Have you been contacted or harassed by a debt collector?  Chances are that you will, especially if you are among the many people facing financial difficulties caused by divorce, temporary job loss or illness.  Now, more than ever, consumers need to know their rights when dealing with debt collectors.  The Fair Debt Collection Practices Act (FDCPA) is a federal law enacted in 1978 to protect consumers from abusive debt collection practices.  The FDCPA provides guidelines under which debt collectors must conduct business and allows the consumer to seek damages when debt collectors fail to follow those guidelines.

Here is a brief overview of how the debt collection business works:

Usually after six months of non-payment and several attempts by the in-house collection department, the credit card company will "charge-off" your account.  A "charge-off" is the point at which the credit card company writes off the account balance as a "bad debt" and no longer counts it on their books as an asset.  The credit card company will then sell your debt as part of a bundle of "charged-off accounts" to third-party debt collectors.  These account bundles are acquired for as little as five cents on the dollar of the face value of the debt.  The third-party debt collectors then attempt to track you down and solicit payment.    The debt collector does not need to collect the full amount owed to make a profit so they will offer you settlement deals.  Those debts uncollected may be resold multiple times to other debt buyers.  As the bad debts move through successive buyers, documentation about the original creditor debt may become harder and harder to obtain.

The FDCPA prohibits certain types of abusive conduct when attempting to collect a debt, including the following:

1. Contacting the consumer outside the hours of 8:00 a.m. to 9:00 p.m.
2. Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number.
3. The use or threat of violence or the use of obscene or profane language.
4. Contacting the consumer's place of employment if the debt collector knows or has reason to know that the consumer's employer prohibits the consumer from receiving such communications.
5. Revealing information about your debt to third parties when acquiring location information about the consumer.
6. Threatening arrest or legal action that is either not permitted by law or not intended to be taken.
7. Contacting the consumer after receiving written notice that the consumer refuses to pay the debt or that the consumer wishes the debt collector to cease further communication with the consumer.

Consumers who feel that a debt collector has violated the FDCPA can file a civil suit against the debt collector. If successful in court, a consumer may be awarded any actual damages sustained as a result of the violation, court costs, attorney's fees and up to $1,000 of additional damages. The FDCPA is a strict liability law, which means that a consumer need not prove actual damages in order to claim the additional statutory damages of up to $1,000 if it is proven that a debt collector violated the FDCPA.

What should you do if contacted by a debt collector? The initial contact for a third party collection is either a phone call or collection letter. Within five days after the initial communication with the consumer, the debt collector is required to provide a verification rights notice. This notice gives the consumer the right to request the name and address of the original creditor. Once the consumer's written request is received, the debt collector must cease collection of the debt until the debt collector obtains verification of the debt and mails the verification information to the consumer. The consumer must send the written request within thirty days of receiving the debt collector's verification rights notice.

Another useful tool for stopping harassment from debt collectors is a cease and desist letter or "drop dead" letter. The consumer must notify the debt collector in writing that the consumer refuses to pay the debt or that the consumer wishes the debt collector to cease further communication with the consumer. Once the debt collector receives the "drop dead" letter, they are permitted to contact you one more time to notify you of the action they intend to take. After that, all communication must end and any further attempt to contact you will be a violation of the FDCPA. Remember to send the letter via certified mail with a return receipt request and keep a copy of the letter for your files. You may contact our office for a free sample cease and desist letter.

If you should have any questions or feel that your rights as a consumer have been violated under the guidelines of the FDCPA, please contact our office for a free consultation.