Understanding the Debt Collection Act

Understanding the Debt Collection Act

If you are behind on paying your bills, you may soon be contacted by a debt collector. The debt collection is an act supervised by the nation’s consumer protection agency known as the Federal Trade Commission (FTC), which enforces the Fair Debt Collection Practices Act (FDCPA). This prohibits debt collectors from using unfair, abusive or deceptive practices when collecting from people.

Borrowers Making Sense of the Debt Collection Act

Federal Trade Commission (FTC), Debt Collection Practices Act (FDCPA)

Below you can see some important information regarding the Debt Collection Act so that, if you get into this situation of being contacted by a collector, you will already know and understand your rights and obligations as a borrower.

What types of debts are covered by the Debt Collection Act?

This Act regulates and refers to all personal, family and household debts incurred. These debts can include money owed on personal credit card accounts, mortgages, medical bills and auto loans. However, this does not include any debts you incurred while trying to start or run a business.

When can I be contacted by a debt collector?

According to current regulations imposed by the Debt Collection Act, a debt collector is only allowed to contact you during convenient times and at acceptable locations. Unless you agree otherwise, lenders are not allowed to contact you before 8 a.m. or after 9 p.m. With permission, they should never try to contact you at work.

As long as they follow the rules, debt collectors can contact you by telephone or email. They may also choose to send text messages or letters to make contact with you. When contacting you, they must introduce themselves as debt collectors, as the Act prohibits them from pretending to be someone else, such as an attorney or government agent.

Also, you should know that, under this Act, debt collectors are never allowed to threaten, harass or deceive you.

Can a debt collector be stopped from contacting me?

If a debt collector contacts you, it is highly recommended that you at least try to talk with them about your debt in an effort to resolve the issue. Even if you cannot afford to pay all or part of your debt immediately, you should discuss a payment plan that is doable with the debt collector.

If negotiations are not possible and you would like for the debt collector to stop contacting you, the best way is to make your wishes known in writing. When you decide to formally ask them to stop contacting you, it is always a good choice to keep a copy of the request for your records.

Who can my collector contact about my debt?

If you are represented by an attorney regarding your debt, then the debt collector is allowed, and should, contact your attorney. The debt collector can also contact other people in an effort to find your address, phone number, or workplace.

However, the debt collector is prohibited from contacting third parties more than once. Additionally, the collector is only allowed to contact third parties to find out location information about you. They are not allowed to discuss your debt with anyone but yourself and those who represent you legally, such as your attorney or spouse.

Prohibited Practices for Debt Collectors

Fair Debt Collection Practices Act

There are some practices which are strictly off limits to debt collectors. Among these prohibited collection practices are the following:

  • Debt collectors are not permitted to harass, abuse or oppress the people they contact. This can include threats, violence, harm, sharing the names of other people who don’t pay their debts, the use of obscene or profane language, and making repeated phone calls to the borrower in an attempt to harass or annoy.
  • Making false statements to or about the borrower are strictly prohibited. They mustn’t lie. This includes falsely claiming to be someone else, such as an attorney or government representative, or the operators of a credit reporting agency.
  • Debt collectors should not misrepresent the amount of money that borrowers currently owe the lending company, or accuse borrowers of committing a crime. They are not allowed to lie regarding the legality of the forms they send customers.
  • Under the Debt Collections Act, they are not allowed to say certain things that are threatening or untrue. For example, saying they intend to take legal action against the borrower, or that the borrower will be arrested if the debt is not paid.
  • Debt collectors are not allowed to give false credit information, use a false company name or send borrowers any official looking or misleading document, if it isn’t truly official.
  • These collection agencies are not allowed to use unfair practices. Debt collectors aren’t allowed to collect additional fees or interests unless the contract that the borrower initially signed allows for such charges.
  • Additionally, debt collectors are not allowed to deposit a post-dated check on a date earlier than agreed, contact borrowers by postcard, or threaten to take the borrower’s property unless this is legal to do.

Garnishments of Bank Accounts or Wages

If borrowers do not make a valid attempt to pay their debts, it is possible to be sued by a creditor or debt collector in an effort to collect any arrears. If the debt collector wins his case against the borrower, the borrower will have the court entering a judgment against him. Additionally, the judge may order that the borrower be responsible for any court costs and related fees.

Recourse for Debt Collectors who Violate the Law

If a borrower believes that a debt collector has violated the law under the Fair Debt Collection Practices Act, he has the legal right to sue them in a state or federal court. This should be done within one year from the time of the alleged violation.

If the borrower were to win such a case in court, the debt collector might be required by the judge to pay the borrower a hefty compensation intended to cover any possible damages that he might have suffered due to the violation of his rights.

Sued by a Debt Collector

A borrower might finds himself in a legal situation where a debt collector has filed a lawsuit against him. In this case, the borrower should respond to the lawsuit with the representation and counsel of his attorney in order to protect and preserve his rights.

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