Debt collection laws


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Debt Collection Laws and the Way They Work

Debt collection laws are put in place to shield consumers from unjust debt collection policies. The discovery of collection institutes brought along the faulty and fraud policies of debt collection among the collectors.

Ever since, the federation has implemented a law called the Fair Debt Collection Practices Act (FDCPA) which fights the offensive and illegal policies of debt collectors. The FDCPA sets specific limitations on the actions and techniques of debt collection agents. 

However, it is vital that have a complete understanding of the way debt collection works so as to not be involved in a case of fraud.

The Fair Debt Collection Practices Act and Its Rules

Consumers generally misconstrue the working of FDCPA. The law applies to all third-party debt collection offices: Collection agencies, debt buyers and lawyers who exercise debt collection as a component of their business are all regarded as third-party debt collectors.

The FDCPA application comprises of debts like mortgages, credit card debts, medical debts, student loans and auto loans. This law highlights certain limitations of the actions of a debt collector and the methods they use to communicate with the consumer. If any of these rules are violated, you can issue a warrant within a year against the debt collector or agency.

What Are the Rules and Ways a Debt Collector Can Contact You?

·        Time: Collection companies can communicate with you through the phone, mail, fax or email. There are certain times during which a debt collector can contact you, between 8 a.m. and 9 p.m. local time. Any contact falling out of the set timings is a violation of the FDCPA.

·        Place: Debt collectors are not permitted to contact you in strange places like hospitals, schools or restaurants. You may exercise the right to tell them not to contact you when suitable. Furthermore, if they are aware of the prohibition of personal calls at your place of work, they must refrain from doing so.

·        Representation by attorney: If there is an attorney backing you up and the debt collector is aware of this, they are obligated to contact the attorney rather than communicating with you directly. However, if they do so, you may convey your attorney’s contact details and ask them to forward all details through them.

Who Else Can a Debt Collector Contact About My Debt?

Although a debt collector is permitted to contact any of your close relatives or friends to get through to you, they are not allowed to discuss their debt with anyone besides you, your significant other and your attorney.

What Can Debt Collectors Talk About?

When communicating with a consumer, the first thing a debt collector must do is establish themselves and let the consumer be aware of whom they’re talking to. After introducing themselves, they must then discuss the debt and disclose that any information relayed by the consumer will utilized in the collection of debt.

The FDCPA prohibits any sort of harassment like abusive or improper language. Some examples of harassment are:

·        Using abusive language

·        Signaling bodily harm

·        Disguising your debt

·        Threatens of arrest

·        Threatens of property

·        Continuous contact

When a debt collector communicates with you, they are required by law to convey necessary details about the debts, such as:

·        The name and detail of person you owe

·        The amount of debt

·        Your rights if you decide to dispute the debt within 30 days

·        Knowledge of your rights to demand the contact information of your lender, if you dispute it within 30 days

If the debt collector fails to offer all this information, they are then obligated to send you a writing document in the span of five days.

How Much Can a Debt Collector Demand of You?

A debt collector can only discuss the debt, the fees and the charges. Any additional payments lying out of the set limitations is a violation of the law.

What Are the Ways I Can Dispute a Debt?

If you find an error in the demand of a debt, you may file a dispute against the error. If you do this within 30 days of receiving the collection notice, the debt collector cannot communicate with you during the time. If, however, you fail to file the dispute the claim in the given time, the collector may till contact you during the process of elimination.

What Is a Debt Verification Notice?

A debt verification notice is the written evidence given by the debt collector replying to your claim disputing the error. It constitutes all the necessary details of you and your debt. Debt collectors are required to convey this letter to you, in confirmation of your dispute. The subjects in this letter are:

·        The amount of debt owed

·        The name of the lender

·        A statement giving you the information of your lender, if you ask for it

The debt verification notice is designated to offer you all the necessary details of your debt and give you a chance to verify it. The notice consists of the following information:

·        Identity theft: If the reason you are disputing the debt is identity theft or fraud, the debt verification notice will contain a duplicate of the original contract.

·        Debt amount: If the amount of debt is the reason for your dispute, then the notice must include details of the payments and any additional charges.

Keep in mind that if you demand a debt verification notice, all debt collection activities must be stopped and conveyed to you until your demand is fulfilled. Id this is performed during the 30-day time period, then they are clearly violating the FDCPA, which is why a record of all happenings must be kept.

Can I Ask a Debt Collector to Cease Communication?

The FDCPA gives you the right to request the debt collector from contacting you. You must make this request via mail or in writing. However, the best way to send the request through writing to ensure that the records contain the letter.

After this, a debt collector is only permitted to contact you to inform that they are concluding all communication or any further steps to be taken.

How Long Can a Debt Collector Seek a Former Debt?

 Majority of debts have an expiry, generally ranging from three to seven years. After which the statute of limitations concedes that the creditor cannot pursue your debt any longer.

Although the creditor can seek you personally seek the debt from you, they can no longer ask the court to take legal action.

What Is the Time Limit of the Statute of Limitations?

The exact time period of the statute differs by location, meaning that the statute depends on where the debt was incurred. It also depends on the nature of your debt. It always advised that you contact an attorney specializing in debt law. There are plenty of resources that aid you in your search for an appropriate attorney and the general mode of action.

Do I Restart the Statute of Limitations by Disputing a Debt?

No, the only thing that can restart the statute of limitations is if you admit to the debt or make any payments to the debts. Other practices like the application of a payment plan or agreeing to a settlement offer from the debt collector can play a role in restarting the statute of limitations.

Although the investigation of your debt will not restart the statute of limitations, agreeing that the debt is yours will. It is vital that you are vigilant in your conversation with the debt collector, to ensure you are not giving them any sensitive information. Moreover, it is useful to employ a debt collection law firm to help guide you through the process.

How Do Debt Collectors Affect My Credit?

Any overdue or pending payments can have a negative impact on your credit score. Potential creditors need to validate your responsibility and they do so through your credit score.

When you have debt in collections, it is assumed that the original creditor understood that you did not mean to pay the debt and sent it off to a collection agency. Credit bureaus classify these debts depending on how late they are, ultimately deciding your credit score decrease.

These debt collections are included in your report for seven years, after which the debt is null. The debts that are most recent have a greater effect on your credit score. Therefore, there is no specific answer for how can an unpaid debt affect your credit score, as it is tailored to your particular case.

Basically, any debt collection can be heavy on your credit score, which further affects your ability to process credit applications. Which is why debt collections have been issued to aid you in the matter and shield you from all risks.

Guiding through pending debts is no easy work, which is why you must have a deep understand of all your rights to handle your case properly. It is necessary to ensure you know how to deal with derogatory marks on your report.

Law firms like Blackwater Credit Repair aid you in the process of fighting all credit errors and dealing will all credit-related activities. Contact our team today to see how we can help make any credit process easy and efficient for you.