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In Debt? Know Your Rights and How to Deal With Collection Agencies

Being in debt doesn’t mean collectors can abuse you. If you’ve felt harassed about outstanding debts, read on to learn about your rights and available recourse.

Laws Protecting Consumers

There are two major acts that govern consumer debt: The Fair Credit Reporting Act or FCRA (15 U.S.C. § 1681) enacted in 1970, and the Fair Debt Collection Practices Act or FDCPA (15 U.S.C. § 1692). The FCRA promotes the accuracy of credit reports by indicating what can and cannot be reported. The FDCPA aims to prevent abuse by collectors and to establish procedures for disputing debt information and unsavory practices. You can find the complete text of both acts online:

FCRA: https://www.consumer.ftc.gov/sites/default/files/articles/pdf/pdf-0111-fair-credit-reporting-act.pdf

FDCPA: https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text

Your Rights in a Nutshell

The FDCPA puts some strict limitations on how collection agencies can communicate with you. If a collection agency commits any of the following acts, they have breached 15 U.S.C. § 1692d, the FDCPA’s communication clause:

  • Contacts you before 8 a.m. or after 9 p.m. without your consent
     
  • Contacts you at work if you have informed them in any way that you cannot receive calls there
      
  • Contacts you by phone after you have requested (via certified mail) that they do not

Additionally, they have breached 15 U.S.C. § 1692e, the FDCPA’s “harassment or abuse” clause if they:

  • Threaten you with violence or any other criminal action
      
  • Use profane or obscene language towards you
      
  • Cause your telephone to ring repeatedly or continuously with intent to annoy or harass

In any of these cases, you should bring the evidence to a lawyer and discuss your options for legal action. Initial consultations are often free and with sufficient evidence, you may have a strong case to sue the agency for damages.

Disputing a Debt

If a collection agency contacts you by phone, employ the following actions:

  • Immediately request a mailing address and repeat it back to them to make sure it’s the correct address. Don’t admit that the debt is yours (it may or may not be), and ask for a “validation of debt.” A validation of debt is all the information about the debt, including the amount owed, the creditor owed and instructions for you to dispute the debt. If they do not send the validation notice within five days of the phone call, they are in violation of 15 U.S.C. § 1692h.
      
  • If you think the debt is inaccurate, you should mail back a “debt validation letter” within the first 30 days of the notice. Don’t sign the letter — you don’t want to provide your signature to the collection agency. This is a formal request that the collection agency verify that the debt is correct. It is their responsibility to prove that you owe it. From the date of your request until they have verification, all collection actions must cease.

Collecting Inescapable Evidence

When you take legal action, it’s not enough to claim you’ve been wronged. You’ll need evidence to prove your case.

Know the phone recording laws in your state. Federal law permits recording telephone calls and in-person conversations with the consent of at least one of the parties, however consent requirements can differ from state to state, across state lines and in business and/or criminal cases.

Always use certified mail with a return receipt requested. This creates a paper trail and starts the clock on the seven-year reporting time for debt. If a debt is not verified or collected within seven years, it falls off your credit report (15 U.S.C. § 1681c).

Collection agencies act intimidating, but only because they know you have the law on your side. If you follow these tips and make it clear that you know your rights, they may even decide that the effort required to collect is more than it’s worth and drop the debt! 

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