Debt collections law
Are your tried of trying to reach your debtors to get back your debts and there is no other alternative than hiring a debt collection agency? Well before you hire a collection agency you should know that all the collection agencies functioning in the U.S. are supposed to abide by the debt collection laws.
For creditors taking the help of these agencies it is important to know whether the agency that they hire follows the debt collection laws or not. If these agencies do not follow the laws then it can create a lot of difficulties for your company. Besides the federal debt collection laws the agencies are also required to work according to the state collection laws and the HIPAA.
The laws that are to be followed by the agencies are mentioned below.
Types of laws to be followedThe collection agencies are basically supposed to follow the Fair Debt Collection Practices Act (FDCPA) and the Fair Debt Reporting Act (FCRA). Let us see both these laws in detail.
Fair Debt Collection practices Act: This is the main debt collection law and is the federal law that is supposed to be followed by all the collection agencies. This law is mainly applicable on family, personal and household debts. These might include debts like loans taken for buying cars, medical treatments, personal charge accounts etc. the collectors are supposed to function in a decent manner to collect debts and should avoid following deceptive or abusive actions.
According to the FDCPA the collectors cannot contact the debtor more than once and are not allowed to make repeated phone calls and that too at odd times.They are prohibited from using abusive or obscene languages and cannot harm the debtor or his or her property. The debt collectors also cannot use false identity that they are government agents or attorneys. Moreover they should not fake the amount that they have to collect from the debtor.
Fair Credit Reporting Act: This is another important laws that is to be followed by the debt collectors. According to this law there is a restriction on who can view the credit information of the debtor.
Restrictions as per the debt collection lawsAs per the federal trade commission and the FDCPA the debt collector is restricted from the following:
- Calling the debtor before 8 a.m. or after 9 p.m.;
- Calling the debtor at the work place if the collector is aware that the employer does not approve of such calls.
- Cannot abuse or oppress the debtor
- Cannot lie that you can be implicated in a legal case.
- Cannot make the use of any unfair means for collecting debts
- Cannot start speaking to you over the phone by giving the identity
- If you give a written request to stop any further contact then they should abide by it.
According to the laws the debt collector is supposed to have proper documentation of how much the debtor owes to the creditor.
How should the collector communicateAs per the FDCPA laws the collection letter given by the collector should not just state the amount that the debtor owes but should present all the facts in a manner so that it is easy for the debtor to understand what exactly is being conveyed. If the collector has the intention to collect only the amount that is to be paid on the date that the letter has been sent then according to the FDCPA it should contain the amount due and statement that the creditor has hired the agency to collect the debts. In case the debt collector is trying to collect the amount due and the interest rate or other costs applicable to the debt then they are required to use the federal court language.
Things that you should be careful aboutWhen a debt collection agency calls you, you should be calm and patient. Answer the relevant questions and make sure that you do not give out any additional information about yourself like your bank accounts and your place of work. If you give such details it becomes easier for the agency to get judgment against you. Besides, this you should not agree to make payments for which you cannot make for the time being.It is best advised that you should be aware of the debts that you have and the amount that you owe to each creditor so that in case you get a call you are able to confront the collection agency in case of a wrong allegation.
There are some agencies that would also propose a repayment plan to you or offer a postdated check payment option. However, do not agree to it immediately. Take your time and sort out your debts and finances and then take a decision.
Statute of limitationEvery debt that you have has its own statute of limitation within which the collection can be carried out. This indicates that the creditors can have the option of collecting their debts within a stipulated time.
This statute of limitation is different for every debt and also varies from one state to another. The statute of limitation on the debt starts when it becomes delinquent.So, if a debt collection agency is trying to recover a debt that has already crossed its statute of limitation then you can take action against them as per the FDCPA. It is advised that you get details about the statutes for the various debts that you have so that if the debt collection agency tries to collect the debts then you can have enough proof and act against it.
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