Collection laws refer to a set of specific rules that govern debt collection practices. The main guidelines that debt collectors must follow when attempting to recover payments owed by debtors can be found in a federal law known as the Fair Debt Collection Practices Act (“FDCPA”). The law was initially passed by Congress in 1978 and amended again more recently in 2010.
The original purpose of the FDCPA was to prohibit debt collectors from employing abusive, deceptive, or unfair practices when engaging in collection activities, such as harassing or threatening debtors to make payments. Under the Act, the term “debt collectors” may refer to debt collection agencies, debt collection companies, debt purchasers, and/or lawyers who collect debt as a facet of their business.
However, the FDCPA does not cover business debt; only debts of individuals. For instance, the FDCPA protects individual debtors against debt collectors who attempt to recover overdue mortgage payments, credit card debt, medical expenses, and/or other family, personal, or household-related debts in an abusive, deceptive, or unfair manner.
The FDCPA also explicitly prohibits debt collectors from conducting the following debt collection activities:
- Discussing your debts with friends, family, employers, or neighbors;
- Calling a debtor before the hours of 8am or after 9pm;
- Using slurs, insults, threats, or obscenities as a tactic to force a person to repay their debts;
- Misleading a debtor by not identifying themselves as a collection agency; and/or
- Contacting a debtor at work after they have told a collector that it is not allowed.
Another federal law that protects against unlawful debt collection practices is the Fair Credit Reporting Act (“FCRA”). Under the FCRA, consumers may submit a complaint if they find an error in their credit report. There are also various federal consumer protection laws as well as federal agencies that offer ways to report such actions (e.g., Federal Trade Commission (“FTC”), Consumer Financial Protection Bureau (“CFPB”), etc.).
In addition, states may also have their own collection laws that are similar to the provisions of the FDCPA and offer protection for consumers against unlawful debt collection activities, as well as state agencies and laws that prohibit unfair and deceptive acts. Therefore, there are many ways to resolve an issue with a debt collector or to prevent a debt collector from harassing you under the law.
What Acts Violate Collection Laws?
When a lender extends credit to a borrower, there is an implied expectation that the funds loaned will be repaid within an agreed upon time frame. If the borrower fails to repay the lender, the lender will then have a right to demand payment for those debts. As discussed above, however, a lender or creditor cannot recover debts using a method that is considered abusive, deceptive, or unfair under various debt collection laws.
For example, under the FDCPA, a debt collector cannot contact a debtor at an inconvenient time (i.e., not before 8am or after 9pm) or in an unusual location (e.g., if a debtor explicitly states that they cannot receive communications at work). Also, if a debt collector is aware that an attorney is representing a debtor, they must speak to the debtor’s attorney instead.
Some other common examples of collection activities that may be prohibited by federal and/or state debt collection laws include:
- Unfair practices: For example, a debt collector may not tack on fees or interest that were not part of the original agreement between them and the debtor, or that were not formally issued by a court order. Debt collectors also may not communicate with a debtor through methods wherein they would incur a charge (e.g., text messages, phone calls, etc.).
- Invasion of privacy: Debt collectors may only contact third parties if they genuinely cannot find or connect with the debtor after numerous attempts. In contacting a third party, the debt collector must identify themselves, but cannot offer any information about the debt payments they are seeking or the debtor’s situation.
- A debt collector also may not use envelopes or other types of mailed documents (e.g., a postcard) that would reveal the debtor’s information or connection with the debt collector or the nature of the correspondence.
- Acts that constitute abuse or harassment: A debt collector must refrain from abusing, harassing, intimidating, or threatening a debtor when trying to recover debt payments. This is especially true when a debt collector is not legally authorized to do so. Debt collectors also may not repeatedly call a debtor, abuse a debtor, hide their identity from the debtor, use profane language, behave violently towards a debtor, or specifically call to irritate the debtor (e.g., continuous phone calls).
- Some evidence that would constitute proof of abuse or harassment include having to declare bankruptcy, prompting a married couple to divorce, and causing a debtor to lose their job.
- False, deceptive, or misleading representations: Debt collectors may not lie to the debtor about their identity, their contact information, the amount of debt the debtor still owes, and so forth. Debt collectors also cannot tell a debtor that they are committing a crime, about to be arrested, or any other types of false concerns that would mislead the debtor and trick them into paying the debt (even if they could not afford it).
- A debt collector cannot lie to a debtor about taking a negative action towards them when it is not available as a legal remedy, or when they have no intention of taking such legal action against a debtor. They also cannot tell a debtor that they are a state or federal government representative, attorney, or other law enforcement officer in order to recover debt payments.
What Remedies are Available When Collection Laws are Violated?
The FDCPA provides remedies for individuals both to stop debt collection agencies from contacting them (e.g., by writing and submitting a letter to the debt collection agency), and also by filing a private lawsuit for damages in civil court. Plaintiffs in these cases will have the burden of proving that the debt collector’s actions were unlawful, and if they do, can receive statutory damages of up to $1,000, along with attorneys’ fees.
Other legal remedies will depend on the basis of the lawsuit, the facts of an individual case, and the laws of a specific jurisdiction. For example, if a debtor is suing a debt collection agency because the amounts that they owe are fraudulent or in error, the court may either order that a debt collection agency fix their mistakes or can issue the plaintiff a higher monetary damages award.
Should I Contact a Lawyer?
As previously mentioned, once you hire an attorney to represent you against a debt collections agency, they may no longer contact you directly and will need to go through your attorney instead. Thus, it may be in your best interest to hire a local collection lawyer if you need assistance with debt-related matters.
An experienced bankruptcy and finance lawyer can apprise you of your rights as a consumer under the relevant laws, can determine whether your claim is strong enough to file a lawsuit against a debtor collections agency, and can ensure that your rights are being sufficiently protected throughout the process.
Additionally, your lawyer can identify the ways in which a debt collector may have violated collection laws, can suggest other options for legal recourse aside from going to court (if possible), and can explain the potential types of remedies that you may be able to recover if your case is successful.