Can a Collection Agency Legally Threaten You?
The Fair Debt Collection Practices Act (FDCPA), originally passed in 1977, established rules that debt collectors must follow in attempting to collect on either past-due or defaulted loans. It has been amended seven times, most recently in 2006. The law's purpose was to address consumer abuse and harassment at the hands of collectors.
The FDCPA bans numerous acts of creditors, including the making of threats of physical harm for non-payment. Other guidelines spell out the ways a consumer can challenge the validity of a debt and how to stop calls, if only temporarily.
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Put It in Writing
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Consumers can request the details of a specific debt be put in writing within five days of initial contact by the collector. This notice must include the original creditor's name and amount of the original debt. There must be instructions on how to challenge the validity of the debt, and a statement that if the debt is not challenged, in writing, within 30 days, the debt will be considered valid. If the debt is disputed, all collection activities must cease until it is validated.
Abuse and Harassment are Illegal
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Threats of violence are not the only forbidden actions of collectors. Threats of legal action can only be made if the collector intends to carry them out. Harassing phone calls at all hours are forbidden. Phone calls are limited to after 8 a.m. and before 9 p.m. Profane language during a call, and advertising a debt for sale as coercion for payment, are also illegal under FDCPA.
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Misrepresentation Is Illegal
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Collectors cannot falsely claim to be an attorney, can't claim to be any kind of government-bonded or sanctioned collector by showing a badge or government ID, and they can't claim that non-payment will result in arrest or criminal prosecution. Collectors are specifically prohibited from using "any false . . . or deceptive means to collect a debt or obtain information regarding a consumer."
Unfair Practices
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These include tacking on collection fees not specifically spelled out in the debt instrument, accepting post-dated checks and depositing them early, threatening to deposit a post-dated check early, using post-card mailers requesting payment, or having a return address on an envelope indicating a collection company. Even the types of forms that can be used by collectors must conform to the FDCPA.
Collectors Also Need Permission From You
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Under the FDCPA, collectors cannot communicate with anyone else regarding a debt without your permission. They are not allowed to contact you at your place of business or speak to your employer about a debt without your consent. And if you notify them in writing that you do not intend to pay, all communication must cease, except from a court of jurisdiction if legal action is pursued.
Having an Attorney Also Can Stop Calls
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If you decide to hire an attorney to assess your options, you must notify the creditor, either verbally or in writing, to communicate with the attorney. Bear in mind when the attorney speaks to the collectors, he or she will be "on the clock" while doing so, and time spent talking to your creditors will cost you the lawyer's hourly billing rate. Some attorneys will do this type of work for a flat fee, but get that in writing up front.
Federal Law vs. State Laws
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Every state has its own laws regulating collectors. The federal law supersedes the state laws, unless the state laws offer more protection for consumers or the discrepancy in the laws is minimal and provides the same protection. Jurisdiction under the law lies with the Federal Trade Commission. Penalties for single willful violations of the law can include a fine of up to $1,000 plus actual damages and attorneys' fees.
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