CREDITORS RIGHTS UNDER THE FDCPA
Visit askdoctordebt.com for answers to most of your questions about third party debt collections and what is allowed under the law.
Recent Question of the Day from askcotordebt.com
Question of the Day
- I wasn't notified when a joint debt with my ex-spouse became delinquent. Should I have been notified?
Yes, you should have been notified. You weren't and this sometimes happens when a debt collector only has one address. Typically, a creditor only has the joint address that was current before the divorce. If you did not change your address with the creditor, they probably had no reason to know or assume you no longer reside at the same address as your ex-spouse, sometimes referred to as your co-obligor in legal proceedings.
The federal Fair Debt Collection Practices Act (FDCPA) was enacted with the support of ACA International, ICA's national affiliate, to protect consumers from unfair and abusive collection practices. The federal FDCPA regulates all third-party collection agencies handling consumer debt (but may not apply to child support collections). This information is not intended to be a complete or official summary of either of these laws, but simply an attempt to provide an understanding of the provisions of these laws as they pertain to a consumer when contacted by a third-party debt collector, and the most frequently asked questions following such contact.
Most of the information presented here applies only to collection agencies. The association is not able to assist in the handling of problems or disputes between a consumer and the original creditor.
- M Must the creditor (the business or person to whom the original debt is owed) notify me before turning my account over to a collection agency?
- The creditor generally is not required to let you know it’s referring your account to a collection agency. There are rare exceptions to this rule.
2. How can I find out what the bill is for?
Either in its first contact with you regarding an unpaid bill or in writing within five days after that contact, the collection agency must provide the following information to you: (a) The amount you owe, (b) the name of the creditor, and (c) the process to follow if you dispute the bill. The five-day notification period applies whether the collection agency’s first contact with you is by telephone or in writing, but many agencies include this information on their initial written notice, whether or not they have telephoned first.
3. What do I do if a collection agency contacts me?
It is important that you respond as soon as possible. If you don’t, the agency may keep trying to reach you to collect what they believe is a valid debt. lf you legally owe the bill, you should arrange to pay it if possible.
4. Why can’t I just continue making payments to the original creditor to whom I owed the money? Once the debt has been assigned to the collection agency, it is the collection agency that is entitled to receive all payments. The collection agency becomes the "owner" of the debt you owe. The collection agency is responsible for collecting the debt and is the only one who can agree to payment terms.
5. When can a collection agency call me?.An agency may only call at hours presumed to be convenient for the debtor -- generally, between 8 a.m. and 9 p.m. If these hours are inconvenient for you, you may ask the agency to contact you at other times. There is no law that specifically limits the number of calls an agency may make to you, but repeated calls over a short period, which may be annoying or harassing, are prohibited.
6. Can a collection agency contact other people and discuss my bill?
Although a collector may call others to try to locate you, he or she may not discuss your account or debt status except for your spouse, attorney or person necessary to enforce a judgment. He or she must give his or her name, but not the name of the agency unless they are specifically asked for it.
7. Can a collection agency contact my employer? .An agency may contact an employer, but only for the following reasons:
a. To communicate with you at your place of employment.b. To verify your location. c. To garnish your wages once you have been taken to court and a judgment was entered against you.
b. To find out whether you have medical insurance to cover a medical bill.
8. Can a collection agency contact me at my place of employment?
Yes, unless the debt collector knows or has reason to know that your employer prohibits you from receiving such communication. However, if you do not want to be contacted at work, you can request that they not telephone or send you notices at work. Be sure to make your request in writing to protect yourself.
9. How do I stop a collection agency from contacting me?
If you want to stop all contact from the agency you may request that they not contact you again —IN WRITING. Your letter should be sent by certified mail, "return receipt requested," so you have proof of its delivery. Once the agency receives your letter, its employees can only contact you one final time to explain what action they plan to take. After that, contact must stop. Remember, though, that if you request no further contact in any way, except for certain messages allowed by law, you may leave the agency with no choice but to file a civil lawsuit against you.
10.Does an agency have to accept partial payments?
No. A collection agency has the choice of demanding the whole amount or taking payments on the bill. It will want to know your actual ability to pay the debt. The agency can set what it is willing to take for the amount of the payments and how often you will be required to make them.
11.As long as I am paying something every month, doesn’t the collection agency have to take my payment?
No. The agency’s responsibility is to collect the debts assigned to it. The agency will want to have payments made pursuant to an agreed plan, so it knows when to expect payment, and when the debt will be paid in full.
12.The collection agency has agreed to take payments. Do I have to sign a contract?
