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Fair Debt Collection Act

There are a number of reasons a person may have trouble paying on a loan as agreed. Most people do want to pay their bills but at times are just unable to do so. The responsible thing is to never borrow money (use a credit card, take out a loan, etc.) unless you are sure you can repay the debt. Sometimes however, despite best intentions, it is just not possible to make a payment. 

When you know you will not be able to meet an obligation you should immediately contact those you will not be able to pay. You should explain, without making excuses, why you are not able to pay and when you expect that you will be able to make a payment. If you are able to make a partial payment you should indicate that you would like to make a partial payment and then tell them when the balance can be expected.

Usually creditors are understanding and will give you a short grace period. If your situation becomes critical and you are not able to make payments over the long term you should see if you can recover the cost to the person to whom you owe money. This can be accomplished by returning the item to the seller, selling that item or other items in your possession to try and raise the money needed to pay your debts.

Sometimes a debt goes to collections. When a debt goes to collections it means the company that you owe is not feeling confident of your continued regular payments on the obligation. The collector’s job is to recover as much of the money owed to your creditor as possible. They have a tough job, and have heard every excuse, and have little to no sympathy. They are usually hard driving individuals focused on getting money out of you. Even though collectors are persistent, there are rules by which they must abide.

The Federal Trade Commission (FTC) administers The Fair Debt Collection Practices Act (FDCPA), which regulates third party collection efforts. Third party collectors include collection agencies and law firms that offer collection services. Here are some of the most important rules.

Collectors may:

• Contact you by mail, telegram, email, or fax at any time

• Call between the hours of 8am to 9pm

• Contact you at any reasonable place such as at home 

• File a lawsuit against you 

• Trace you through other people, but may not discuss your debt with those people.

Collectors must:

• Identify themselves as debt collectors

• Tell you that any information they gather will be used to try and collect the debt.

•  Keep your business relationship private

If you owe on more than one transaction placed with an agency they must post the payment to the account specified.

Collectors must not:

• Call between the hours of 9pm to 8am

• Send a postcard

• Contact you at work unless you give them permission to do so

• Represent themselves as agents of the government, or a credit bureau

• Threaten you with jail if you don't pay. 

• Imply that you have committed a crime (unless you bounce a check to them in which case you could be prosecuted).

• Disclose any debt related information to anyone other than your attorney of record

• Use profanity, threats of violence, or other verbal abuse.

• Threaten to file a law suite unless they intend to actually do so

• Contact you by phone if you write a letter requesting that they not contact you by phone any further

In addition, each state has its own guidelines for debt collection.

If you feel you have been subject to collection actions that violate these policies you can contact the FTC to file a complaint. If the harassment is sufficient you can file a civil law suit against the collection agency. The best way to deal with a collection agency is to agree to a certain amount in monthly payments and then stick to it. Being turned over to a collection agency will damage your credit and it will take some time to restore your good rating. There is no quick fix, but you don't have to put up with illegal practices.

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