Federal and state laws regulate the collection of debts. The applicable federal law is the Fair Debt Collection Practices Act, or FDCPA. The FDCPA governs the techniques a debt collector may employ in the collection of a debt. The FDCPA does not apply to those creditors who collect debts in-house or to government employees whose job is to collect government debts, such as student loans.
Prohibited Debt Collection Practices
A debt collector is not allowed to violate a debtor's privacy or use abusive or harassing collection tactics. A debt collector may not:
- Telephone a debtor before 8 a.m. or after 9 p.m.
- Telephone repeatedly as a form of harassment
- Use obscene language, make racial or religious slurs or comments about a debtor's character
- Contact a debtor at work if prohibited by the debtor's employer or upon the debtor's request
- Contact a debtor when the debtor hires an attorney for debt collection purposes
- Claim that papers are legal papers when they are not
- Send forms that appear to be legal papers when they are not
- Falsely accuse a debtor of a crime
- Threaten a debtor with violence
- Garnish wages or sell property if not allowed by law
- Threaten to sue a debtor when no suit is intended
- Lie about the amount of the debt
- Threaten arrest
- Continue contact with a debtor after the debtor gives written notice to cease contact
- Misrepresent their identity
- Advertise a debt for sale or distribute a list of debtors
- Leave telephone messages with third parties disclosing the existence of the debt
- Sending a debt collection letter without disclosing that the letter is for the collection of a debt and that any information obtained from a debtor may be used for that purpose.
There are a number of things that a debt collector is allowed to do. A debt collector may:
- Sue to collect a debt
- Access a debtor's credit report
- Report truthful negative information on a debtor's credit report
- Send mail in care of another person sharing a debtor's address
- Attempt to collect the debt from a co-signer
- Add charges allowed by law to the debt or agreed to in the original creditor agreement
- Contact a debtor by mail (the envelope must not reference the debt)
Debtors have certain rights under federal law that require debt collectors to respect a debtor's privacy and to refrain from using abusive debt collection practices. Violations may be addressed with the FTC, state agencies, or through individual litigation.
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