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Debt Collection Practices

 
This LegalCapsule,™  prepared by the Auerbach Law Firm, is a plain-English explanation of debt collection practices. In an effort to be brief, many points may be oversimplified. Readers are therefore cautioned to check with our offices or another lawyer as to the particulars of their case; this generalized information should not be construed to be formal legal advice.

The United States Congress has recognized the frequent use of abusive, deceptive, and unfair practices by many debt collectors, which cause many consumers to lose jobs and suffer invasions of privacy. As a result, the Fair Debt Collection Practices Act was enacted into federal law in order to protect consumers from these practices.

The Act regulates the conduct of debt collectors in various ways, including the manner in which they can communicate with the consumer, the restrictions on communicating with third persons regarding the consumer's debt, and the penalties for violating the law.

Communicating with the Consumer

Communicating with Third Parties

Notice of the Debt

Penalties for Violating the Act

Communicating with the Consumer

The Act has placed numerous restrictions on the attempts by debt collectors to communicate with consumer debtors:

TIME AND PLACE — A debt collector may not communicate with a consumer regarding collec­tion of a debt at any unusual time or place which the collector should know is inconvenient to the consumer. Inconvenient times are presumed to be before 8:00 a.m. and after 9:00 p.m.

TYPE OF CONDUCT — Among the actions prohibited by the Act, collectors may not:

  • Engage in harassment, oppressive or abusive conduct in an attempt to collect a debt. For instance, collectors cannot use or threaten the use of violence, or use obscene or profane language;

  • Cause a telephone to ring or engage any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass that person;

  • Publish a list of consumers who allegedly refuse to pay debts, except to a consumer reporting agency; or

  • Use false, deceptive, or misleading representa­tions in an attempt to collect a debt, including misrepresenting the amount or legal status of a debt, the representation or implication that the collector is an attorney, the threat to take any action that is not intended or cannot legally be taken, the representation that nonpayment of any debt will result in arrest or imprisonment, or the false representation or implication that the consumer committed any crime.

TERMINATING COMMUNICATION -A debt collector must cease communicating with a debtor once the consumer notifies the collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communications. After such written notice, the collector may advise the consumer that further communication is being terminated, or that the creditor intends to invoke a specific remedy. In addition, the debt collector must communicate with the consumer's attorney rather than the consumer, if the collector knows that an attorney is representing the consumer.

Communicating with Third Parties

Debt collectors attempting to obtain information about the consumer from another person must identify themselves, state that they are confirming or correcting location information concerning the consumer, and if requested, must state the name of their employer. They may not:

  • State that the consumer owes a debt;

  • Communicate more than once with that person, unless they reasonably believe that the earlier response was incorrect and that the person now has correct or complete location information;

  • Communicate by post card; or

  • Indicate by mail or telegram that the debt collector is in the collection business or that the communication relates to the collection of a debt.

Notice of the Debt

A debt collector must inform the consumer of the amount of the debt and the name of the creditor. The notice must also advise that unless the consumer disputes the debt within 30 days, the debt will be assumed to be valid by the collector, and that if the consumer disputes the debt within that time period, the creditor will verify the debt and forward that verification to the consumer.

If all this information is not provided by the collector in the initial communication with the consumer, the collector must notify the consumer of these points in writing within five days after the first communication.

Penalties for Violating the Act

A debt collector who violates the Act may be held liable to the consumer for the actual damages sustained by the consumer, and up to $1,000.00 additional damages to an individual consumer, as well as the costs of the action, including the consumer's reasonable attorney's fees. The court determining liability must consider several factors, including the persistence of the violations by the debt collector and whether the violation was intentional. It should be noted that where an action is brought by a consumer against a debt collector in bad faith or for harassment purposes, the court may award court costs, including reasonable attorney's fees, to the collector.

Finally, the Act provides that it is not intended to relieve any person from liability under stricter debt collection laws adopted by any individual states.


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This web site is designed for general information only. The information presented at this site should not be construed to be formal legal advice nor the formation of a lawyer/client relationship. Send mail to webmaster@auerbachlawfirm with questions or comments about this web site. Copyright © 2013, Auerbach Law Firm. All rights reserved.