Fair Debt Collection

While it may sound harsh, any person who owes money on a mortgage, auto loan or who uses a credit card is a debtor. That said, most people are in fact in debt. Problems arise when you fall behind on payments or if a company mistakenly thinks you haven’t paid your debt on time. If this happens, you will probably be contacted by a debt collection agency. While you can’t erase any debt you actually owe, there are laws that the debt collectors must abide by. These laws are encompassed in the Fair Debt Collection Practices Act. Known also as the FDCPA, it protects consumers from abusive methods sometimes used by manipulative debt collectors and ensures the collectors treat each consumer fairly.

According to the Federal Trade Commission on their website www.ftc.gov, “Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis and companies that buy delinquent debts and then try to collect them.”

The FDCPA covers personal, family, and household debts. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts. The FDCPA doesn’t cover debts you acquired to run a business.

Additionally, the FDCPA dictates the ways in which a collector may contact you. It’s okay for them to contact you in person, by mail, telephone, telegram or fax. The crux is they may not contact you during inconvenient times, such as before 8 a.m. or after 9 p.m., unless you give them your consent. Also, according to the FTC, “A debt collector can not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls there.”

While you can’t wipe out any legitimate debt you owe without actually paying it off, you can stop a debt collector from contacting you by writing a letter to the collector telling them to cease communication. Subsequently, they can confirm to you in writing that there will be no further contact, but they cannot contact you after such confirmation. Again, if your debt is genuine, you are still liable for it and may be sued by the creditor or debt collector.

In terms of the initial contact from the debt collector, if you have an attorney, the debt collector must contact them first, rather than you. Further, a collector may contact outside people, but only to determine your place of residence, your contact information and where you work. In most cases, the collector may not tell anyone but you and your attorney that you actually owe money and they may only contact the outside parties once.

Within five days of first contact, the debt collector must send you a written notice informing you of the dollar amount you owe, the name of the creditor to whom you owe the money and how to proceed if you don’t think you owe the money.

For those of you interested in maintaining a clean credit report, unfortunately collections will have a negative impact on your credit report and score. Your collections record reflecting your debt will be sent to the three credit reporting agencies, where it will remain on your credit report (impacting your score) for seven years from the last late payment of the original account. This is true even if you pay off the debt. At this point, for the health of your credit, it is a great idea to review credit repair solutions. In order to improve your credit score, you will want to get a handle on the factors affecting your credit that you can control and get back on track. However, it is also important to review the information a collection agency posts on your credit report very carefully. It is fairly common for collectors to report incorrect facts to help with negotiations. In this situation, fixing credit could be as straight-forward as disputing an incorrect event on your credit report.

It is important to note that if you feel the information regarding your debt is inaccurate, you can send the collector a letter within thirty days after receiving your initial written notice, stating so or asking for verification of the debt. The collector cannot contact you again unless he can verify your debt. An example of this would be a copy of the bill for the amount you owe.

According the Federal Trade Commission on their website, www.ftc.gov, the following practices are off limits for debt collectors:

Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:

•use threats of violence or harm;
•publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
•use obscene or profane language; or
•repeatedly use the phone to annoy someone.
False statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:
•falsely claim that they are attorneys or government representatives;
•falsely claim that you have committed a crime;
•falsely represent that they operate or work for a credit reporting company;
•misrepresent the amount you owe;
•indicate that papers they send you are legal forms if they aren’t; or
•indicate that papers they send to you aren’t legal forms if they are.
Debt collectors also are prohibited from saying that:
•you will be arrested if you don’t pay your debt;
•they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or
•legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.
Debt collectors may not:
•give false credit information about you to anyone, including a credit reporting company;
•send you anything that looks like an official document from a court or government agency if it isn’t; or
•use a false company name.
Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:
•try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt — or your state law — allows the charge;
•deposit a post-dated check early;
•take or threaten to take your property unless it can be done legally; or
•contact you by postcard.
If you believe a debt collector has violated your rights or broken the law, you have a right to sue the collector in a state or federal court within one year from the date the law was violated.

In addition, you should report any issues you have with a debt collector to your state Attorney General’s office and the Federal Trade Commission. Many states have their own debt collection laws, which is why your state’s Attorney General will be invaluable.