone, they are required under the Fair Debt Collection Practices Act to follow up with written notification to you in five business days,” says Gerri Detweiler, the co-author of “Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights.” “When you receive that written notification, you have the right to dispute it within 30 days.” Detweiler suggests disputing the debt in writing, by certified mail. Also, if you notify the collector that the debt is not yours and it continues to harass you, she recommends contacting a consumer law attorney.

3. Know your chances.
What if a travel company wants to charge you, but you don’t think they should? “Companies will typically tell the debtor that if you don't pay by such and such a date we will turn the account over to a collection agency,” says Robert Ashner, president and general manager of AG International Services, a Phoenix-based collection agency. “This tactic may get some debtors to pay.” The real question is: At what point are collection agencies serious? If there’s a consensus among debt experts, it’s that anything less than $1,000 is considered the cut-off, and the threat remains exactly that — a threat. But Ashner says it depends. He told me it’s up to the collection agency. His company accepts accounts based on several criteria, including balance, age of the debt, how old the account is, type of debt, and the number of accounts placed by that client. “We don't accept accounts from clients when we have determined that the product or service is — shall we say — questionable,” he adds.

4. Know how to negotiate.
Companies and collection agencies can be surprisingly flexible when it comes to paying debt. The most common offer, according to author and financial expert Michelle Dunn, is a payment plan. “Each payment will show up on your credit report until the balance is zero,” she says. Some collection agencies will also allow you to pay a portion of the debt. It all depends on your negotiating skill and a little insider knowledge of the process. The average charge for using a collection agency is a 25 percent commission, so the creditor would receive 75 percent of the amount paid from a debtor. “Most agencies work on a commission basis, so if they don’t collect any money, you as the business owner don’t pay anything,” says Dunn.

5. Know that you’re not alone.
If you booked your trip through a travel agency, you may have other options. Sophia Mei recently tried to buy a cruise through Travelocity. When the site froze, she called Travelocity to report the problem, and finished the reservation by phone. Turns out the first booking had gone through — a fact she didn’t find out about until a month after her vacation. Travelocity promised her a refund, but soon after that, a collection agent for the cruise line contacted her, demanding an extra $2,000. “I told them the reservation was a mistake — a double booking,” she says. The collection agency agreed to settle her case for $1,200, but I asked her travel agent to intervene. Travelocity contacted the cruise line and persuaded it to stop the collection. Good thing Mei used an online travel agency. If she hadn’t, she might be $1,200 poorer.

Truth is, there’s no need to worry about a collection agency, as long as you’re familiar with some of the rules, rights, practices and know what your chances are if you ever are indebted to a travel company.

With any luck, the travel industry’s fascination with debt is a byproduct of the soon-to-be over recession, not another way of making a quick buck.

We’ll know soon enough.

Christopher Elliott is the ombudsman for National Geographic Traveler magazine. You can read more travel tips on his blog, or e-mail him at .