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Fair Debt Collection Practices Act

What Is the Fair Debt Collection Practices Act?

The Fair Debt Collection Practices Act (FDCPA) is a United States statue added in 1978 to the Consumer Credit Protection Act. It was passed by Congress in response to the growing abuse by collection agencies and helps define your rights as a debtor. The FDCPA also defines what a debt collector can—and perhaps more importantly what they cannot—do in attempting to collect a debt and prescribes penalties and remedies for violations of the Act.

Sometimes referred to as the Fair Debt Collection Act, this statue only deals with personal, family, and household debts from personal unsecured debts (credit cards, signature loans, lines of credit), car loans, medical bills, and mortgages. Debts that are incurred from a business are not covered by the Fair Debt Collection Act and only apply to debt collectors, not original creditors.

Your Rights Under Fair Debt Collection Laws

You have many rights under the fair debt collection laws that fall under the FDCPA. While debt collectors and debt collection agencies count on you not knowing your rights (and in fact may not even know themselves), it's recommended that you do your homework so you can be in control of the situation.

To get you started, here are a few of the most important rights you have:

  • Debt collection agencies can't contact you at work or call at all if you notify them verbally or in writing that you do not wish to receive calls. Be sure to do both and send the written request by certified mail with return receipt so you have a copy for your records.
  • Debt collectors cannot call before 8 a.m. and after 9 p.m.
  • Once you tell debt collectors to stop calling, they can only contact you if they plan to take legal action.
  • Debt collection agencies are only allowed to call or write other people to get your contact information, and they are prohibited from stating that the request is regarding a debt.
  • If you send the credit debt collector a request for validation of the debt, they can't contact you during the interim period or report additional negatives to your credit report, until they provide this validation.
  • Debt collectors can't garnish your wages unless they have a court order to do so.
  • They cannot make any false or misleading representations.
  • They cannot harass (e.g. call multiple time a day) or abuse you (e.g. use obscene language).

If your rights under the Fair Debt Collection Practices Act have been violated, and properly documented, you may have the leverage you need to back a creditor down and/or retire your account.

The Federal Fair Debt Collection Practices Act in Action

If you find yourself hounded by creditors, it may feel like they are holding all of the cards. However, if you understand your rights under the Federal Fair Debt Collection Practices Act, you might be surprised at how few rights debt collection agencies actually have.

For example, you don't have to verify your identity, your address, how much money you make, whether you recognize the debt, where you bank is located, how much your mortgage or rent payment is, or anything else for that matter. In fact, not only is it within your rights not to talk to your creditors, you can force them to stop calling you altogether by simply sending them a letter.

Think about it this way. Anyone can call you on the phone and say you owe them money. You have no way of verifying for certain who is calling so why would you talk about your personal financial information to just anyone on the phone?

Of course the debt collection agency does want to talk to you on the phone and will do everything they can to keep you talking. Specifically they are going to try to get you to admit that the debt is yours, to make a small payment and to gather other information to make their jobs easier. Though admitting the debt is yours or making a small payment might not seem like a big deal, it can have serious legal ramifications.

By admitting to the debt you can give up your right to dispute the debt and request validation. By making a payment you can create a contract where one didn't exist before and reset the statue of limitations on your debt. It's important to first understand your rights under the Federal Fair Debt Collection Act.ur rights, the best thing to say to any debt collector is "I don't discuss financial matters on the phone" and simply hang up.

Unfair Debt Collection Practices

Under the FDCPA, there are a number of fair debt collection practices and unfair debt collection practices that you should know in case you experience them. Below are some of the more common unfair debt collection practices.

  • A debt collector cannot harass you. This includes calling multiple times a day or either before 8am or 9pm in your time zone.
  • A debt collector cannot talk to anyone besides yourself, your spouse or your attorney about your credit debt.
  • If a debt collector does contact a friend, family member, neighbor, or employer, they can only do so for the purposes of verifying your contact information. They are prohibited from stating the reason they are calling has anything to do with a debt.
  • Debt collectors cannot threaten criminal punishment or even arrest, eviction, wage garnishing, or even a lawsuit (unless they intend to file one).
  • Collectors cannot pretend to be someone they are not such as an attorney, officer of the law, or someone in government.
  • Collection agencies cannot send you documents meant to look like they came from the courts or some other government body.
  • Debt collectors are prohibited from phoning you or anyone else regarding the debt if you have notified them in writing to stop.
  • If you have requested verification within 30 days of receiving a dunning letter, debt collection agencies are unable to continue collection efforts until verification has occurred.

Be sure to carefully document all unfair debt collection practices so that you can turn the tables on your creditors. To learn more, read our tutorial on The Fair Debt Collection Practices Act and consult an FCDPA attorney if you feel your rights have been violated.

Fair Debt Collections Practices: Dunning Letters

The FDCPA outlines fair debt collections practices for Dunning letters. Within five days of the first communication with you, debt collection agencies must provide a written notice that contains:

  • The amount of your credit debt;
  • The name of the creditor to whom the credit debt is owed;
  • A statement that unless the debtor, within 30 days after receipt of the notice, disputes the validity of the debt or any portion thereof, the debt will be assumed to be valid by the debt collector;
  • A statement that if the debtor notifies the debt collection agency within the 30-day period that any portion of the debt is disputed, the debt collector will obtain verification of the verification and a copy of such verification shall be sent to the debtor; and
  • A statement that, upon the consumer's written request within the 30-day period, the debt collector will provide the debtor with the name and address of the original creditor is different from the current creditor.

In lieu of a written notice, the dunning letter can even be delivered verbally as long as the above items are covered and they give this information to you as the debtor. You can also ask for verification over the phone. However, it is always best to follow up a verbal request with a written one. Make sure you send it with some type of delivery confirmation so that you can prove it was received.

Unless or until they verify the debt, the debt collection agency is prohibited from further collection activities and cannot report any additional negatives to the credit bureaus. There is no timeframe defined in the FDCPA as to when the debt collector must comply with the request.

The truth is that many debt collection agencies do not respond to validation requests in an appropriate manner. If they don't respond at all, or if their response is incomplete, and they continue collection efforts and/or report negatives to your report, you may have a claim against them. Not following fair debt collection practices can mean fines and may jeopardize a collection company's license to operate in your state. A threat of reporting violations and filing a suit may be just the leverage you need to zero-out your account, and update your credit report.