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CONSUMER RIGHTS UNDER THE FAIR DEBT COLLECTION PRACTICES ACT

It is obvious that Bankruptcy and debt collection should go hand-in-hand, as ultimately it will be the attempts at collection upon one or more debts that will inevitably trigger a bankruptcy filing.  One of the frequent questions that we hear from prospective clients is, “[can] my creditors legally do that?”  This essay will attempt to simplify the rights available to consumers under the Fair Debt Collection Practices Act (or FDCPA).  The FDCPA was created by Congress in response to numerous complaints lodged against the debt collection industry by consumers, alleging unfair, deceptive, misleading and even harassing behavior.  The Act sought to protect consumers by regulating the conduct of debt collectors, and providing remedies to those who are harmed by violations of the FDCPA.  Compliance under the Act is governed by the Federal Trade Commission (“FTC”), an agency of the federal government.

Debts that are subject to regulation under the FDCPA are limited to personal debts, such as medical bills, credit cards, and deficiency claims arising from foreclosures and repossession.  Because the purpose of the FDCPA is to protect consumers, the collection of business debts or other non-personal debts is not subject to the FDCPA.  A common misunderstanding among consumers is in regard to who is considered a debt collector.  A debt collector under the FDCPA is defined as an entity that routinely engages in the collection of debts.  This includes collection agencies, attorneys, and business that “buy debt” from other companies.  However, the FDCPA does not apply to an original creditor seeking to collect its own debt.   For instance, a credit card company such as Capital One does not have to comply with the FDCPA if its representatives are seeking to collect on a Capital One account.  This is important to remember if you are seeking to invoke the protections of the FDCPA or report violations to the FTC.

The FDCPA restricts a significant amount of collection practices that were in place before its enactments.  It prevents harassment, including phone calls or other contact at inconvenient times – such as before 8:00 a.m. or after 10:00 p.m.  However, there is no restriction on which days of the week that a collection agency may call you.  Collectors cannot use profane or obscene language in contacting consumers.  Collectors cannot attempt to collect a debt by making false statements, such as:  threatening arrest or incarceration; claiming an affiliation with a local, state or federal agency; threatening to file a lawsuit or garnishment if they have no intention to do so; or misrepresent or falsify the amount of money that is actually owed.  Collectors cannot contact third parties – such as employers or family members –  about the debt, other than to confirm or obtain an address, phone number or other contact information.

Assuming that a consumer is being contacted by a debt collector who is regulated by the FDCPA, there are certain steps that have to be taken to protect your rights.  If you are contacted by telephone, request written validation of the debt.  Also obtain the name, phone number and address of the collection agency and its representative, in the event that you should receive additional phone calls after you request validation of the debt.  NEVER agree to settle a debt without obtaining validation, and be wary of any bill collector who refuses to provide it.  There are numerous scams where consumers are conned in to making payments on non-existent debts.  If you dispute the debt, you are required to notify the collector in writing!!! Disputing the debt over the telephone does not preserve your rights.  When disputing the debt in writing (assuming there is a dispute), make sure to send the letter by certified mail, with return receipt requested.  In this manner, you will have verification of the receipt of your dispute letter, and the collector cannot claim to have “never received the letter.”   If you have any proof of your dispute, such as a cancelled check or other document demonstrating payment of the debt, attach a copy with your dispute letter.

Once notified of the dispute, the FDCPA requires the collector to contact the original creditor and “verify” the debt.  If the collector is unable to do so, then they are prohibited from further contact with the consumer.  They are also prohibited from posting any false or misleading information on the consumer’s credit report.  If you feel that a collection agency has violated the FDCPA by committing an act of harassment or deception, you can report it with the FTC at ftc.gov.  But be aware that disputing the debt with the collection agency, or filing a report with the FTC, does not necessarily mean that you may not be served with a lawsuit in the future, seeking a judgment to collect the debt.  If you are served with a lawsuit, you must take immediate steps to protect your rights.  Contact an attorney at once!