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An Overview of Collections Law
Collections law is the body of law governing the practices and procedures of legal debt collection. Federal regulation in this area is the primary source of law. The Federal Trade Commission (FTC) enforces the Fair Debt Collection Practices Act (FDCPA), which is the federal law that governs the conduct of third party debt collectors, such as a debt collection agency or independent debt collector. Some states have extended the protections afforded to consumers under the FDCPA to apply to the original creditor as well.
The FDCPA provides a minimum standard of protection for consumers against predatory debt collectors. A number of states have enacted legislation providing even greater consumer protection. Let’s take a look at the rules that debt collection agencies must follow and explore whether hiring a debt collection lawyer is right for you.
Limitations on Debt Collectors and Fair Debt Collection Practices
In the early days of colonial America, virtually no limitations existed on debt collectors. Those who did not repay their debts would routinely be thrown in debtors’ prisons, where they would freeze or starve to death. Congress enacted the Fair Debt Collection Practices Act in 1977. The purpose of the FDCPA was to prohibit debt collectors from using abusive, unfair, or deceptive practices to collect a debt from a debtor. Prior to its passage, debt collectors and creditors regularly used disreputable tactics to collect from debtors. In 2011, as a response to the financial crisis of 2008, the Dodd-Frank Act and the creation of the Consumer Financial Protection Bureau (CFPB) – an independent agency of the federal government – established additional oversight and regulation of the debt collection industry.
Here are some of the important limitations on debt collectors mandated by the Fair Debt Collection Practices Act:
- No communication before 8 AM or after 9 PM local time (15 USC §1692c). Additionally, debt collectors may not call repeatedly or allow the phone to ring constantly in an effort to annoy or harass the debtor.
- Prohibition from using threats of violence (15 USC §1692d). It is also illegal for a debt collector to use obscene or profane language in their communication with a debtor.
- No false representation or claim (15 USC §1692e). A debt collector cannot falsely pretend to be an agent or representative of the government, cannot pretend to be an attorney or law enforcement officer, and cannot pretend to be from a credit reporting agency. Further, debt collectors are not allowed to misrepresent the amount of debt owed or claim that a debtor has committed a crime in relation to the debt.
Debt collectors and creditors are not capable of garnishing a debtor’s wages without a court order. Many federal benefits such as Social Security Benefits, SSI Benefits, and Veterans’ Benefits are exempt from garnishment. Other than obtaining location information, debt collectors are not allowed to discuss a debtor’s debt with anyone other than the debtor, the debtor’s spouse, and the debtor’s attorney (if the debtor has sought legal counsel).
What Debt Collection Attorneys Can Do
A debt collection lawyer specializes in the area of debt collection and is intimately familiar with FDCPA laws. Furthermore, debt collection lawyers understand what additional protections may be afforded to consumers in their state. In order to legally collect on a debt, collection agencies – and sometimes original creditors – may hire a debt collection lawyer to sue a debtor for repayment. On the flip side, debt collection lawyers also work as consumer rights advocates, protecting individuals who have fallen victim to harassment or other illegal actions taken by a debt collector or creditor.
Why Should I Hire a Debt Collection Attorney?
If you’re a creditor or debt collector, an effective means of collecting on a debt is filing a lawsuit against the debtor. Debt collection lawyers assist creditors and debt collectors with these types of actions. If you’re a consumer who has been the target of illegal harassment by a debt collector, a debt collection lawyer can help preserve your rights. If you’ve had a lawsuit filed against you for the debts you owe, it is useful to consult a debt collection lawyer. To avoid having a judgment entered against you automatically, never ignore a lawsuit summons. A debt collection lawyer can help you seek relief from malicious collectors and creditors and defend you from an unfair judgment.