Debtor’s rights are guaranteed under debtor laws to people who borrow money, who are known as debtors. These laws apply whether they are purchasing a home or a vehicle, or are using the funds for personal use.
There are both federal and state laws in place which protect debtors from unfair treatment by creditors. Two examples of these would be the Truth in Lending Act (“TILA”), and the Fair Credit Billing Act (“FCBA”). TILA is a federal law which applies to specific creditors and requires them to provide certain information to consumers. Such information includes the amount that was lended, as well as the applicable percentage rate.
The FCBA provides guidelines regarding the steps that a creditor must take when there is a dispute associated with a credit card bill. The Act also provides the rights that a consumer has when there is an error on their credit card bill.
What Is The Fair Debt Collection Practices Act?
The Fair Debt Collection Practices Act (“FDCPA”) is a federal law which limits the actions of third-party debt collectors, when they are attempting to collect debts on behalf of another person or entity. The law restricts the ways in which collectors can contact debtors, as well as the time of day and number of times that contact can be made. If the FDCPA is violated, the debtor has the right to sue the debt collection company, as well as the individual debt collector, for damages and attorney fees.
Under the FDCPA, it is illegal for debt collectors employed by a debt collection agency to call a debtor before 8 a.m. or after 9 p.m. in the debtor’s time zone. Additionally, the FDCPA forbids collectors from:
- Calling a debtor while they are at work;
- Using obscene and/or abusive language;
- Making false and/or misleading statements;
- Adding unauthorized charges to the debt; and
- Making threats. An example of this would be how a debt collector cannot threaten to report the debt to the police, or otherwise suggest that the police can become involved.
Because the FDCPA prohibits collections agencies from engaging in these practices, the Act also gives the debtor the right to demand that the collection agency stop contacting them entirely. The only exceptions would be that the collector can tell the debtor that collection efforts have ended, or that the creditor or collection agency is going to file a lawsuit against the debtor in order to collect the unpaid debt. It is important to note that a debtor’s demand that a debt collector stop contacting the debtor must be made in writing.
There are some other limitations placed on whom a debt collector may contact when trying to collect a debt. A debt collector may only contact certain people other than the debtor, including:
- The debtor’s attorney;
- A credit reporting agency, if doing so is permitted by local law;
- The creditor;
- The creditor’s attorney; and
- The debt collector’s attorney.
What this means is that a debt collector cannot contact a debtor’s employer, nor their friends, neighbors, and relatives. An exception may be made if the debt collector cannot locate a debtor. Under these circumstances, the debt collector may ask a third party (such as an employer, neighbor, friend or relative) for the debtor’s:
- Home address;
- Telephone number; and
- Place of employment.
If the debt collector does make such contacts, they are required to provide their name and must state that they are confirming or correcting information about the debtor’s location. The debt collector may not identify the collection agency, nor reveal that the debtor owes any amount of money.
Additionally, the debt collector may not contact any third party more than once, unless the collector believes that the information obtained from the first contact was wrong or incomplete. They would also need to believe that the third party has new and better information that justifies more contact. Alternatively, the debt collector may contact a third party if the third party specifically requests additional contact.
What Are Miranda Rights? What Are Mini Miranda Rights?
Miranda rights are the result of Miranda v. Arizona, which states that when you are in police custody and an officer wishes to interrogate you, the officer is required by the 5th Amendment of the Constitution to read you your rights. This is also known as a Miranda warning. The warning generally includes:
- The right to remain silent;
- Anything you say can be used against you in court;
- The right to consult with an attorney;
- The right to be appointed an attorney if you cannot afford one; and
- The right to cease answering questions at any time and request an attorney.
The mini Miranda warning is a statement that debt collectors are required to use when initiating contact with a debtor for the first time. This is required by the Fair Debt Collection Practices Act. This mini Miranda warning requires that the debt collector state that:
- They are a debt collector;
- They are attempting to collect a debt; and
- Anything you say and any information you give them will be used for that purpose.
To reiterate, the debt collector is required to begin the initial contact with this mini Miranda warning, whether that contact is by phone or mail.
Mini Miranda warnings are not officially labeled as such in the Fair Debt Collection Practices Act. However, many relevant parties began referring to the debt collector warnings as mini-Miranda warnings because they are similar to the warnings that are required by Miranda v. Arizona. Just as a police officer must warn a suspect of their rights before beginning interrogations, a debt collector must warn a debtor of their rights under the Fair Debt Collection Practices Act.
What Happens When A Debt Collector Violates The Fair Debt Collection Practices Act? Are Mini Miranda Warnings Still Required If The Debtor Is In Bankruptcy?
Failing to begin the initial contact with a mini Miranda warning is an automatic violation of the Fair Debt Collection Practices Act, and each violation could result in the debt collector being fined $1,000. If the debt collector sues the debtor in court for past-due debt, the debtor can counter-claim with each violation of the Act. Additionally, the debtor may lodge a formal complaint with the Federal Trade Commission regarding the violation.
When a debtor is in bankruptcy, the debtor receives an automatic stay which is a court order requiring creditors to cease all collection efforts against the debtor. However, creditors can still file bankruptcy claims with both the bankruptcy court and the debtor.
Whether creditors have to provide a mini Miranda warning when the debtor is in bankruptcy is still up for debate. The 2nd and 9th Circuit Courts have ruled that the Fair Debt Collection Practices Act and its mini Miranda Rulings do not apply if the debtor is in bankruptcy. However, the 3rd and 7th Circuits have ruled that the Fair Debt Collection Practices Act is still enforceable, even when the debtor is in bankruptcy.
Do I Need An Attorney For Issues With Mini Miranda Laws?
If you are experiencing issues associated with mini Miranda rights and/or debt collections, you should consult with an area bankruptcy attorney. An experienced and local lawyer can inform you of your rights and legal options according to your state’s specific laws regarding the matter, and can communicate with debt collectors on your behalf. Additionally, an attorney will also be able to represent you in court, as needed.