For most people, just the thought of having a collection agency after them is enough to make them really, really uncomfortable. But, if you understand the rules and regulations under which collection agencies must operate, and you know your rights as a consumer, there’s really nothing to fear. As with all things related to credit, knowledge is power. The more you know, the more leverage you will possess in dealing with collection agencies.
In the past, it was especially unpleasant having dealings with credit collection agencies, but because of the abusive practices of some unethical collectors, the Federal Trade Commission (FTC) stepped in to protect the rights of consumers. The FTC is charged with enforcing the provisions of the Fair Debt Collection Practices Act or FDCPA. This act bars all collection agencies from employing unfair, abusive or fraudulent tactics to collect debts.
What Types of Debt Collectors Are Regulated By the FDCPA?
According to the FDCPA, debt collectors are defined as any person or entity that collects debts on a regular basis, including collection agencies, lawyers who work with collection agencies, legal firms which collect on debts and companies that buy bad debt for pennies on the dollar and try to collect whatever they can from consumers. If you are in debt, if enough time has elapsed, you may not be contacted by the person or company to which you were originally indebted, but the collection firm which now owns or is collecting on the debt.
Types of Debt Covered By the FDCPA
The FDCPA does not cover business debt, but instead focuses on personal and household debt, such as credit card bills, medical debt, mortgages, and car loans.
Are Debt Collectors Allowed to Contact Debtors Whenever They Choose?
Because the FDCPA was enacted, debt collectors are prohibited from harassing consumers at awkward times or locations. For instance, they may not call your home before 8 AM or after 9 PM, unless you’ve previously agreed to it. Collectors are also barred from contacting you at your job if they’re informed (either orally or in writing) that you cannot be called at work.
Approved Methods of Contact by Debt Collectors
Debt collectors are allowed to get in touch with you via the following methods: phone calls (within the approved times), letters, email messages, and/or texts sent to your phone. However, collectors must abide by a strict set of guidelines. For example, they must always identify themselves as debt collectors whenever they contact you. They are not allowed to pretend to be someone else, such as a government agent or a lawyer. Debt collectors may not lie to you, threaten you, or attempt to intimidate you with constant phone calls, coming to your place of business, or other harassing tactics.
Debt Collection Practices that are Specifically Prohibited by Law
If you are contacted by a debt collector about a debt that you legally owe, the collectors are specifically prohibited from employing certain tactics, such as:
- Threatening to harm you or employ violence against you
- Using profanity in their conversations with you
- Lying to you about who they are or who they represent, such as pretending to be a government agent or a lawyer
- Falsely claiming that you have committed a crime
- Lying about the amount of money you owe
- Pretending that they work for a credit reporting agency
- Publishing your name and address and publicly identifying you as a deadbeat debtor
(Collection agencies, are, however, allowed to report the collection to the credit reporting agencies such as Equifax, Experian, and TransUnion.)
Some Further Debt Collection Techniques that are Barred
In addition to the information that’s already been listed, here are some other things that debt collectors may not do:
- Attempt to collect fees, additional charges, or interest on your existing debt, unless you signed a contract, or the laws of your state, allow these types of charges.
- Depositing post-dated checks early
- Take or threaten to seize your property, unless it can be done legally (mainly by winning a lawsuit against you.)
- Get in touch with you with a postcard.
What Control Do Consumers Have Over Which Debts are Paid First
When a collector is trying to get you to pay multiple debts, the collector must apply your payments to the debts you specify. Also, debt collectors are not allowed to apply your payments to any debts that you have disputed or don’t think you owe.
Are Debt Collectors Allowed To Seize My Bank Accounts Or Take My Salary?
When you owe a debt, your creditors or their agents (debt collectors) can take you to court to collect what you owe. If the court case goes against you, the court enters a judgment stating the amount of your debt, and permits a collector or creditor to obtain a garnishment order. A garnishment order compels a third party, such as your bank or credit union to give them funds from your accounts to pay off your debts.
After that, if you still have outstanding debts, your salary can be garnished to satisfy those debts. In this case, part of your salary goes to pay off your debts. If a court order has been obtained, this is perfectly legal. When a summons appears in your mailbox, do not, under any circumstances, ignore it. If you ignore a summons, you’re surrendering your ability to fend off your creditors who are seeking to garnish your wages.
Income that Credit Collectors Can’t Touch
Although your creditors can go after your savings and try to garnish your wages, there are limits to the types of income that they can attempt to seize. For example, if you have certain federal benefits including:
- Social Security Payments
- Supplemental Security Income (SSI) Payments
- Federal Emergency Management Agency (FEMA) Federal Disaster Assistance
- Military Survivors’ Benefits and/or Military Annuities
- Veterans’ Benefits
- Federal Retirement and Disability Payments
In general, these benefits are off-limits to collectors. However, they may be used to pay off debts under certain circumstances, such as paying off delinquent taxes, overdue alimony, student loans, and delinquent child support payments.
What Can You Do When a Collector Does Something Illegal
Consumers are permitted to sue a collector in state or federal court, if they do so within one year of the violation. If you win in court, a judge can compel the collector to pay you damages for things like lost wages or medical bills due to the stress inflicted on you by the collection attempt. You can report any problems or violations to the Attorney General’s office for your state, or the Federal Trade Commission, or the Consumer Financial Protection Bureau.
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