If you’ve run into some sort of financial trouble or have missed or delayed payments, or have featured in a debt collector’s list due to someone else’s mistake, your life may be turning out to be less peaceful, with each passing day. The incessant reminders in the forms of phone calls, letters or emails can have an unnerving effect even on the calmest people on this earth! You suddenly seem to have a problem at hand with a whole set of people who seem to fill each minute of the day with reminders, to help you not forget the issue even for a second, diminishing your chances of finding a logical way out of the situation, with each passing day.
Arm Yourself with Knowledge
Your stress levels and the related medical discomforts seem to be rising with time! You feel that you’ve got yourself into a mess and there is no way out but to endure the torture, there’s no one to help you out until you’ve got out of the debt! However, you are mistaken; the Federal government has armed you with enough ammunition to protect yourself from being harassed, even in case you’ve got yourself into a debt situation. So a little awareness, can help you deal with the situation much better.
Understand The FDCPA Guidelines
The FDCPA or the Fair Debt Collection Practices Act protects the rights of the consumers in the US. This law prevents the lenders and their collection agents from using any unfair or unlawful, abusive or misleading practices for collecting their dues from the customers. This act covers all kinds of personal, family and household debts, which includes credit card debts and medical bills but does not cover business debts. The Act sets standards that are binding only on the primary lender but also on all its agents and even companies who may have bought their bad debts with a goal to recover the dues.
The Act maintains that all consumers have the right to be treated with respect irrespective of the fact that they may owe money to their lenders. They cannot be coerced, threatened or publicly embarrassed to pay their dues.
The World’s Largest Collector Pays a Heavy Price
Recently, the FTC or Federal Trade Commission, which is the nation’s primary body that aims to protect consumers’ interest against any fraudulent or unlawful practices, recently pursued a case against Expert Global Solutions, one of the world’s largest collection companies, for clearly flouting the norms laid down by the FDCPA, in a bid to recover the dues from customers. They were guilty of calling customers beyond the permitted time slots, use false information, call up at work or even let friends and colleagues know about the dues. This clearly was a breach of the rules and in a landmark judgment against the third party collector, which was asked to pay up a fine of $3.2 million civil penalty for breach of the rules laid down under this Act. They have been directed to carry forth their business only after strictly adhering to the rules laid down under the act.
Stop Those Incessant Calls
The first and the foremost thing if a debt collector is calling you is to calmly hear him/her out and understand their part of the story and then see what you could do to resolve the issue, even if you feel that you have no business with the debt they are talking about. In case you have spoken to them and given your views and if you don’t want them to call you again, you can tell them so, in writing.
You could do this by sending the letter through registered post, while you retain a copy for your records. They will agree to either stop their calls or go ahead with further action such as filing a lawsuit. In case you owe them money, your debt collector may use other ways of recovering the money, such as filing a lawsuit, however, it can prevent them from harassing you with innumerable calls. If you deal with the collector in a firm but logical manner, you may be able to negotiate easy repayment terms for your dues
How To Tell When The Collector Flouts The Rules
If you know about the general guidelines that are set forth by the ACT to protect your interests , you will be in a better position to deal with the nagging collectors, who often transcend from being just irritating to even start embarrassing you in front of your friends or acquaintances, as was the case with Expert Global Solutions’ collectors. Most consumers are not aware of their rights and some of the hapless borrowers are really taken for a ride by these cunning professionals by taking advantage of their ignorance. So let us look at some of the broad norms set forth in the FDCPA:
When Can The Debtor Call: A debtor is expected to call only between the 8 a.m. - 9 p.m. window, unless the customer agrees for some other slot. In case they are told it is prohibited to receive personal calls in office, they will not be able to contact the customer there.
What Type of Debt is Covered: The FDCPA covers all kinds of personal and household debts, including credit cards and the medical expenses. Business debts fall outside its purview.
Who Should Be Called: In case you have an attorney to represent your case, then the collector must be contacting the person rather than the borrower. In other cases, they can contact the thirds parties (only once) for your contact information or whereabouts only. They are not allowed to discuss any details related to the debt with such people.
What Information Should A Debtor Provide: They are supposed to give in writing a “validation notice” within 5 days of contacting the borrower. This is to provide all the relevant details that pertain to the debt, which the collector is trying to recover.
What If I Don’t Owe Them The Money: If you give them the denial in writing or demand a verification of the debt, the collector cannot pursue with the calls. However, this letter must be sent within 30 days of receiving the notice, and in case the collector sends you the verification or proofs, it can again contact you.
Can My Bank Account or Salary Be Attached: A debt collector is not allowed to debit a borrower’s account directly. In case the borrower refuses to pay up, they can initiate a legal action and if they win the case, the court can order a third party like your bank to garnish your account to pay for the debts. Wages can be garnished only on court orders and one must not ignore the summons as you can lose the opportunity to fight your case.
