Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Understanding the Fair Debt Collection Practices Act

Author: Robert E. Levy

Date: July 24, 2018

Key Contacts

Back

Under the Fair Debt Collection Practices Act (FDCPA), Businesses Must Follow Certain Rules When Attempting to Collect a Debt

If a collection company calls you repeatedly, threatens litigation or tells you it can cause you to lose your driver’s license, or contacts you or your employer after you write and tell them to stop harassing you, the collection company is violating laws and rules applicable to the collection industry. Under the Fair Debt Collection Practices Act (FDCPA), businesses must follow certain rules when attempting to collect a debt. The federal law also imposes penalties for violations and provides protections for debtors.

Understanding the Fair Debt Collection Practices Act
Photo courtesy of Sharon McCutcheon (Unsplash.com)

What Types of Debts Are Covered?

The FDCPA covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The federal law doesn’t cover any debts incurred in the operation of a business.

Who Is Considered a Debt Collector?

Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. Collection agencies, attorneys who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them all fall under this definition and are subject to the law’s requirements.

Can You Prevent Debt Collectors from Contacting You?

Debt collectors can contact debtors by a variety of means, including phone, letter, email, or text message, when seeking to collect a debt; however, they must disclose that they are debt collectors and may not contact debtors at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless the debtor agrees. They also may not contact debtors at work after being notified that the debtor is not allowed to receive such calls.

Within five days of first contacting a debtor, a collector must send a written “validation notice” detailing how much is owed, the name of the creditor to whom the money is owed, and how to dispute the debt. To prevent future contact from the collector, debtors must send written notification within 30 days. The letter may also request additional information to verify the debt and/or state that the debtor disputes that all or some of the money is owed. Once the collector receives the letter, they may only contact you to confirm there will be no further contact or to let you know that they or the creditor intend to pursue further action, such as filing a lawsuit.

Debt collectors may only contact third parties, such as employers, neighbors, or relatives, to obtain the debtor’s contact information, i.e. current address. They may only discuss the debt with you, your spouse, and any co-signor on the debt. If you are represented by an attorney with respect to the debt, the debt collector must contact the attorney, rather than you.

What Other Practices Are Prohibited?

The FDCPA generally prohibits debt collectors from using abusive, unfair, or deceptive practices to collect debts. Below are several examples of prohibited conduct:

  • Harassment: Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not use threats of violence or harm; publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies); use obscene or profane language; or repeatedly use the phone to annoy someone.
  • False Statements: Debt collectors may not make false or misleading statements when attempting to collect a debt. For example, they may not falsely claim that they are attorneys or government representatives; falsely claim that you have committed a crime; falsely represent that they operate or work for a credit reporting company; misrepresent the amount you owe; indicate that papers they send you are legal forms if they aren’t; or indicate that papers they send to you aren’t legal forms if they are.
  • Threats: Debt collectors also are prohibited from saying that you will be arrested if you don’t pay your debt; they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.
  • Unfair practices: Debt collectors may not engage in unfair practices when seeking to collect a debt. For example, they may not: try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge; deposit a post-dated check early; take or threaten to take your property unless it can be done legally; or contact you by postcard.

The Federal Trade Commission (FTC) is tasked with enforcing the FDCPA. Debtors may also pursue legal action. Debtors must sue a collector in a state or federal court within one year from the date the law was violated. If successful, the collector may be required to pay for any damages suffered because of the illegal collection practices, like lost wages and medical bills. In addition, the court may order the debt collector to pay statutory damages of up to $1,000, even if you can’t prove that you suffered actual damages.

If you are facing the threat of legal action in a connection with a debt, it is imperative to consult an attorney experienced in creditor collections who can help you resolve the matter. For businesses, it is also advisable to work with legal counsel to ensure that your debt collection practices do not result in costly FDCPA violations.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Robert Levy, or the Scarinci Hollenbeck attorney with whom you work at 201-806-3364.

    No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

    Scarinci Hollenbeck, LLC, LLC

    Related Posts

    See all
    How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide post image

    How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide

    Closing your business can be a difficult and challenging task. For corporations, the process includes formal approval of the dissolution, winding up operations, resolving tax liabilities, and filing all required paperwork. Whether you need to understand how to dissolve a corporation in New York or New Jersey, it’s imperative to take all of the proper […]

    Author: Christopher D. Warren

    Link to post with title - "How to Dissolve a Corporation in New Jersey: A Step-by-Step Guide"
    Gross Lease vs. Net Lease: Understanding the Key Differences post image

    Gross Lease vs. Net Lease: Understanding the Key Differences

    Commercial leases can take a variety of forms, which is often confusing for both landlords and tenants. Understanding the different types, especially the gross lease structure, is important when selecting the lease that best suits your needs. One key distinction between lease types is how rent is calculated and paid. This article addresses the two […]

    Author: Robert L. Baker, Jr.

    Link to post with title - "Gross Lease vs. Net Lease: Understanding the Key Differences"
    What to Do If You Are Impacted by a Retailer Bankruptcy Part 2 post image

    What to Do If You Are Impacted by a Retailer Bankruptcy Part 2

    Over the past year, brick-and-mortar stores have closed their doors at a record pace. Fluctuating consumer preferences, the rise of online shopping platforms, and ongoing economic uncertainty continue to put pressure on the retail industry. When a retailer seeks bankruptcy protection, a myriad of other businesses are often impacted. Whether you are a supplier, customer, […]

    Author: Brian D. Spector

    Link to post with title - "What to Do If You Are Impacted by a Retailer Bankruptcy Part 2"
    The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business post image

    The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business

    Since his inauguration two months ago, Donald Trump’s administration and the Congress it controls have indicated important upcoming policy changes. These changes will impact financial services policies and priorities. The changes will particularly affect cryptocurrency, as well as banking rules and regulations. Key Regulatory Changes in Cryptocurrency For example, in the burgeoning cryptocurrency business environment, […]

    Author: Dan Brecher

    Link to post with title - "The Current Administration's Proposals for the Financial Services and Banking Industries Will Affect Your Business"
    Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1 post image

    Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1

    The retail sector has experienced a wave of bankruptcy filings over the last year. Brick-and-mortar businesses in financial distress include big-name brands like Big Lots, Party City, The Container Store, and Vitamin Shoppe. When large retailers seek bankruptcy protection, they are not the only businesses impacted. Landlords can be particularly hard hit. While commercial landlords […]

    Author: Brian D. Spector

    Link to post with title - "Tips for Commercial Landlords Impacted by Wave of Retailer Bankruptcies Part 1"

    No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

    Sign up to get the latest from our attorneys!

    Explore What Matters Most to You.

    Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

    Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

    Let`s get in touch!

    * The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

    Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!

    Please select a category(s) below: