Consumer Protection Topics - Debt Collection
Debt Collection Basics
The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from using abusive, unfair, or deceptive practices to collect debts. The FDCPA covers debt for personal, family or household purposes. Under the FDCPA, a debt collector is someone who regularly collects debts owed to others, such as a collection agency. A bank collecting its own debt in its own name is not considered a debt collector and may attempt to collect debts owed in a reasonable manner, including telephone calls to the borrower. However, banks and other lenders that are not acting as “debt collectors” under FDCPA are generally expected to avoid abusive collection practices and comply with the spirit of the FDCPA.
Consumer Protections Available
Consumers are protected from debt collectors engaging in certain practices, like using abusive language or threatening violence. A short list of prohibited debt collection practices include:
- Contacting consumers at unusual times, which typically means before 8:00 am or after 9:00 pm in the consumer’s time zone.
- Using obscene or profane language; threatening or using violence; or falsely stating or implying that the debt collector is affiliated with the United States government or a state government.
- Contacting consumers at their place of work if the consumer has notified the debt collector that they are not allowed to receive calls at work.
- Telling a consumer’s co-workers or friends that the consumer is in debt.
- Abusing or harassing a consumer by, for example, repeatedly calling their telephone or letting it ring continually.
However, the law allows for certain debt collection practices. For example, a debt collector can contact friends, neighbors, and co-workers, but only to find out a consumer’s home address, phone number, and work address. Also, debt collectors can contact the consumer’s attorney, the creditor, the creditor’s attorney, the debt collector’s attorney, and credit reporting agencies (in some cases). Debt collectors may also contact the consumer’s spouse, parent (if the consumer is a minor), guardian, executor, or administrator.
In addition to the FDCPA’s prohibition of certain debt collection practices, there are several other ways you can protect yourself:
- Verify the debt is legitimate. When a debt collector first contacts you, they will probably tell you the amount owed and the creditor’s name. In some cases, debt collector will send a letter to the consumer with this information. Make sure this information is accurate.
- Limit communication by hiring an attorney. Once debt collectors know you have an attorney to handle the debt, they will contact the attorney instead of calling you.
- Request an end to communication. When a creditor receives your written request to stop contacting you, they must stop contacting you (an exception is made for informing you there will be no further contact or to let you know that a specific action, like filing a lawsuit, is planned). However, it is important to note that this does not mean the debt goes away – the debt collector can still take legal action to collect the debt.
- Consider your legal options. If you think your rights under the FDCPA have been violated, you may want to contact an attorney to discuss your legal options.
- File a complaint with the FDIC. The FDIC directly handles debt collection complaints related to FDIC-supervised banks and forwards complaints to other regulators as needed.
In addition to federal regulators, many individual states have enacted their own versions of the FDCPA, which may provide additional protections (see below).