It is not unusual for people who have fallen behind in paying their bills to have trouble with debt collection agencies. While debt collectors enjoy a considerable amount of latitude when it comes to collecting debts, the law imposes some limits on their conduct.
The Fair Debt Collection Practices Act (FDCPA) is a federal law that regulates the conduct of bill collectors and forbids many abusive collection practices. Even if a person does not dispute that the money is owed, the FDCPA applies to the actions of a debt collector pursuing a consumer debt.
The Fair Debt Collection Practices Act is a federal law that was passed by Congress in response to abusive conduct by collection agencies, and the concern abuses by debt collectors were causing some consumers to resort to bankruptcy. The FDCPA provides guidance to debt collectors that are seeking to collect legitimate debts, while providing protections and remedies for consumers who question the validity of a debt or might otherwise be mistreated or harassed by debt collectors.
When a debt collector violates the FDCPA, a consumer may file a lawsuit against the debt collector in either state or federal court. The consumer may seek actual damages, compensation for any actual harm caused by the debt collector's unlawful actions, plus an additional amount of up to $1,000,00 per violation.
A consumer who successfully proves a violation of the FDCPA may also be able to recover court costs and attorney fees.
The FDCPA applies to consumer debt, meaning personal, family, and household debts. Debts falling under the FDCPA include car loans for a family vehicle, bills for medical and dental care, debt from retail financing contracts, credit card bills, and money owed on first and second mortgages.
The law does not cover business debts, nor does it cover debts such as fines from parking and traffic tickets, or criminal fines and restitution.
Most states have passed laws that are similar in scope to the FDCPA, and some states have passed consumer protection laws that provide protections not included in the FDCPA.
The FDCPA regulates the conduct of debt collectors: any person who regularly collects or attempts to collect debts owed to others. This definition includes:
- Debt collection firms that collect debts for client creditors;
- Law firms that perform debt collection services on a regular basis; and
- Companies that purchase debts from others, and then attempt to collect those debts.
In-house collection agents are not ordinarily covered by the FDCPA.
- For example, if you have a store credit card, and the store's own collection department contacts you and asks you to pay, that contact is not covered. However if the same store uses an outside debt collector to contact you in relation to the debt, that debt collector's conduct is restricted by the FDCPA.
- If the store uses an in-house collection agent but suggests to you that the collection is being performed by a third party, the FDCPA likely applies to the original creditor a result of that misrepresentation.
Some state debt collection laws impose restrictions on all debt collection, including in-house debt collection, that may be similar or at times greater in scope that the restrictions imposed by the FDCPA.
Restrictions that the FDCPA imposes on debt collectors include:
Improper Contact -
Contacting a debtor at work after being instructed to stop, or if they know that the debtor is not allowed to receive personal phone calls at work;
Contacting a debtor when they know that the debtor is represented by a lawyer in relation to the debt;
Contacting a debtor in an effort to collect the debt after being told by the debtor to cease all contact;
Sending letters that appear to have come from a court;
Sending letters that appear to be from a government agency;
Sending letters that appear to have come from a lawyer, if the sender is not a lawyer;
Falsely claiming to be a lawyer;
Claiming that the transfer, referral or sale of the debt will cause the loss or diminishment of the debtor's legal rights;
Falsely claiming to work for a credit bureau;
Misrepresenting the amount or nature of the debt;
Using a false name;
Making false representations about the purpose of the call, such as claiming that the call is an invitation to participate in a survey;
Contact With Others -
Contacting a third party other than a cosigner or guarantor, except for a single contact limited to obtaining the debtor's location information;
Sending a debt collection letter to the debtor in the care of the debtor's employer;
Informing a third party that they are a debt collector, that you allegedly owe money, or how much you allegedly owe.
Harassment and Annoyance -
Making repeated telephone calls to the debtor over a short period of time with the purpose of annoying the debtor;
Making telephone calls to the debtor at unreasonable times;
Using racial slurs, obscenities, or insults;
Advertising the debt for sale in order to coerce payment of the debt;
Suggesting that the debtor has committed a crime by not paying the debt;
Publicly disclosing information about the debt, such as by publishing a list of debtors or "deadbeats";
Filing a lawsuit in an incorrect venue, far removed from the debtor's known place of residence;
Improper Threats and Demands -
Threatening to file a lawsuit or to refer a debt collection case to a lawyer, unless the debt collector actually intends to do so;
Trying to collect fees or interest that are neither permitted by the debtor's contract with the creditor nor by law;
Requesting post-dated checks, then threatening to prosecute the debtor if the checks don't clear;
Threatening violence or to cause harm to the debtor's person, property or reputation;
Falsely claiming to have filed a lawsuit against the debtor;
Threatening to have the debtor arrested if the debt isn't paid;
Threatening to seize the debtor's property or garnish the debtor's wages when they do not have the legal right to do so;
Threatening any action that would be unlawful if carried out.
