The Fair Debt Collection Practices Act

Main Concepts of The Fair Debt Collection Practices Act

If you find yourself in financial difficulties, there are several specific steps you can take to protect your credit standing. Although creditors can always turn over your account to a collection agency, some prefer not to do so and would rather make an arrangement for repayment with you. They may be willing to accept reduced payments, extended over a longer period of time; they may be willing to accept a delay or postponement in your payment schedule. Such arrangements will, in the long run, cost you money, since the interest on your debt will continue to accumulate. But they are worth it, since they maintain your credit standing.

The particular arrangement you make with any given creditor can only be determined in conversation between you. It is important to visit your creditors personally, if you can, and to explain your financial situation with complete honesty.

If a bank or finance company is among your creditors, one of its officers may try to talk you into taking out a consolidation loan, which will enable you to pay off your outstanding debts immediately and will give you a long period in which to make repayment. The proposition may sound tempting, but you should think very carefully before agreeing to it, since it merely postpones your problems and charges a high interest rate for the privilege. On the whole it is wiser to reschedule payments of existing debts than to borrow new money to pay them off.

If, despite your best efforts to come to a satisfactory arrangement with a creditor, your account is turned over to a collection agency, you are protected by the provisions of the Fair Debt Collection Practices Act. This law prohibits a number of practices that were previously standard in the debt collection business. Among other things, it prohibits bill collectors from:

  • Placing telephone calls to debtors at unusual places or times, generally before 8 a.m. or after 9 P.M.
  • Harassing debtors and their families by telephoning frequently.
  • Being personally abusive towards debtors or members of a debtor’s family.
  • Threatening to expose debtors to their friends, neighbors or employers. A collector may get in touch with other people, but only to find out where the debtor lives or works and may not tell anyone other than the debtor and the debtor’s legal counsel that any money is owed.
  • Pretending — whether in writing, in person or on the telephone — to represent any agency of local, state or federal government.
  • Engaging in any other misrepresentations — as, for example, pretending to take a survey in order to obtain personal financial information about the debtor.
  • Making any attempt to humiliate the debtor in some manner — as, for example, by stationing in front of the debtor’s house a car with the words “debt collector” on it.
  • Demanding payment in excess of the amount actually owed.
  • Instituting legal proceedings against the debtor except in the debtor’s home town, where the contract was signed, or in an action involving real estate, in an area where that real estate is located.

You may legally break off all contact with a debt collector by informing the agency — or individual — in writing that you have turned the matter over to an attorney, or that you simply will not deal with the collector or the agency. In that case, the collector has the right to notify you that he or she will go to court to force collection. But having told you this once, the collector cannot continue to make any contact with you, either personally or in writing.

These requirements apply only to collection agencies. They do not apply to creditor companies or institutions, to their lawyers, federal or state officials or legal process servers — except in the case of those localities that have imposed their own specific legal restrictions.

In the event you are bothered by a collection agency that acts in violation of the Fair Debt Collecting Act, make sure you notify your local Better Business Bureau. In addition, it is a good idea to write to the Bureau of Consumer Protection of the Federal Trade Commission. If the FTC commission receives several complaints against a particular agency, it may bring suit against it. You, too, have the right to bring suit, and if you are successful, you can collect actual damages, additional damages up to $1,000, court costs and attorney fees.

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