Consumer Debt Collection Act
When an individual owes money to a company or another individual and does not pay, the company may sell that debt to a debt-collection company. Debt collectors then try to recoup the money spent on the debt by contacting the individual who originally owed the money and trying to get her to pay on the debt. In the past, debt collectors may have used unfair and abusive tactics in pursuit of getting individuals to pay on their debts. The Fair Debt Collection Practices Act (FDCPA) was enacted to protect individuals from these practices.
Other People Are Reading
-
Who is Protected
-
Any debt incurred by an individual, such as a home loan, car loan or medical bills, is protected by the FDCPA. Business debts or debts incurred by an individual acting as a business are not.
Contact Rules
-
The debt collector is not allowed to contact the debtor either very early or very late in the day, at times when it may be assumed a person is sleeping. Nor can the collector contact the debtor at his place of business once the debtor has notified the company, either over the phone or by letter, that they may not do this. A debt collector also may not discuss the debt with anyone other than the debtor, although they are allowed to contact family members or others who can reasonably be assumed to know the debtor to confirm contact information for the debtor.
-
Ideal Contact Scenario
-
The debt collector may contact the debtor to ask about the debt. The debtor can then ask for proof of the debt, in which case the collector must stop calling until it sends verification the debt is owed. The collector must send a written notice within five business days of first contact with information about the debt, such as to whom it was originally owed and the amount. If the debtor recognizes this debt, she should contact the collector to make arrangements to pay. If the debtor disputes the bill, she should contact the collector in a certified letter and provide copies of her own proof of payment and to request the collector stop calling.
Prohibited Behavior
-
Collectors cannot harass the potential debtors. This includes ceasing to call when asked in writing, not using profanities, not threatening the debtor and other similar behavior. Collectors are not allowed to lie about the debt or the debtor to the debtor or anyone else. They also cannot make a false statement about the consequences of not paying the debt, such as threatening the debtor with prison or wage garnishment, unless they have begun legal proceedings to start the wage garnishment. Debt collectors are also prohibited from charging any unlawful fees on top of the original debt owed, threatening to repossess the debtor's property (unless the property is the source of the debt and this is allowed by law) or depositing post-dated checks the debtor sent in good faith early.
Allowed Behavior
-
If the debt is valid and the debtor does not pay, the collector has the right to sue the debtor for the amount owed. If a court decides for the debt collector, it will issue a judgment against the debtor stating the amount owed and how it may be collected, including allowing certain types of debt to be recouped through wage garnishment. It is important to reply to a legal summons in a case involving debt collection, as not responding will automatically cause the judge to find the debt valid.
Recourse
-
If a debt collector breaks the law, the debtor can contact the Federal Trade Commission (FTC) or his state's attorney general's office for assistance. The debtor has one year after the alleged legal violation to file suit and may be awarded damages and a fine of up to $1,000.
-
References
Resources
- Photo Credit bank statment and cut credit card image by Warren Millar from Fotolia.com