A debt collector may truthfully inform you that your file has been referred to a collections law firm or that a lawsuit has been filed over the debt, but it is a FDCPA violation for a debt collector to make those claims when they are not true.
Under the FDCPA, unless the debtor gives a debt collector permission to call at other times, the debt collector may not call the debtor before 8:00 AM, or after 9:00 PM.
Debt collectors are restricted by the FDCPA as to who they may contact about a consumer debt. A debt collector may contact:
- The consumer alleged to owe the debt;
- The consumer debtor's lawyer; or
- A third party, a single time, to try to obtain your location or contact information.
You may instruct a debt collector that you are represented by an attorney and no longer want to be contacted directly about the debt. Once a debt collector learns that you are represented by a lawyer, it should direct all further contact to your lawyer.
Contact With Friends, Family and Employers
Debt collectors may make one-time contact with third parties, including your friends, family members, or even your employer, but may do so only in order to obtain information about your current location: information such as where you live, where you work, and your current phone number. For example, a debt collector that does not know your location may send a letter to your last known employer to inquire about your present address.
- Contact may be made by letter, but may not be made by post card.
- A debt collector may not contact a third party if it already has your contact information.
When contacting a third party, the debt collector:
- May not reveal that it is a debt collector;
- May not reveal that it is attempting to collect a debt; and
- May not leave a message or voice mail asking for a return call.
Debt collection agents may identify their employer to a third party only if that information is expressly requested by the third party.
The debt collector may only contact a third party a second time if given permission to do so by the third party, or if the debt collector reasonably believes that the information obtained during the first contact was erroneous or incomplete and that the third party has current or complete location information. All other restrictions continue to apply in any subsequent contact.
If the debt collector violates these restrictions, the third party may pursue a FDCPA claim against the debt collector in state or federal court.
The first notice to the consumer about a debt must include a warning known as the Mini-Miranda warning: a notice to the debtor that the communication is from a debt collector and that any information obtained from the debtor may be used to collect the debt. Except for formal legal pleadings filed as part of a lawsuit, all subsequent communication from the debt collector must also include the mini-Miranda warning.
A debt collector must provide specific information to a debtor when initiating the debt collection process. If not provided at the time of the initial contact, unless the consumer has already paid the debt, within five days of the debt collector's initial communication with the debtor a debt collector must provide a written notification that includes the following information:
- Amount of the Debt: How much money the debt collector claims that you owe;
- The Creditor: The name of the creditor to whom the debt is allegedly owed;
- Right to Dispute: That you have thirty days from the date of the notice to dispute the validity of the debt, and that unless a timely dispute is made the debt collector will assume the debt to be valid.
- Right to Verification: That if you dispute the debt or any portion of the debt within that thirty day period, the debt collector will obtain verification of the debt or a copy of the judgment from the creditor and mail a copy of the confirmation or judgment to the consumer; and
- Original Creditor: That if you request within the thirty day period, and if the current creditor is different from the original creditor, the debt collector will provide you with the name and address of the original creditor.
Whether this information is provided in the first notice to the debtor, or is subsequently mailed to the debtor within the five day time frame, the notice must describe the debtor's mini-Miranda rights.
If you are contacted by a debt collector, you have the right to demand validation of the debt, and you have the right to demand that the debt collector stop contacting you.
Keep Records of Collection Activity
If you are contacted by a debt collector, and are concerned that the debt collector may not respect your legal rights, you should keep good records of all contact from the debt collector and of all correspondence exchanged with the collector. If contacted by phone, useful information includes:
- The date and time of the contact;
- The name of the person who has contacted you;
- The name of person's employer (the debt collection company);
- A summary of the information exchanged in the conversation, including the identity of the creditor and amount alleged to be owed; and
- Any abusive or improper conduct that occurs in the course of the conversation.
For contact by mail, whether the letter is one received from a debt collector or is one that you sent to a debt collector, maintain a file that includes a copy of the letter along with a copy of all other documents provided or received.