Can I Lose My Benefits: Many of the federal benefits are exempted to garnishment or attachment against any debts. These include the benefits like SSN and SSI benefits, Veterans benefits, Civil Service & Federal retirement & disability benefits, Military Annuities & Survivors' benefits, Service member’s pay, Student assistance and a host of other applicable federal benefits. However, they can still be garnished under special circumstances to recover taxes, child support or alimony or even in case of recovering student loans.
Some Of The Practices Prohibited to Protect The Borrower
The debt collector is expected to use only ethical ways of recovering the debt you owe, however the case is not always like that. So, in case you feel you are being victimized by any of these, do not hesitate to report the creditor or its representatives.
Harass - The debt collector is prohibited from using any means to collect the debt that can be defined as harassment, oppression or abuse by use of violence or threats, public defamation, using inappropriate language or conduct or troubling through repeated calls.
Misrepresent - The collectors cannot give out any information or statement, which are not true, while they attempt to collect the due payment. They cannot make false claims to strengthen their authority or threaten you like claim to be attorneys, or credit reporting representatives or claim that you have committed a crime, give out a false figure about the debt, etc.
Threaten: The debt collectors cannot claim that you’ll be arrested if you don’t pay or that they can seize your property or salary, unless that was agreed in the original loan agreement, or threaten you with a legal action that does not have a legal basis.
Defame - They are also prohibited from giving out false credit information about the borrower to anyone else, send fake documents or use a fake company name.
Use Unfair Practice: The debt collector is not allowed to collect any amount or fees over and above your actual dues, unless it was agreed in the loan contract, deposit a post-dated check early, contact you through unprofessional communication methods, etc.
When You Know That The Debt Collector Is Not Playing By The Rules
Now, that you have a fair idea of how the debt collector is expected to conduct the business when they are attempting to recover the dues from the borrower, you can tell whether you are being treated rightly or not.
In case you know that the company is not following the law, what do you do? You have the right to sue the debt collector. In case you win, the debt collector can be forced to pay up for the damages that you can prove in the court. In case you are unable to prove the claim, still you can receive a compensation of up to $ 1000. In case of a group claim, this can be up to $ 50, 000.
Nevertheless, it is important to remember that even if the collector has not followed the FDCPA norms, it does not lose claim over the money you owe to the creditor. In case the debt collector files a case against you, you must respond immediately either personally or through a lawyer.
Any violation of the law by the debt collector can be reported to the Attorney General’s office or the Federal Trade Commission (FTC), for taking suitable action against the violators. Do remember that some state laws may follow different norms and it is best to contact the local Attorney General's office for the same.
Is there A Time Limit for Recovering The Debts
In case you are being pursued for old debts, check if the debt collector has the right to recover that money as debts have a limited period within which it should be recovered. This is known as the “Statute of limitations,” or a limited time to sue the borrower or else the debt becomes “time-barred.”
However, there are uniform norms as far as the different state laws or types of debts are concerned, hence you need to have your facts right when you feel you are being harassed for some old “time-barred” debt.
However, the debt collector is allowed to call the customer regarding these debts in an attempt to recover the same. They may or may not divulge the status; however, in case as a borrower you inquire if the debt is time-barred, they need to answer truthfully. However, in case they decline to answer you should find out what is the last payment received in their records. This will help to determine the statute of limitations, and in case the collector does not give you the information, you must send a letter demanding the same within 30 days of receiving the notice, giving clearly your reasons of disputing the claim.
The decision to pay, partially pay or not pay at all, a time-barred debt lies with the borrower as the debtor cannot legally sue the individual, but there are some consequences that follow:
- When You Don’t Pay- The creditor can continue to follow-up unless you ask them to stop (in writing). However, this will feature as a debt you owe in your credit records and pull your scores down.
- When You Pay Partially- Or even promise to make partial payments, the debt gets “revived” and a new statute of limitation starts with the risk of the lender being able to sue you for the entire amount along with the additional charges and fees
- When You Pay- The total claimed or the renegotiated amount, it is important to get the same in writing before you make any payments, that this is the complete amount against your debt and you will not hold any further responsibility towards the debt. Without this proof, the debt collector can claim your payment to be a partial amount against your debt and can pursue you further, legally.
Dealing With Unlawful Practices
In case you are sued for any time-barred debts, you should fight your case by providing the necessary proofs that it is beyond the statute of limitations and get the judgment in your favor.
However never ignore summons and exert your rights by filing a complaint, if you feel the debt collector is breaking a law. You may file a complaint with the FTC and your Attorney General’s office and even consider hiring a lawyer to fight your case, depending on the situation.
It is also important to keep your eyes and ears open against scammers. Remember, many fake debt collection agencies are nothing more than scams trying to cheat you out of your money. Never come under pressure and never make any payments unless you are completely sure of the claims. Always demand verification notices with all the necessary details and verify the same before you decide to make any payments. Make sure you get the complete details about the caller and verify the same before you proceed further with the debt discussion. You may contact the creditor directly too, in case you have doubts about the debt collectors identity, and may even report them in case you find their claims to be baseless.