You don’t have to sign any contract with a collection agency. However, if the collection agency wants the payment agreement to be in writing, they have the right to require you to sign a contract as a condition of accepting payments. This can be a protection for both of you as long as you make the payments under the contract. If you make your payments on time and pay the agreed amount, the agency cannot change the way they are collecting the bill or demand more money. But, if you fail to make the payments according to the contract, the collection agency could then demand payment of or sue you for the entire remaining balance, not just the defaulted payment. The contract may also be in the form of a promissory note. These are both legal documents by which you will be bound — do not promise more than you can pay, and do not sign one just to appease an agency. A contract is a legally enforceable agreement.
13.What about oral (unwritten) payment plans?
The same conditions apply to unwritten agreements as do the written agreements. Both are contracts between you and the collection agency.
14.The collection agency wants me to write postdated checks or pre-authorize payments from my checking account. Do I have to do this?
No, you are not required to give postdated checks or pre-authorized payments to a collection agency. However, many consumers and collection agencies have found that this is very efficient means of structuring a repayment plan as it requires little ongoing maintenance by either party. Writing or accepting postdated checks or pre-authorized payments are not illegal so long as you plan to cover them when they are cashed or presented. The agency is required to send a notice of intent to deposit letter prior to deposit of any check.
15.May a collection agency demand the consumer pay interest on an assigned debt? If so, how much?
When assigned the debt by the original creditor, the collection agency can demand and collect interest from the debtor to the same extent that the consumer would be obligated to pay interest to the original creditor. The obligation to pay interest is not changed by the debt being assigned to a collection agency. If a collection agency does demand and collect interest, it should be shown as a separate amount from the principle when it is first demanded from the consumer. Subsequently, each additional amount of interest should be shown as a separate increase to the total balance due at that time. The obligation to pay interest exists whether a contract you signed included a promise to pay interest, the contract you signed was silent with respect to the amount of interest which would become due, or there was no written contract for the monies, goods, or services you obtained from the creditor.
If possible, contact the agency before you miss a payment or send a partial payment. Explain the problem and what you plan to do to solve it and catch up on your payments. Many agencies will work with you, especially if you’ve already made several payments on time.
16.What if the bill has been paid, I do not owe the bill, or I am not the person the collection agency is looking for?
If you do not owe the bill, or if the bill has already been paid, send the agency a written explanation along with copies of receipts, cancelled checks and any other information to back up your claim. It is important to send your letter within 30 days after your first contact from the collection agency. Once the agency receives your dispute letter, it must stop further attempts to collect the debt until it sends you written verification to show that you do owe the bill and that the amount of the bill is correct. If you are questioning only a part of the bill, the agency may not continue to collect on that part until it has provided verification, but you must make arrangements to pay the rest of the bill. If you are not the person the agency is looking for, write and explain the mistake. You may be asked to provide a driver’s license or social security number to prove that you are the wrong person. If you are unsure about your legal responsibility for a debt, check with an attorney. If the collection agency is unable to obtain verification that you owe the debt, it may return your account to the creditor and stop collection efforts.
17.Can a collection agency sue me?
Yes. The agency, represented by its counsel, may file a civil lawsuit against you in whatever court has jurisdiction in your state. If a judgment is obtained by the agency you may be liable for additional expenses for court costs and/or attorney fees.
18.Can a collection agency report my account to a credit bureau (i.e., Experian, TransUnion or Equifax, etc.)?
Yes. Most collection agencies, though not required by law, provide a brief period after receiving your account before reporting it to the credit bureaus. Therefore, it is important that you make immediate contact with the agency to resolve the matter before any negative information is reported about your past due account.
19.What should I do if the agency has already reported my account to a credit bureau?
If you owe the debt you should pay it. Payment of the debt will allow the agency to report your account as paid in full to the credit reporting agencies. If you dispute the debt you should send written notification to the agency together with supporting documentation to substantiate your position.
20.If I pay a bill to the collection agency in full, are they required to delete their negative report on my credit?
No. They are required to show it as "paid collection." The credit reporting agencies prohibit deleting a reported debt merely because it was paid.
21.What if I have been the victim of identity theft and the debt is not mine?
There are certain steps you must take if you have been the victim of identity theft. You can contact the Association for more information about this subject.
22.How do I file a complaint against an agency?
If you feel, after reading this information, that your rights have been violated by a collection agency, you can file a formal complaint with Association. However, you should always try to work out any problems with the collection agency yourself before you file a complaint. .You can contact GCA if you have any questions about the material on this page or want a complaint form sent to you. To file a complaint, download the Consumer Complaint Form fill it out and fax or send back to GCA. The association can respond to questions and provide you with information over the telephone on how to file a complaint, but the actual complaint must be in writing. The complaint form will ask you for specific information and will explain how your complaint will be processed. Your complaint form will be forwarded to the agency’s owner.
NOTE: The association provides this service with respect to third-party collection agencies. Complaints with creditors or credit reporting agencies are not within the scope of this service.