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Is Your Debt Collector Treating You Fairly?With today’s tough economy, many people are beginning to receive calls from debt collectors. In fact, according to the Federal Trade Commission (FTC), the number of people that were contacted by a debt collector in 2008 was in the millions. Of these millions, over 70,000 of them filed a complaint with the FTC for what they considered to be unfair debt collection practices. Since this is the case, that must imply that there are laws governing what debt collectors can and cannot do in the process of collecting debts. Let’s consider some of them. Debt Collection and Contractual AgreementsWhen you sign a loan contract or other type of credit application, you are in effect promising to make the agreed upon payment until the full amount of the loan has been paid off. If you should default on this agreement, the creditor has the right to initiate efforts to collect this debt. What this usually involves is hiring a third party agency to collect the debt for them. Or sometimes they will sell the debt outright to a third party debt collection agency. A more drastic step that some creditors will take is to hire an attorney to collect the debt for them. Whichever way it goes, the debt collector must work to collect the debt within the guidelines of a US federal statue called the Fair Debt Collection Practices Act (FDCPA) that was set up in 1978.
Collection AllowancesFirst of all, debt collection agencies are allowed to try to collect personal, family or household debts. This means that if you’re late on car payments, house payments, medical bills or credit card bills, then debt collectors can contact you to try to collect on them. They are allowed to knock on your door and talk to you in person, call you on the telephone, mail you a letter or send you a telegram or fax for the purpose of collecting a debt. However, they can not contact you at strange hours like 3 a.m. in the morning. They must keep their contact times between 8 o’clock in the morning and 9 o’clock at night unless you give them permission to call you at other times. A debt collection agency may try to call you at work, but simply telling them that you are not allowed to receive phone calls should stop them. If they continue to bother you at work, they are in violation of the FDCPA and you can sue them. When they contact you about a debt, they must tell you how much you owe, who exactly was the original creditor and what procedure you need to follow if you dispute the debt. Disputing the DebtIf you dispute the debt, you need to send a letter requesting proof of the debt. The debt collection agency must stop all contact with you until you receive the proof. Once you receive proof of the debt, they can resume collection attempts. If you are unable to pay the debt and wish them to stop contacting you, the procedure is the same. You must write a letter requesting them to stop contacting you in any form. Send the letter with a return receipt requested as proof that you sent the letter to them. In order to be in compliance with the FDCPA, they only way that they can contact you now is to tell you that they will no longer contact you or to tell you that they are going to pursue the debt further through possibly a legal avenue. The reason that they can move forward with this process is because even though you wrote a letter asking them to stop bothering you, this in itself does not cancel your debt. Hiring an AttorneyThere are a couple of times that debt collector can contact someone other than you to try to collect. First, if you hired an attorney to help you with this case, the debt collection agency can only contact your attorney and not you. Otherwise, the debt collector might call your family to find out your address or your phone number or possibly where you work. This is alright for them to do as long as they don’t begin harassing your family member or discussing your debt with them. Debt collection agencies are not allowed to try to embarrass you by publishing a list of unpaid debts or by sending you a postcard about your debt that others can see. Those things would be in violation of the FDCPA and you can sue them. Harassment by Debt CollectorsIf a debt collector is harassing you by continuing to call you even when you have asked them to stop, if they threaten you with violence, if they use foul language or profanity when speaking to you, they are in violation. If they lie to you and tell you that they are suing you or about to seize your property when they actually are not, these things are also a violation of the FDCPA. In one reported case, a debt collector told the consumer that papers were on their way to their employer to begin garnishments when in fact, that process can only follow a court order and the case had not been to court yet. They cannot by law misrepresent themselves, lie about their intentions with regard to the debt or give the impression that they have more legal power than they actually have in that particular state. Unfair Debt PracticesIf you believe that you have been a victim of unfair debt practices from a debt collection agency, you can discuss the matter with an attorney. You can also file an official complaint with the Federal Trade Commission. If you decide to take the matter to a lawyer, you must file a lawsuit within 1 year of the violation. You may be eligible for up to $1000 of compensation without having to prove any actual damages plus attorney and court costs. Every state has it’s own set of debt collection laws that will be no less that the federal statue and possibly even stricter. To find out what these might be, you can contact your state‘s Attorney General office for more information. Resources: Federal Trade Commision Website - Debt Collection FAQs Federal Trade Commision Website - Fair Debt Collection Practices Act |
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