About Legal Rights and Unpaid Credit Cards
With unpaid credit card debt spiraling out of control in America, many collection agencies have stepped up their workforce. When a consumer is in the unfortunate position of fielding calls and letters from debt collectors, it's important to understand the rights afforded to customers concerning fair and responsible debt collecting.
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Significance
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Understanding your credit rights is essential to financial health and peace of mind. Some collectors use highly aggressive (and illegal) tactics to collect debts. Keeping abreast of the laws governing consumer rights is rather simple, and will pay dividends if confronted with an unruly or unethical debt collector.
FACT Act
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The FACT Act (Fair and Accurate Credit Transactions Act) mandates that all lenders and debt collectors must notify borrowers that negative mark will be placed on a credit report. The reason this act was passed was to prevent lenders from staining a borrower's credit report without their knowledge, thus disabling them from obtaining any further credit and forcing them to pay back the their unpaid debts.
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FDCPA Act
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The Fair Debt Collection Practices Act spells out certain guidelines to which collection agencies must adhere. Some highlights include: not calling a borrower between 9 P.M. and 8 A.M.; not using obscene language to threaten or intimidate borrowers; not calling a borrower's employer without written permission; and not speaking to anyone about the debt expect the borrower, the lender, an authorized signer or representative, and the credit bureaus.
Lawsuits
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Collection agencies and lenders attempting to collect a debt can file a lawsuit against a delinquent borrower. However, these companies cannot use the threat of a lawsuit to coerce customers to pay back debts. In fact, it is illegal (and punishable by law) to threaten a lawsuit, and then fail to file the suit papers.
State Regulations
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While the FACT Act and the FDCPA Act both provide federal protections for borrowers, there are certain laws that apply only to individual states. For example, in California, their own version of the FDCPA extends protections to consumers from both collection agencies and the initial lender itself. Contact your State Attorney General if you feel a debt collector is practicing illegal collection methods.
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