Category Archives: debt collectors

CFPB – Chief Enforcer for Fair Debt Collection Practices Act

Posted on May 8, 2012 by admin

The Fair Debt Collection Practices Act (FDCPA) makes it illegal for debt collectors to employ “abusive, unfair or deceptive practices.” The FDCPA applies to collection agencies, firms that buy delinquent accounts and attempt to collect the obligations and attorneys who attempt to collect debts. When the U.S. Congress passed the FDCPA in 1977, it gave the primary responsibility for FDCPA enforcement to the Federal Trade Commission (FTC). The FTC also submitted an annual report to Congress. In July 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act (Franks Dobb Act) created the Consumer Finance Protection Board (CFPB) In general, the CFPB has oversight of matters related to credit cards, student loans, mortgages and other powers as granted by Congress. As the primary agency responsible for consumer financed-related affairs, the Dodd-Frank Act requires the CFPB and FTC to work together in the administrative, and enforcement responsibility of the Fair Debt Collection Practices Act (FDCPA). Duties of the two agencies include the following items: Develop debt collection rules Guideline for how to meet the requirements of regulations Collect  complaint data Inform and educate consumers and debt collectors Conduct research and policy In January 2012, the CFPB and the FTC agreed to a Memorandum of Understanding, which organizes work between the two agencies to “protect consumers and avoid duplication of federal law enforcement and regulatory efforts.” This year, the CFPB released its first report to the Congress. The report provides a summary of the FDCPA relate activities and the agency efforts in the debt collection market in general. The report also contains a breakdown of the consumer complaints received by the agency. Consumer Complaints According to the FTC, they receive 142,743 complaints regarding in-house debt collectors and third-party debt collection companies. These complaints equated to more than 27.16 percent of the total complaints received by the FTC. In 2011, the total number of complaints increased, compare to 2010 when the FTC received 141,285 debt collection complaints. Following are the nine types of complaint categories, number of complaints and the percentage of total FDCPA complaints received in 2011: Harassing the alleged debtor or others, 47,362 complaints – 40.4 percent Demanding an amount other than is permitted by law or contract, 46,482 complaints – 39.6 percent Failing to send required written notice of the debt to consumer, 30,742 complaints – 26.2 percent Threatening dire consequences if consumers fail to pay, 27,624 complaints – 23.0 percent Failing to identify self as a debt collector, 20,781 complaints – 17.7 percent Revealing alleged debt to third parties, 20,519 complaints  –  17.5 percent Impermissible calls to consumer’s place of employment, 16,895 complaints – 14.4 percent Failing to verify disputed debts, 10,000 complaints – 8.5 percent Continuing to contact consumer after receiving “Cease Communication Notice,” 5,922 complaints – 5.0 percent In 2011, third-party debt collectors increased to 117,374 in 2011 or 22.3 percent of consumer complaints. In 2010, 21.1 percent or 109,254, or 21.1 percent of all complaints related to third-party collection firms. Complaints regarding in-house debt collectors comprised 4.8 percent of total complaints recorded – 25,569. In 2010, the FTC received 32,031 complaints about in-house debt collectors – 6.2 percent of the total. Other Items in the Report The Dobb-Franklin Act gives the CFPB power to supervise a variety of creditors or third-party debt collectors. It also has in the works to oversee the activities of nonbank firms involved with offering financial products or services to consumers. Last year, the FTC had it highest number of “brought or resolved” debt collection cases with a total of seven. Actions including a civil suit against a payday loan company for garnishing wages without the proper court order and advocating for consumers in enforcing the Fair Debt Collection Practices Act. Continue reading →

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Strategies for Dealing with Debt Collectors

