The Fair Debt Collection Practices Act and Your Rights

For anyone who has had to deal with shady debt collectors it’s not surprising to find that some of these agencies use annoying and questionable practices and even threats to try to collect a debt. It’s been proven that abusive collection practices have contributed to personal bankruptcies, instability, the loss of jobs and high rates of stress related health problems. To address these issues the federal government passed the following consumer protection laws in an attempt to curb unwarranted collection practices. It’s important you understand your rights!

The Fair Debt Collection Practices Act (FDCPA)

The FDCPA is a federal law introduced in 2010 that controls what debt collection agents can do when they are trying to collect certain kinds of debt including credit card debt, medical bills, student or auto loans, and mortgages.

Under the FDCPA a bill collector can contact you about a debt or judgement and ask you to pay, however they cannot threaten you or take other legal action to settle the debt without due process. Here is a list of restrictions:

Contact hours: They may only contact you between the hours of 8am to 9pm local time. If they are working with you on debt verification or repayment they may only contact you during the times you specify.
Limits to contact: If you have informed them in writing not to contact you at your place of employment they may not contact you at that location.
Third party calls: There are limits to the debt collector practice of contacting third parties. They can contact others to find out your phone number, address, or place of employment but should not contact them more than once. You must inform the collection agency in writing that they may not contact anyone but yourself as the debtor to curb those calls.
Caller identification: In accordance with the law, when you are contacted the collector must identify him/herself and the reason he is calling or writing (to collect a debt) and that any information collected from you will be used for that purpose.
Limits to information shared: He/she cannot state verbally or in writing that the consumer owes them a debt or the amount of the debt unless asked.
No threats: They cannot threaten violence or criminal means to damage person or property. They cannot imply the consumer as a criminal or threaten arrest or imprisonment, garnishment, or lien on property unless it is legal and they are intending to immediately take that action.
No verbal abuse: They are not allowed to swear or use offensive language verbally or in writing.
No harassment: They cannot repeatedly call with the intent to annoy, abuse or harass you.
Restrictions to physical mailings: They cannot contact you by postcard, only sealed mail, and the envelope may not indicate that it is communication in relation to a debt and must not appear to come from an actual legal federal or state entity.
They can’t lie. If they lie to you about the amount or age of the loan or judgement and if it has lapsed according to your state laws or if they claim to be an attorney then they are in violation of the FDCPA.
They can’t add on fees to the debt. They cannot charge fees or other charges on the debt unless allowed in the original contract or if your state law allows it.
Legal counsel: If the collector has been informed that there is a lawyer representing the consumer they may not contact the consumer unless the lawyer does not respond in a timely manner.

What happens when I talk to a debt collector?

If you choose to communicate with the collector you should be very careful as some types of communication and payment can restart the statute of limitations (see below) period on the loan – even if it’s well past the limitation window.

1. Never admit to owing anything or knowing anything about the debt and be careful of giving out personal or financial information especially if the agency contacting you should already have it.

2. Always ask for a verification of the debt they are holding. Upon your request the agency must send you the following within 5 days: the amount of the debt, the name of the creditor to whom the debt is owed, how to dispute the debt and inform you that you have up to 30 days to dispute the debt or it will be considered a valid debt.

3. They must also offer to send you contact information for the original creditor if they are different from the collection agency.

4. It is a good idea to inform them in writing at this time that they are not to contact outside parties, contact your place of work, ask them to only communicate with your attorney, place limits on the hours they may contact you in, or limit the forms of communication they may use – for instance only contact in writing, or only contact through a phone call. It is a good idea to send this letter as certified mail and ask for a receipt.

5. Once you review their evidence and respond with either a disputation of the debt or request more information, they must stop debt collection practices until they obtain and provide all verification paperwork of the debt. It is your responsibility to review the evidence to decide if it is valid.

6. If the collection agency decides to start legal proceedings against you, you must be contacted properly in accordance to federal and state law regulations. Be sure to respond to any legal paperwork in a timely manner to protect your rights as a consumer.

7. If you decide to pay the debt, don’t send any money until you have the contract in writing with terms you approve of and with appropriate signatures. It is recommended to work with an attorney or credit protection agency like Family Financial to secure your rights. Don’t be afraid to look for help, especially if the debt is large.

8. A collector must go through the court system and win a judgement for your wages or bank account to be garnished. They must also go through the proper court channels of your state of residence to obtain one. Every state has a different set of regulations to determine how garnishment is structured and what consumer laws are in place.

9. Some of your assets are protected from collection, for instance your retirement accounts and main residence. Laws vary by state. Your federal benefits are exempt in most cases; however, they may be garnished to pay for alimony and child support, back taxes, or student loans. Become educated on your situation and what is at risk.

Debt Statute of Limitations

Most consumer debt is time-barred. That means that there is a window of time during which a debtor can take legal action against you, it’s called the Statute of Limitations. The time period for each credit account varies from 4-10 years depending on the kind of debt and the state laws regulating types of debt.

Once that window closes you are protected from legal action on the debt, but in some states any payments made on the debt, or written acknowledgement of owing the debt may start the time over again. Also, if you move out of state during a collection window returning to the state even after the statute of limitations closed may mean the debt is no longer time-barred and the loan can be collected legally for the remaining period it would be valid had you not left the state. Be sure to check the laws of your state!

Even if the Statute of Limitations window is closed and the debt has dropped off of your credit report (7 years), collectors are still allowed to contact you as you still owe the debt, they just can’t enforce legal action against you unless they can trick you into reinstating the debt. You can send them a letter telling them to stop and under the FDCPA they must comply; however, many people find that debt collectors who are pursuing time-barred debt will play games and refuse to offer a mailing address or a business name and ‘accidentally’ drop the call when asked for additional information.

You can report a collector for any alleged violation of the FDCPA at one of the following agencies:

You can also sue a collector for damages if you can prove them or up to $1000 plus attorney fees and court costs.

Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your attorney general’s office or a consumer attorney can help you navigate your rights under your state’s law.

Information provided by the FTC Consumer Information pages: https://www.consumer.ftc.gov/articles/debt-collection-faqs

The Fair Credit Reporting Act (FCRA) and your rights against collectors

The FCRA was designed to promote accuracy in reporting and recording financial information about private individuals and businesses. Personal credit reports are designed to show credit-worthiness to potential lenders and can affect interest rates on new loans and even the ability to find housing and jobs.

Unfortunately, shady debt collection agencies have leveraged consumer credit reports in an attempt to gain repayment of a debt by reporting inaccurate or unprovable debt delinquency to the credit bureaus. If you owe a debt you should keep an eye on your credit reports for any unwarranted and inaccurate information.

If a debt collector is found to have mis-used the consumer reports they can be fined for damages, fees, court costs and punitive damages if the violation was willful, generally at no cost to you. It’s up to you to monitor your credit. You must report inaccuracies on your report within two years to have any leverage against an inaccurate report.

FFEF counselors are available to help you navigate the crazy world of debt collection issues. There are many options – starting with a free consultation! Contact us if you would like to learn how to create a brighter financial future.

Additional articles:

http://www.ffef.org/ffefblog/what-is-a-credit-score/

http://www.ffef.org/ffefblog/fair-debt-collection-practices-act/