Demanding Validation of a Debt
When a debt collector first contacts you, the debt collector is required to inform you in writing of your right to demand validation of the debt that it is trying to collect If the initial contact is made by phone, a written notice that describes your right to dispute the debt must be mailed to you within five days of that initial contact.
Within a thirty days of your receipt of the notice, you may send the debt collector a letter that demands that the debt collector validate the debt. Your demand letter must be in writing, and must be hand-delivered or postmarked within thirty days of the date of receipt of the notice.
You do not have to deny owing the money in order to demand validation, but you should not admit that you owe any money during your communications with the debt collector.
Within the thirty-day notice period you may also request that the debt collector provide contact information for the original creditor, if different from the current owner of the debt. It makes sense to include that request within a validation demand letter.
In order to avoid a later claim by the debt collector that your validation demand was not timely,
- You should send your validation letter promptly after you receive the initial written notice,
- You should use a method of delivery that includes delivery confirmation, such as certified mail, so that you have an official record of both when you mailed your demand letter to the creditor and the date it was received by the debt collector.
If you can prove that you mailed a letter within thirty days of the date of the debt collector's notice, it will be difficult for the debt collector to later try to wriggle out of its duties or explain subsequent improper debt collection activity.
Once the debt collector receives your demand, it must stop all collection activity until it receives validation of the debt from the creditor. It may not resume collection activity that falls under the FDCPA until it validates the debt and mails you a copy of the judgment or other document that it claims to be proof of the existence of the debt and of the amount claimed by the creditor. However, the debt collector may take other lawful actions to collect the debt within the notice period, as long as those actions are consistent with your right to dispute the debt under the FDCPA.
The article How to Demand Validation of a Debt From a Debt Collector includes more information on validation demands, along with example validation letters to send to debt collectors.
Demanding That the Debt Collector Cease Contact
You have the right to demand that a debt collector stop all future contact with you, by sending a written notice to the debt collector instructing it to stop contact. Once you make that demand, the debt collector may contact you only one additional time:
- To inform you that it is going to stop further contact,
- To explain its policies or the original creditor's policies upon receipt of an instruction from a debtor to cease further contact, or
- To explain the specific lawful action it or the original creditor is taking to collect the debt.
A demand to stop contact does not prevent the creditor or debt collector from taking lawful action to collect the debt. For example, even after being instructed to cease contact, the debt collector may file a collection lawsuit against you and serve you with formal legal pleadings from that lawsuit without violating the FDCPA.
The article How to Stop a Debt Collector from Contacting You includes additional information of your rights under the FDCPA, along with example letters to send to debt collectors.
If a debt collector violates the FDCPA, your options include:
- Using the violation to try to negotiate a more favorable resolution of the debt;
- Reporting the violations to state and federal agencies that oversee debt collection activity; and
- Filing a legal action against the debt collector.
These remedies are not mutually exclusive. You don't have to pick between them, and can respond in multiple ways at the same time.
Filing a Lawsuit Against a Debt Collector
The FDCPA permits a debtor to file a lawsuit in either state or federal court, in order to recover damages from an abusive debt collector. The law permits debtors to seek compensation for the actual damages they suffered as a result of the debt collector's violations of the law, plus an additional amount of up to $1,000.00 per violation.
In addition to damages a debtor may recover court costs and, if represented by a lawyer, may be able to recover an award of legal fees.
If you want to file a lawsuit against the debt collector without the assistance of a lawyer, the best place to file a lawsuit is most often your state's small court. However, you may benefit from consulting a consumer lawyer in your state who handles debt collection cases.
- The lawyer may be willing to take the case with the intention of recovering legal fees from the debt collector, either as part of a settlement or by asking a court to award attorney fees at the conclusion of the case.
- The lawyer may also identify additional legal violations by the debt collector, including violations of state consumer protection laws, potentially strengthening your case or increasing your eventual recovery.
If a debt collector has engaged in similar misconduct with a large number of debtors, the lawyer may evaluate the possibility of proceeding with a class action lawsuit that will seek recovery for all of the abused debtors.
Reporting Abuses to the Government
In most states, you may report abuses by debt collectors to the consumer division of the state attorney general's office. If that office does not oversee debt collection, they should be able to identify and provide contact information for the correct state agency.
You may also report abusive debt collection activity to the federal government, through: