Financial Resource

Debt Collectors have a bad reputation. Rightfully so. Many of them take advantage of the fact that most Americans don’t know their rights regarding the collection of a debt. In order to collect a debt, many of them will lie, misrepresent facts, or commit fraud in order for a debtor to pay the debt collector.

What follows is an easy-to-understand breakdown of a federal law known as the Fair Debt Collection Practices Act (FDCPA). This set of laws was created to protect the rights of consumers regarding the collection of a debt.

We will cover only the most frequent situations that occur, as there are many statutes that protect you. For a comprehensive list, visit the Federal Trade Commission (FTC) website @ www.ftc.gov/bcp/edu/pubs/consumer/credit/cre18.shtm But first, let’s start with a basic understanding of the process of collecting a debt.

Keep in mind that your creditors are not debt collectors. If you are late on a payment, your creditors will simply attempt to collect a payment. However, when a debtor is about 90-120 days late on a credit card payment, the creditor will normally sell the account to a collection agency.

The collection agency (debt collector) will attempt to collect the debt in full. They are usually not interested in receiving monthly payments.

If the debt collector ultimately fails to collect the debt, they may choose to sell the account to another collection agency. If you ever received a collection notice from a debt collector and later on received another letter from a different company, it’s usuallybecause the debt has been resold.

If, after 4-6 months, the debt was not collected, the original creditor will “charge-off” the account. This means that the creditor basically gives up trying to collect the debt.

The creditor will report the account to the credit bureaus as a “charge- off”, and your credit report will reflect it accordingly. The creditor gives up trying to collect, and walks away from the debt and take a loss.

However, the debtor is still responsible for the unpaid debt, and it will remain on the debtor’s credit report for 7 years after the date that the account was charged-off.

O.K., now that you have a basic understanding of the debt collection process, and you know the legal definition of a debt collector, let’s start.

Communications of a debt collector to someone other than the debtor

If a debt collector cannot locate the debtor, and speaks to someone other than the debtor, such as a friend or relative, he may not state the purpose of the call. He must not disclose that he is trying to collect a debt. Also, he may not communicate with the same person more than once.

In addition, he may not communicate via postcard. He cannot use any language or symbol on the envelope that indicates that he is a debt collector.

If the debt collector knows that the debtor is being represented by legal counsel, he may only communicate with the attorney, unless the attorney does not respond to the debt collector in a reasonable time.

Communication of a debt collector with the debtor

A debt collector may not communicate with a debt collector if:

The time or place is inconvenient to the debtor. Also, he cannot call the debtor before 8am and after 9pm.
The debtor is at his place of employment and the employer prohibits such communications.
The debtor informs the debt collector that he refuses to pay the debt, or that he wants to cease communications with the debt collector. If so, then the debt collector may inform the debtor that the creditor, or debt collector may take legal action in order to attempt to collect the debt.

Harassment or abuse

A debt collector may not harass a debtor. This includes verbal threats of harm to the debtor, the debtor’s family, his property, or his reputation.

He may not use obscene or foul language, or repeatedly call the debtor to annoy, abuse or harass him. If a debt collector calls, he must identify himself.

False, deceptive or misleading representation

The debt collector may not state that he is an official officer or employee of the government. Also, he may not mislead the debtor into believing that he is an attorney, if he is not.

He may not misstate the amount or legal status of a debt.

The debt collector may not state that the failure to pay a debt will result in imprisonment, wage garnishment, or asset seizureunless it is lawful and he informs the debtor that the creditor or debt collector intends to take legal action.

The use, or distribution of a false document to facilitate the payment of a debt.

The false misrepresentation that documents are not legal, and require no action on the part of the debtor.

Validation of a debt

Within five days of the initial communication with the debtor, the debt collector must send the debtor a written notice containing:

The amount of the debt owed.
The name of the creditor to whom the debt is owed.
A statement that if the debtor doesn’t dispute the validity of the debtwithin 30 days, the debt collector will assume the debt to be valid.
A statement that if the debtor dispute’s the debt to be valid within the 30 day period, the debt collector must provide the debtor with a copy of the original contract between creditor and debtor, or a copy of the judgment (if applicable) that the debt is valid.

Legal actions by debtors

If the debt collector is proved to be in violation of the FDCPA, the debtor may file lawsuit, and seek damages in the amount of ,000.

Now that you are armed with the basic laws of debt collection practices, the debt collectors shouldn’t try to bully you around!  To discover the fastest method of eliminating your debt, please visit us at http://debtfreesolutions.mobi

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