Debt Collection Laws: Know Your Rights

In 1978 the Fair Debt Collection Practices Act, or FDCPA, was passed by Congress due to an overwhelming amount of complaints related to collection agencies. Each state in the U.S. has adopted different laws similar to the FDCPA, many of which broaden what debt collectors are bound by under the act.

All states have to follow the minimum guidelines when it comes to debt collection laws. The country wide FDCPA covers most types of debts including vehicle purchase loans, medical bills, mortgages, credit cards, and retail financing.

Under the FDCPA the following actions are prohibited:

- Contacting you at any time outside of the hours between 8 a.m. and 9 p.m.

- Threatening you in any way, including threats of supplying false information to your credit report.

- Representing himself or herself as an attorney or law enforcement official when they do not hold such credentials.

- Contacting customers known to be in bankruptcy or known to have attorney representation.

- After a consumer notifies the company in writing that they want all communications to cease immediately, and they refuse to pay the debt, a collection company is no longer allowed to contact that person. This part holds some exceptions, such as contacting your attorney. They are often permitted to contact you one last time to offer one last chance to settle the debt, or to inform you that your request was received and they will cease communication. This type of letter is often referred to a 'cease and desist letter'.

- Publishing a consumers name on any public list of bad debts owed to the company.

- Threatening to have the consumer arrested or threatening to pursue legal action when there is no reason under law that they could. For example: A debt collector cannot threaten you with fines or imprisonment because a debt collector cannot 'truly' issue these things.

- Contacting you at a place or time that you have previously explained was inconvenient is prohibited.

- Debt Collectors are prohibited from using obscenities, racial slurs, or verbally attacking the consumer with insults.

- They cannot file any course of legal action that is far from your place of residence.

- They cannot use false information in an effort to get any type of information from you.

- They are not permitted to contact a third party without your consent. This includes relatives, neighbors, or employers. In some cases one phone call will be allotted in an effort to find your personal contact information, but they are not allowed to disclose that they are a debt collector.

The FDCPA also requires debt collectors to do other actions. These actions are as follows"

- The debt collector must identify himself or herself in every communication. They must tell you that you are speaking to, or reading a letter from, a debt collector and any information obtained will be used for that purpose only. This is sometimes called a Mini Miranda Warning.

- The debt collector must be able to provide verification of the debt upon request. A debt will have thirty days from the first point of contact to send a letter of dispute or request verification of the debt. At that time the debt collector must provide proof of the debt or cease all communication.

- They must provide the name and address of the original creditor upon written request within thirty days of receiving such request.

- They must tell you the full amount of the debt that they are trying to collect.

The FDCPA applies to third party creditors, not the original creditor. What this means is that the original creditor does not follow the same guidelines under the FDCPA. If you have a credit card from ABC Company and someone from the company contacts you directly they are not covered under the FDCPA. However, if ABC Company sends the debt to XYZ Inc. to collect the debt, XYZ is then a third party and obligated to abide by the FDCPA.

These third parties are known as debt collectors. Your state may hold the original creditor to the same laws as the FDCPA. It is important to check your state regulations when the original creditor is contacting you without the use of a third party. Many states do not allow the debt collector to contact you by telephone for a minimum time period after you have hung up on them. Some states do not follow any hang up rule, while others will allow one more immediate phone call to ensure that you hung up and were not disconnected for another reason.