US Collection Law
It is hard to find anyone who has not borrowed money from a financial institution. And a good lot of such people might have experienced abuse by the so-called Debt Collection Agencies. The abuse can take any form ranging from repeated telephone calls, reminder notices, use of obscene language, insults, or even racial remarks. Unable to withstand such abuses, many end up becoming bankrupt. This has a serious impact on the society as a whole. Therefore, to put an end to all such unhealthy practices, the Fair Debt Collection Practices Act or FDCPA was passed.
The main objective of the collection law is to ensure that the collection agencies only resort to healthy practices towards debt recovery. The Act has laid down many guidelines for the agency to adopt while engaged in their business of debt collection. This law protects the interest of the debtor (one who owes money) in that he can sue the agency if it violates any recommendations laid down in the FDCPA. Moreover, the debtor can exercise more control over his debt in that if there are more than one debt that he owes, he can determine which is to be paid off first.
This collection law also restricts another unhealthy practice of debtors leading to insult and abuse of the debtor – contacting third parties regarding your debt. Perhaps this is the worst insult a debtor can withstand. According to FDCPA, the agency may contact such third parties, only once, to collect your whereabouts, and is strictly prohibited from disclosing the fact that you owe money to the creditor. However, if you have an attorney, then the agency can directly approach your attorney and not you.
There are some specific practices which a debt collection agency is prohibited to adopt. They can be broadly divided into three categories, namely, harassment, false statements, and unfair practices. Under harassment, the agency should not use any unhealthy measure like threat of violence, use of obscene language, making the debtors list public, etc. so as to insult the debtor and force them to repay the debt to save their face. Secondly, they are prohibited from using any misleading or false statements to recover the debt. This includes claiming that they are government authorities or attorneys or that they represent the credit institution, etc. Finally, they should not resort to unfair practices like seizing the property illegally, recovering more than the amount due, contact the debtor via postcard, or use deception to recover the debt.
The collection laws may have slight difference in different states, but the underlying idea is the same. There is a prescribed method that the collection agency should follow starting from sending written notice regarding the debt mentioning the amount due, the party to whom you owe the amount, and what should you do if you feel that you don’t owe money to the said creditor. In this way the interest of both parties are protected. The whole act of debt collection becomes a fair game.
