Understanding the Fair Debt Collection Practices Act

Consumers have to understand the ins and outs of the Fair Debt Collection Practices Act in order to know their rights and responsibilities as debtors.

Almost everyone owes someone money. This is not a big issue provided you can manage your financial liabilities. The problem may arise once you start falling behind on monthly credit card payments or other types of loans. That is why ordinary consumers, entrepreneurs and business entities have to know the basics of debt management and debt collections. The key to avoiding this problem is to spend your money prudently and refrain from making purchases or mortgages that you cannot afford to settle.

Dealing with Debt Collection Agencies

People, who have debt problems and delinquent payments, need to contend with debt collection agencies. These facilities function as representatives of lending facilities and creditors. The primary task of these agents is to collect unpaid debt for a certain fee or percentage of the total amount owed by borrowers. These people can be mean and do everything, including harassment, to force debtors to pay their arrears. In fact, dishonest collectors have proliferated and are resorting to illegitimate means to collect unpaid debts. Consumers have the right to seek protection against the unfair actions of these agencies. Likewise, it is your right to challenge any allegation of debt that a collection agency files against you. This is the reason for the enactment of the Fair Debt Collection Practices Act.

Provisions of the FDCPA

This statute drafted by the United States Federal Trade Commission and ratified in 1977 encompasses all forms of personal debts such as credit card purchases, medical expenditures and mortgages. Collectors but not individual creditors are covered by the stipulations of this Act. However, all concerned parties are mandated to abide by state legislations. Agencies are compelled to follow all relevant FDCPA policies regarding account collections.

The decree allows debt collection agencies to call borrowers through telephone, fax, mail or telegram but not through postcards. Contact by email and cellular phones is forbidden by U.S. federal law. The FTC has not yet ruled on this matter after the debt collection sector filed an appeal in 2007. Collectors are allowed to call debtors during specified times which is before 8 a.m. and after 9 p.m. No calls are allowed during office hours. Once a person hires a lawyer, all calls and communications should be directed to your attorney. All forms of harassment, intimidation, rudeness and verbal abuse are not allowed. Debt collectors must be honest and desist from sending documents that appear like legal papers. Consumers cannot be accused of any criminal act or threatened with arrest.

Consumers Rights Under the FDCPA

The Fair Debt Collection Practices Act provides the following rights for consumers:

  • All borrowers should be given a written notification regarding the amount of the debt, creditor’s identity, actions you may take if you believe that the debt is not your own.
  • The collector cannot get in touch with you regarding the letter of dispute. Nonetheless, collection efforts can be made if you have received proof of the current debt.
  • Any cash payments made to the debt collection agencies should be accepted as payment for the debt that you owe to the creditor.

The passage of the FDCPA has given more protection to consumers against illegitimate practices of unprincipled practitioners in the industry.