What Is a Collection Attorney?
Collection refers to the process in which creditors attempt to obtain payment from non paying debtors. This process can be carried out by the creditor, or by a collection agency hired by the creditor.
A debt collection attorney is generally a business attorney who specializes in debt collections. They may work for debtors or creditors. If they are employed by a creditor, such as a credit card company, the attorney will work to collect unpaid debts from delinquent debtors. However, if the attorney works for the debtor, they may consult with creditors to come to a settlement agreement. Either way, a collection attorney works to protect the rights of their client.
When debt collections result in financial disputes, a collection attorney will understand whether it is better to pursue litigation or utilize credit counseling. Collection attorneys will have the knowledge to advocate for debt discharge, a restructured payment plan, or another similar option to resolve the debt dispute.
What Rights Do Debtors and Collectors Have?
Collection agencies are well known for utilizing aggressive tactics to collect money owed. These tactics, however, must not violate the Fair Debt Collection Practices Act (“FDCPA”). The FDCPA limits what actions a collection agency can legally take in its effort to collect payments from debtors. An example of this would be how a collection agency may not do the following:
- Use threats of violence or harm;
- Contact any third party about the debt owed, such as a debtor’s employer;
- Use obscene language when speaking to the debtor;
- Use the phone to annoy or irritate someone;
- Falsely misrepresent themselves as attorneys, government officials, or any other entity;
- Make false or misleading statements in an effort to obtain repayment; and
- Declare that they will take unlawful action if payment is not made.
Additionally, under the FDCPA, it is illegal for a collection agency’s debt collectors to call a debtor before 8 AM. They also may not contact a debtor after 9 PM.
There are also several things a collection agency must do once it has contacted a debtor. The collection agency must disclose:
- The amount of the debt owed;
- The name of the creditor seeking to collect; and
- The timeframe in which the debtor can dispute the amount owed.
The Act also gives debtors the right to demand that the collection agency stop contacting them. The exception to this is to tell the debtor that collection efforts have ceased, or that the creditor or collection agency will sue the debtor in connection to their unpaid debt. It is important to note that this demand must be in writing in order to be legally enforceable.
In addition to federal laws regarding the collection of debts, your state may also have laws surrounding the fair collection of debts. For example, Texas has the Texas Fair Debt Collection Practices Act, which provides additional protections to debtors by extending the federal protections to the original creditors.
Florida has the Florida Consumer Collection Practices Act (“CCPA”), which also supplements the federal debt collection protections, by prohibiting creditors and debt collectors from using deceptive, abusive, or otherwise misleading acts to collect a debt from a consumer. Importantly, other states also offer similar supplemental protections to the Federal Fair Debt Collection Practices Act.
What Legal Issues Are Related to Collections?
Disputes between collection agencies and debtors are fairly common. This is largely due to the fact that the debtor may continue to refuse payments, in which case legal action could become necessary. Financial disputes are also common between the collection agency and the business that initially requested their services.
Some examples of the most common legal disputes involving collection agencies may include:
- The borrower’s continued refusal to make debt payments, as previously mentioned;
- The hiring company suing the collection agency for not making diligent efforts to collect the debt, as the agency is generally bound by contract to make reasonable efforts to collect the payments;
- Illegal, deceptive, or unethical collection tactics, such as harassment or fraud, as these can lead to a lawsuit between the borrower and the agency;
- Unauthorized practice of law, in which a collection agency can be found guilty if they attempt to give legal advice or if they step outside the scope of their collection practices; and
- The collection agency actually assumes a principal-agent relationship with the business that they’re collecting for, and in the event of a violation, the consumer may then sue both the business and the collection agency.
Should You Hire a Collection Lawyer?
If you are being pursued by a collections agency, or otherwise need help managing your debts, you should consult with a collection lawyer. An experienced and local collection lawyer can inform you of your rights as well as your responsibilities, and will have a thorough understanding of any state specific laws that may apply to your case. The collection lawyer can present you with the best options and represent you in court as needed.