Posted on December 28, 2011 by admin

Coping with debts you cannot pay is never a fun process, and it can be downright stressful to have debt collectors calling your home at all hours of the day and night to try to force you to pay.  Debt collectors often use aggressive tactics to try to force you into sending at least some portion of your payment, especially as they often work on commission or on a system where they have to collect a certain amount of debt to meet quotas.  Yet, debt collectors must obey the law and are constrained by certain rules.  Dealing with debt collectors requires that you know your rights and take steps to make sure that any debts that you pay are cleared up once and for all. Tips for Dealing with Debt Collectors The following tips will help you in dealing with debt collectors so that you can cut down on stress and, ideally, resolve your financial problems in the new year. 1)   Pay attention to the age of the debt they are trying to collect There is a seven-year statute of limitations on collecting debt, and if your debt is older than this limit, it is no longer legally collectible.  Often, old debts are resold for pennies-on-the-dollar and you may find yourself dealing with debt collectors for a debt that you’d almost forgotten you had. When a debt collector calls you to try to collect payment on an old debt, it is very important that you think very carefully before paying any portion of the money owed.  Paying some portion of the debt can restart the collections clock and make the debt collectible again.  While you might sometimes wish to pay the debt to get the “charged-off” notation off your credit report, or if you feel a moral obligation to pay the debt, you should only do so if you have it in writing that your payment will result in removal of all negative credit reporting associated with the account.  Do not pay until you have it in writing! 2)   Know your rights The Fair Debt Collection Practices Act imposes significant limitations on when debt collectors can call, who they can call, and what they can say.  For instance, if you request that debt collectors refrain from calling you at work, they usually must do so.  Debt collectors are not allowed to contact you early in the morning or late at night and they are not allowed to reveal information about your debt to family or neighbors (although they typically can contact people to try to obtain information about your current contact info if it is unavailable to them). They also cannot threaten legal action or send you papers that look like legal papers that aren’t, unless they are actually planning on taking legal action. Be sure you are aware of these and other consumer rights under the Fair Debt Collection Practices Act, and if the creditors are engaged in harassing, abusive or dishonest behavior, let them know that you will be taking action.  There are stiff penalties for debt collectors who violate the Fair Debt Collection Practices Act and if you are the victim or harassment or repeated violations, contact an attorney for help. 3)   Demand they prove you owe the debt If a debt collector is calling you about debt, especially if that collector is not the creditor who you initially borrowed money from, you can demand that they provide proof that you owe the debt.  The Fair Debt Collection Practices Act Section 809  covers your right to Validation of debts in 15 USC 1692g and stipulates that when you request validation in writing within 30 days of collections activity, the debt collection against you must stop until the creditor/debt collector can provide his proof.  Proof of your debt may include copies of original credit documents or judgments against you 4)   Get a written settlement offer before settling our debt Settling your debt is another option for dealing with debt collectors once and for all. Settling debt involves negotiating a deal where you agree to pay back a portion of what you owe in a lump sum and the creditor agrees to forgive the rest.  Credit counseling companies facilitate debt settlement agreements for people regularly, but you can do this yourself by writing a letter making a settlement offer. It is essential, however, that you get the terms of the debt settlement in writing BEFORE you send any payments to your creditors.  You should also try to negotiate to have any negative reporting removed from your credit report as a condition of the settlement.  Again, get this in writing as well. 5)   Always check your credit report Whenever you pay off a debt, through settlement or otherwise, you must always check your credit report.  If debt collectors or creditors are not properly reporting the status of your debt, you can dispute the inaccurate information with the three major credit reporting agencies and an investigation will be conducted to make certain that the report is accurate.  While it can be a slow process to get inaccurate information removed, it is your legal right to dispute inaccurate data and you should take advantage of that legal right to make sure your credit score isn’t being unfairly damaged by debt you’ve settled or paid. Continue reading →

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Your Rights When Working With Debt Collectors

Posted on November 19, 2011 by admin

The Fair Debt Collections Practices Act, or FDCPA , enacted by Congress in 1978, responded to the extreme tactics engaged by collection agencies in attempts to collect from debtors.  Collection agencies and debt purchasers make thousands of phone calls and send thousands of letters a day in an attempt to collect valid debts.  Many only collect on a small percentage of the debts which they purchase or have had assigned to them. The FDCPA prevents third party collectors – usually contingency collection agencies or debt buyers – from using harassing or certain deceptive acts, or disturb a debtor’s privacy in an attempt to collect a debt.  A debtor is protected under the FDCPA in several ways: A debt collector must identify himself as such and must remind the debtor of their rights to verification within 5 days of initial contact. A debt collector must verify specific information when requested by a debtor within a certain time frame if requested by the debtor. A debt collector cannot make repeated phone calls on the same day to the same phone number with intent to harass or intimidate the debtor. A debt collector cannot reveal information regarding a debt to anyone other than the debtor, their spouse, or attorney without express permission from the debtor. A debt collector must cease communication when requested. A debt collector cannot place false information about the debt on a debtor’s credit report A debt collector cannot use abusive or profane language, or threaten a debtor with arrest or criminal prosecution. A debt collector cannot use legal action as a threat against a debtor unless legal action is actually intended within a certain time frame. The verifications that a creditor must confirm in writing to the debtor include that the amount being demanded is actually the amount owed, and the name and address of the original creditor.  The FDCPA does not require a creditor to provide every document from origination for validation and verification of a debt. Most of the protections for a debtor generally fall under the above guidelines.  The general purpose of the FDCPA is to protect a debtor’s privacy and legal rights.  Many states also have passed laws that add to the protections for a consumer under the FDCPA. What the FDCPA does NOT cover: Direct contact from the originating creditor, such as a bank or finance company. Debt made for a commercial/business purpose. A creditor reporting a debt correctly on a credit report. Furthermore, the FDCPA does not invalidate a debt, prevent a creditor from filing suit if a debt is in-statute, or otherwise render a debt void unless determined by a court. If a debt collector is not following the guidelines set forth in the FDCPA, make sure you do your homework on the FDCPA and seek attorney assistance.  Many of the “boilerplate” letters can fail when consumers attempt to take on creditors on their own.  Also, ALWAYS deal in writing with a creditor as the ONLY method of communication, particularly when agreeing on any debt settlement. The FDCPA is not a “get out of debt” free card.  Rather, the FDCPA is a consumer protection tool against unscrupulous behavior.  Borrowing money should be undertaken with careful consideration and only done so with the intent to repay. Continue reading →

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