The loss of a job, an unexpected illness or injury, or other common situation that people face in their lives everyday can put a strain on your finances. Anyone who has ever fallen behind in paying their bills has probably received a demand letter or threatening telephone call from their creditors.
Creditors are entitled to collect money that is owing to them, but there are limits on the tactics they can use. Following are some of the limitations in the Federal Debt Collection Practices Act guidelines
1. Contacting debtors at all hours of the day and night
Unless you agree to it, debt collectors are prohibited from contacting you at times or at locations that are inconvenient for you. As a general rule, a creditor should not be contacting you before 8 a.m. or after 9 p.m., and contacting you at your place of employment is not allowed unless you agree to it.
2. Contacting your friends or neighbors about the debt
Debt collectors are not allowed to contact third parties about your debt. A debt collector is permitted to contact another person once find out the following information:
- Your address
- Your telephone number
- Your place of employment
Friends, neighbors and other third parties are frequently the targets of calls from debt collectors in order to persuade you to make a payment on the debt to avoid additional embarrassment.
3. Making false statements about their identity or about your situation
A debt collector is not allowed to attempt to intimidate you by claiming to be an attorney, a government official or a member of a law enforcement agency. Creditors trying to collect a debt cannot make threats to have you arrested or to take legal action against you unless they actually intend to file a lawsuit against you.
4. Engaging in abusive or harassing conduct
Someone calling from a debt collection agency is not required to be friendly, but the following forms of conduct are violations of the debt collection practices act:
- Threats of violence
- Use of obscenities or profanity when talking to you
- Calling you repeatedly on the phone or coming to your home multiple times a day
5. Misrepresenting the amount of the debt
You have the right to know how much you owe. A debt collector cannot misrepresent how much you owe or attempt to add interest and fees unless your agreement with your creditor allows for such charges.
6. Making threats to sue after the statute of limitations expires
Each state has laws setting time limitations within which a lawsuit may be filed to collect money owning on a promissory note, a credit card or other form of consumer debt. The time usually begins to run upon a default in payment. If a state’s statute of limitations is six years from the date of default, a creditor failing to file suit within the six years would be barred from using the courts to collect the debt.
Credit collection agencies are prohibited from threatening to take legal action when they know such action is barred by the statute of limitations. A debt collector might use the threat of legal action to get you to make a payment on the time-barred debt. In some states, any payment you make the debt could renew the statute of limitations and give the creditor more time within which to take legal action against you.
7. Making threats to execute on a judgment that has expired
Judgments have a limited lifespan under the laws in many states. A judgment in New York, for example is enforceable for up to 20 years. This means a creditor can garnish your wages or have a law enforcement officer seize your property, including cars and bank accounts. Once a judgment exceeds its enforceable lifespan as provided by the laws of the state in which the judgment was filed, debt collectors cannot threaten you with enforcement without violating the federal debt collection practices act guidelines against misrepresentation.
8. Misuse of post-dated checks
You should never give a post-dated check to someone in response to a collection call about a debt you owe. If you respond to a debt collector’s call by being honest and explaining that you do not have the funds to make a payment on the debt, a frequent response is to ask you for a post-dated check that the creditor’s representative promises to hold until you add money to your bank account.
Even though it is a violation of federal debt collection practices, the debt collector might contact you and threaten to deposit your check early and cause it to bounce. At the very least, you will incur fees with your bank for writing a check when you did not have sufficient funds in your account to cover it. The best thing to do is to refrain from writing checks in payment of all or part of a debt until you have the money in your account to cover it.
9. Leaving anonymous messages on your telephone answering device
Debt collectors must begin each telephone contact with you by identifying themselves and the purpose of the call. Leaving an anonymous message on your telephone answering device would violate this provision of the federal debt collection guidelines. This might arise when a debt collector has made attempts to reach you without success and decides to use the anonymous message to trick you into calling back.
What you can do about unfair debt collection practices
If you are contacted by a debt collector, you have the right to demand a written notice telling you the amount that you owe and the name of the creditor. The notice must also explain the steps you can take to dispute the debt.
You can stop debt collectors from contacting you by sending a letter asking them to stop. If they do not stop contacting you, the debt collection practices act allows you to file a complaint with the Federal Trade Commission, your state’s attorney general’s office or with the Consumer Financial Protection Bureau.