Laws for Unsecured Loans Up for Collection
Any debt that does not have an asset attached to it is an unsecured debt. The process of collecting an unsecured debt can be cumbersome for both the creditor and debtor. Therefore, these debts have a much higher risk than secured debts. Creditors and debt collectors have very specific responsibilities, and debtors have very specific rights, about contact, validation and truth concerning unsecured debt.
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Validation and Dispute
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The debt collector can contact the debtor initially to determine the validity of the debt, including the amount of the debt and name of the debtor, and to give the debtor a specific time period to respond, typically 30 days. The debt collector must obtain validation of the debt if any part of it is disputed within the time period set aside in the initial contact. Details about the original creditor must be given to the debtor if the debt is disputed. The debt collector must also cease all collection efforts in the event of a dispute until validation has been obtained. BankRate.com suggests that debtors send any dispute communications via certified mail.
Communication
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According to the Federal Trade Commission, unsecured debt collectors cannot contact any debtor or consumer at any inconvenient time or location, including outside the hours of 8 a.m. to 9 p.m. in the local time zone. If the debtor has an attorney that the collector has knowledge of, the collector cannot contact the debtor directly unless he receives no response from the attorney. If the debtor cannot receive calls at work, the creditor cannot call the debtor at work. The debtor may contact the creditor in writing and ask the creditor to cease all contact, and the creditor must stop contacting the debtor immediately except for informing the debtor about terminating collections attempts or revoking any specific remedy.
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Misrepresentation
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The Federal Trade Commission also restricts any false representation or misleading communication. No creditor can state or insinuate that he is affiliated with or bonded by the state or the United States. He cannot show the debtor a badge and cannot wear any state-affiliated uniform. Creditors must be truthful about the legal status or amount of the debt. They may not insinuate that they are an attorney or a part of a law firm, members of a credit reporting agency or part of any other company. Creditors cannot threaten wage garnishment, imprisonment, arrest or the seizure of any property. Creditors cannot accuse the debtor of committing a crime. Debt collectors must inform the debtor that the contact is in the attempt to collect a debt.
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References
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