Demystifying Debt Collection Laws for Consumer Protection

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Americans are plunging deeper into the red zone. According to the Federal Reserve, American consumer debt stood at $4.1 trillion as of June 2019. With the debt burden soaring high, debt collectors have resulted in dubious means to try to recover the money owed. While they are entitled to attempt and reclaim money that legally and ethically belongs to them, they are bound by laws that govern debt collection. The era of feared hard-hearted individuals who threw families out into the cold due to overdue rent is long past. Several regulations exist to limit what a debt collector can do or say, preventing harassment of private citizens. These debt collection laws include:

Federal Fair Debt Collection Practices Act (FDCPA)

The Fair Debt Collection Practices Act is the primary legislation that regulates the collection of debt by third parties. These debt collection laws were passed by congress in 1977 as an amendment to the Consumer Credit Protection Act. The legislation prohibits harassment, threats, inappropriate contact by debt collection agencies to consumers.

As the collection base expands, so have the complaints against debt collectors increased. In 2018, the number of consumer complaints filed was 81500. FDCPA protects consumers from deceptive and abusive practices used to collect a debt.

Rules of contact

The FDCPA clearly outlines the rules of engagement between you, the consumer, and the debt collector. The agency is only allowed to contact you between 8.00 am and 9.00 pm. They should not try to communicate with you while at work. Additionally, you are not permitted to receive personal calls. The language used should not be abusive, threatening, or insinuating violence. If the collector violates these provisions, you may write a cease and desist notice which they should observe. No further contact should be initiated.

Must Prove a debt is due

The collection company must provide detailed information about each debt. They should come with a document supporting their claim that you owe the creditor. The document should contain the the amount owed and the name of the creditor as well as the instructions on how to repay the debt. The debt collector is bound by law to provide written notice within five days of the first contact.

You have the right to dispute all or part of the debt. You may also request more information from the debt collector. If you dispute or ask for more details in writing within 30 days, the collector should cease all debt recovery activities until they verify the debt information to you. If the debt is yours, you may employ the services of a debt settlement lawyer that will draft your debt repayment agreement.

In-house Collectors Vs. Debt Collecting Agencies

FDCPA has a legal loophole as it does not cover the debt collection by original creditors. The law covers third-party collectors who include agencies, debt buyers, and advocates who collect debts. The law shields you from harassment, false statements, misrepresentation, threats, and unfair practices. It is advisable to demand that the collector be clear about the original creditor and how much money you owe.

Federal Fair Credit Report Act(FFCRA)

Other essential federal debt collection laws that protect consumers from scrupulous debt collectors include the Fair Credit Report Act. The legislation covers the release of your information to credit reports companies. Additionally, the debt collector is not allowed to reveal the amount owed to anyone during the process of recovering their money.

State Laws

Most states have debt collection laws similar to the FDCPA. The laws may cover Unfair and Deceptive Acts, which protect local consumers from unfair practices. Consult your State Attorney General’s office to learn more about consumer protection laws in your state.

If you feel a debt collector has violated your rights, you may file a complaint with the Consumer Financial Protection Bureau. You may also submit your complaint with the Federal Trade Commission or your local State Attorney’s office. If you want to handle the issue yourself, you may head to court and sue the collection agency.

Legal Disclaimer: The content on this page contributes to general consumer knowledge. It is neither legal advice nor regulatory guidance. Please contact us or a debt relief attorney for more information.

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