Know Your Rights Against Debt Collectors

The following is a guest post from Kathryn Katz, an avid cat lover, single mom, internet marketer and professional copywriter. Kathryn is a Certified Personal Finance Counselor and works for Consolidated Credit Counseling Services.

Many consumers have suffered from financial difficulties during the recession. High unemployment, upside down mortgages and increased interest rates on credit cards are just some of the challenges facing Americans. If you’ve gotten behind in your bills, you might find that your creditors have charge-off your debts and suddenly you’re in collections.

There are many horror stories about debt collectors engaging in abusive, deceptive and unfair debt collection practices to intimidate consumers into paying their debts. Congress has passed several laws to govern how creditors and third party debt collectors can collect on debts to protect consumers:

Fair Debt Collection Practices Act (FDCPA)

This act prohibits third-party debt collectors from using abusive, deceptive and unfair debt collection practices to collect a debt, including:

• Telling anyone that you owe money.
• Using threats of violence to collect debts.
• Using obscene or profane language while on the phone.
• Calling repeatedly to annoy you.
• Misrepresenting who they are or amount you owe.
• Falsely claim that you’ve committed a crime and threaten you with jail.

Warning: The FDCPA only protects you against third-party debt collectors, not original creditors.

Federal Trade Commission Act (FTC Act)

This act gives the Federal Trade Commission the authority to take action against third-party debt collectors that violate the FDCPA, and original creditors who use unfair and deceptive debt collection practices. If your rights have been violated, you can complain to the FTC.

Fair Credit Reporting Act (FCRA) 

A credit report is created from information provided by data furnishers, which can include creditors, debt collectors and debt buyers. FCRA requires that all information provided is accurate. It details the process consumers need to follow for address disputes.

In addition to these laws, Congress has added provisions in other federal statutes that affect debt collection practices. The Telephone Consumer Protection Act of 1991 regulates the use of predictive dialers, a technology that debt collectors use in their collection efforts. The Financial Privacy Requirements of the Gramm-Leach-Bliley Act governs how debt collectors can collect and share your nonpublic personal information, and the safeguards they have to implement.

Because states are not allowed to enforce FDCPA, many of them have enacted their own fair debt collection statues. Many of these statutes mirror the FDCPA, and give law enforcement the power to protect consumers within their state. Here are some examples of state debt collection statutes:

• California – Fair Debt Collection Practices Statutes 
• Colorado Fair Debt Collection Practices Act
• Massachusetts Laws and Regulation about Debt Collection 
• New York State Debt Collection Law 
• Texas Debt Collection Laws
• Washington State Laws on Collection Agencies 

Also, be aware of the statute of limitations that applies in your state. Your debt collector has a limited opportunity to file legal action against you. According to the FTC, the statute of limitations does vary by state but typically ranges from 3 to 10 years. In some states, the statute of limitations can restart under certain circumstances. For example, in Kansas, the statute of limitations resets when the consumer makes a payment towards the debt or acknowledges the debt in writing.

Before dealing with debt collectors, make sure you know your rights, and don’t be afraid to stand up for them if the debt collector is using abusive, deceptive and unfair debt collection practices.

Comments

[Lawrence @ CRB]

This was an extremely informative post filled with very relative information. I have clients in my office every day that benefit from the information we share about collection agencies. I have a couple of tips that I'd like to add. One, record your conversations with debt collectors. And two, save all messages left on your voicemail by collectors. Should the collectors cross the line, you'll have proof. And, should you decide to sue a collection agency for violating your consumer rights, you'll need proof.

That said, it's important that you check your state laws before recording your telephone conversations.

[MattJ (J is not for Jennikevich)]

What are my rights as someone who doesn't owe anyone any money? I have a very common name. Not everyone with my name, apparently, pays their bills on time, or at all. A couple of years ago I lived in a large (Metro pop > 5 million) city, and was barraged with constant calls from debt collectors who would use the slimiest tricks to get me to call them back. All they wanted was to get me to call them back and give them the last 4 digits of my SSN, but once they couldn't collect on the debt, they would just pass it on to the next agency who would look at the name on the account, go to the phone book, and start the whole process again. And the agencies get progressively skummier as the debt gets harder to collect.

Eventually I stopped cooperating. That is, I would admit to having the same name as the person they were after, but I would no longer give them the last four of my SSN. This infuriated them, and for many it confirmed their suspicions that I was their guy. I flat-out told them that due to my very common name, I got calls from people all the time, and instead of cooperating with their procedure and helping them out, I would refuse to cooperate "in order to make it harder for the "scroll down the list of names in the phone book method to work."

Messing with them led to more frequent calls, but once I stopped being compliant with their methods, the calls were more enjoyable to me because they were on my terms. When a particularly nasty bill collector was after "me", enhancing their frustration and wasting their time was something I looked forward to. That said, I'm not in college anymore and am glad that I've learned to avoid these creeps.

I have had debt collectors tell my roomates that I was behind on my payments to Best Buy on a $2700 debt that was not, in fact, my debt. I've been called at 9am on a Sunday only to be told that if I don't catch up on my boat payments, they'll send someone out to repo it. (That one was actually kind of funny - My response: "Don't waste any time. Send someone out today and please remove any boats you can find on my premises")

Eventually the calls have stopped because I dropped the land line and because I moved to a smaller city where there are fewer people with my name. That is, if there are only five of us around, chances are the other guys pay their bills on time, too. The debt collectors don't look for me here, and even if they did, they don't know my phone number.

So I'm curious... does someone who doesn't owe the money that the bill collectors are seeking have any rights, or is hiding from bill collectors by having an unlisted phone number my only solution?

[corporate refugee]

I would add:

~ Original creditors who pretend to be third party debt collectors may, by doing so, expose themselves to the regulations regarding actual third party debt collectors. (I'm pretty certain about this but IANAL, YMMV, etc.) Be on the lookout for envelopes with third-party names that tell you to send payment to the original creditor. Sending them the standard debt-verification request usually rattles their cage pretty good ;o)

~ By all means report offenders to the FTC (and your state attorney general and any consumer protection office your state may have), but harbor no illusions that they will intervene on your behalf. Government agencies are almost always looking for patterns of abuse. You'll have to file your own lawsuit to enforce your rights (and, if you win, collect your own judgment, which is no small feat). The mere threat of a suit has historically enough to set them back on their heels, but this new breed who go so far as impersonating police officers(!) on the phone may not be as impressed.

Also, the author places a lot of faith in the Fair Credit Reporting Act. My experience has been less stellar. Creditors just "confirm" the debt, regardless, and you have no recourse.

[DB]

I think the FDCPA covers most debt types except for business debts. I'm not too sure. Debts like credit cards, automobile loans, personal loans, medical expenses and mortgages are all covered under the Act.

[Roy Slater]

If you have all of your debts consolidated through one of those non profit debt management companies but your debt collectors are still calling who should you talk to? Do you refer them to the consolidation company? Any suggestions?