|
 If you've been paying your bills late - or not paying them at all - then you might be getting a call from a debt collection agency which is usually the final step in a lender's dunning process. If that's true, then you should know your rights under the Fair Debt Collections Practices Act.
In this publication we're going to first talk about the dunning process. Next we're going to discuss your rights under the Fair Debt Collections Practices Act or FDCPA. Finally, we're going to provide you with information that can help you identify if you've been the victim of illegal debt collection practices.
The Dunning Process
When companies provide goods and services to customers they expect to receive payment from those same customers - usually stated as revenues. Unfortunately, not every customer pays for the goods or services received and that's where a company's revenue protection policy comes into play.
Dunning is the name given to the process of methodically communicating with customers in the hope of collecting monies owed. These communications usually start with gentle reminders in case a customer inadvertently forgot to send in a payment.
Over time, and if payment is not received, the dunning process gets more aggressive in the form of more "firm" letters or outbound calls to the customer. If unsuccessful, the dunning process ends when a company sells the accounts receivable to a collection agency.
Fair Debt Collections Practices Act
The FDCPA was developed under the Consumer Credit Protection Act and its purpose is to reduce or eliminate the offensive or abusive practices typically associated with the collection of consumer debt. The FDCPA promotes both fair debt collection practices as well as provides consumers with a forum for obtaining and disputing debt information.
Debt Collection
By definition, anyone that owes money to another entity is a debtor. This includes both credit extended to you such as in the case of a credit card as well as borrowed money such as car loans, student loans, personal loans and mortgages. If at any time you fall behind in making your scheduled payments you stand a chance of entering a company's dunning process including being contacted by a debt collector.
Consumer Rights under the FDCPA
Fortunately, the FDCPA requires debt collectors to treat people fairly and the following list provides just some examples of the protections offered to debtors:
- Contacting Debtors - a collection agency is allowed to contact you by mail, telephone, telegram or fax. These contacts must not occur at inconvenient times or places. For example, contact cannot be made before 8:00 a.m. or after 9:00 p.m. unless you've given them permission. Debt collectors are not allowed to contact you while you're at work if they know your employer disapproves of such contact.
- Stopping Contacts - it is possible to stop a debt collector from contacting you by simply writing to the collection agency and asking them to stop. Once the agency has received this letter they are allowed to make one final contact if they intend on taking a specific action against you - such as filing a lawsuit.
- Contacting Others - the collection agency is permitted to contact certain individuals including your attorney or other people they believe might know where you live, work, or to find out your telephone number. In general, the debt collector is not permitted to tell anyone, other than your attorney, that you owe money.
- Written Notices - within five days after first making contact with you, the collection agency must send you a written notice outlining the money owed, the creditor's name, as well as any actions you can take to dispute the amount owed.
Prohibited Debt Collection Practices
Now that we've reviewed the allowable debt collection practices, it's time to talk about some of the illegal, or prohibited, collection practices. Collection agencies that use these methods to collect money are in violation of the FDCPA.
Harassment
Debt collectors are not allowed to harass or abuse debtors or any third parties they might contact in an attempt to locate a debtor. This includes threats of violence, publishing lists of people owing money, using profanity or obscene language, or use the telephone as a way to harass someone.
Making False Statements
Collectors may not use false statements in an attempt to coerce someone into making a payment. This includes misrepresenting themselves as attorneys or government officials, accusing the debtor of committing a crime, or claiming they work for a credit agency.
Collectors are not allowed to misrepresent the amount of money owed or pretend that a form is a legal document when it is not. In the same way collectors are not allowed to pretend that a legal document is not a legal form. They cannot send false documents or credit information to credit agencies.
Collectors cannot threaten you with arrest for not paying a debt and they cannot threaten to garnish wages, or sell your property if they are not legally entitled to take such action. You cannot be threatened with a lawsuit unless the collection agency intends, and is legally entitled, to do so.
Unfair Practices
Debt collectors are not allowed to collect more money then that owed unless the state in which you live explicitly allows such a practice. It is unfair for a collection agency to trick you into accepting toll calls or paying for telegrams. They also cannot attempt to contact you via postcards.
Reporting Violations
If you think you're a victim of a prohibited debt collection practice you have the legal right to sue the collector and / or their agency, in a state or federal court. You have up to one year after the violation occurs to file the lawsuit against the collector. If your lawsuit is successful, you may recover damages, court costs, as well as attorney fees.
Complaints can be reported to your state's Attorney General's office and / or the Federal Trade Commission. You can obtain more information on the process of reporting a violation by calling 1-877-382-4357.
About the Author - Debt Collection Practices
Copyright © 2007 Money-Zine.com
Debt Consolidation Resources on the Web |
Home 
