If a person uses credit cards, owes money on a personal loan, or is paying on a home mortgage, they are a debtor. The person they owe money to is a creditor. If a debtor falls behind in repaying their creditors, or an error is made on their accounts, they may be contacted by a debt collector. As a business owner you may be both a debtor and a creditor. As such, it is important that you know about the Fair Debt Collection Practices Act (FDCPA) and its requirements. The FCDCPA requires debt collectors to treat the consumer fairly by prohibiting certain methods of debt collection.
What debts are covered?
Personal, family, and household debts are covered under the FDCPA. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.
Who is a debt collector?
A debt collector is any person, other than the creditor, who regularly collects debts owed to others. Under a 1986 amendment to the Fair Debt Collection Practices Act, this includes attorneys who collect debts on a regular basis.
How may a debt collector contact the consumer?
A collector may contact the consumer in person, by mail, telephone, telegram, or FAX. However, a debt collector may not contact the consumer at unreasonable times or places, such as before 8 a.m. or after 9 p.m. (the debtor's time zone) unless the consumer agrees. A debt collector also may not contact the debtor at work if the collector knows that the debtor's employer disapproves.
Can the debtor stop a debt collector from contacting them?
A debtor may stop a collector from contacting them by writing a letter to the collection agency telling them to stop. Once the agency receives the debtor's letter, they may not contact the debtor again except to say there will be no further contact. Another exception is that the agency may notify the debtor if the debt collector or the creditor intends to take some specific action.
May a debt collector contact any person other than the consumer concerning your
If the debtor has an attorney, the debt collector may not contact anyone other than the debtor's attorney. If the debtor does not have an attorney, a collector may contact other people, but only to find out where the debtor lives and works. Collectors usually are prohibited from contacting such permissible third parties more than once. In most cases, the collector is not permitted to tell anyone other than the debtor and the debtor's attorney that the consumer owes money.
What is the debt collector required to tell the consumer about the debt?
Within five days after the debtor is first contacted, the collector must send the debtor a written notice telling the debtor the amount of money they owe, the name of the creditor to whom the debtor owes the money, and what action to take if the debtor believes they do not owe the money.
May a debt collector continue to contact the debtor if the debtor believes they do not owe
A collector may not contact the debtor if, within 30 days after the debtor is first contacted, the debtor sends the collection agency a letter stating the debtor does not owe money. However, a collector can renew collection activities if the debtor is sent proof of the debt, such as a copy of a bill for the amount owed.
What types of debt collection practices are prohibited?
Debt collectors may not harass, oppress, or abuse any person. For example, debt collectors may not:
- Use threats of violence or harm against the person, their property, or their reputation
- Publish a list of consumers who refuse to pay their debts (except to a credit bureau)
- Use obscene or profane language
- Repeatedly use the telephone to annoy someone
- Telephone people without identifying themselves
- Advertise your debt
Debt collectors may not use any false statements when collecting a debt. For example, debt collectors may not:
- Falsely imply that they are attorneys or government representatives
- Falsely imply that you have committed a crime
- Falsely represent that they operate or work for a credit bureau
- Misrepresent the amount of your debt
- Misrepresent the involvement of an attorney in collecting a debt
- Indicate that papers being sent to you are legal forms when they are not
- Indicate that papers being sent to you are not legal forms when they are
- State that the consumer will be arrested if they do not pay the debt
- State that they will seize, garnish, attack, or sell the consumer property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so
- State that actions, such as a lawsuit, will be taken against the consumer, which legally may not be taken, or which they do not intend to take.
Debt collectors may not engage in unfair practices in attempting to collect a debt. For example, collectors may not:
- Collect any amount greater than the consumer's debt, unless allowed by law
- Deposit a post-dated check prematurely
- Make the consumer accept collect calls or pay for telegrams
- Take or threaten to take the consumer property unless this can be done legally
- Contact the consumer by postcard
Debt collectors may not:
- Give false credit information about the consumer to anyone
- Send the consumer anything that looks like an official document from a court or government agency when it is not
- Use a false name
What control does the debtor have over payment of debts?
If the debtor owes more than one debt, any payment made must be applied to the debt the debtor indicates. A debt collector may not apply a payment to any debt the debtor believes they do not owe.
What can the debtor do if they believe a debt collector violated the law?
The debtor has the right to sue a collector in a state or federal court within one year from the date they believe the law was violated. If the debtor wins, they may recover money for the damages they suffered. Court costs and attorney's fees can also be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of the collector's net worth, whichever is less.
Where can the debtor report a debt collector for an alleged violation of the law?
Report any problems with a debt collector to the State Attorney General's office and the Federal Trade Commission. Many states also have their own debt collection laws and a local Attorney General's office can help determine the debtor's rights. If you have questions about the Fair Debt Collection Practices Act, or your rights under the Act, write: Correspondence Branch, Federal Trade Commission, Washington, D.C. 20580. Although the FTC generally cannot intervene in individual disputes, the information you provide may indicate a pattern of possible law violations requiring action by the Commission.