The conduct of any collection agency, which is a business that regularly collects debts including companies that buys delinquent debts, is regulated by the Federal Trade Commission that enforces the Fair Debt Collection Practices Act (FDCPA). The FDCPA covers credit card debt, auto loans, mortgages and medical bills but no debts owed by a business.
What Can a Collection Agency Do?
If you are delinquent on a consumer debt or loan, you may be getting regular phone calls and letters from the lender or collection agency. The agency may contact you after 9:00 am or before 8:00 pm. The agency can also contact you at work unless you tell them to refrain from contacting you there since it is against your office policy or rules. They also must cease contacting you if you send them a letter telling the agency to no longer contact you. The agency can respond, however, by confirming your wishes or by advising you that the creditor will or intends to take legal or other action to collect the debt. If you are represented by a lawyer, the agency can only talk to your attorney. Third parties may be contacted once but only for finding out your address, employment or phone number.
If a debt is valid and can be verified, the collection agency can sue you and obtain a judgment that may be collected by a writ of execution, levy your bank account or garnish your wages.
What is a Collection Agency Prohibited from Doing?
A collection agency must stop contacting you if you send a letter to them asking them to stop within 30 days of your receiving a validation letter, or document evidencing or verifying the debt. The FDCPA has a list of practices that a collection agency is prohibited from doing:
- Telling you that you will be arrested if the debt is not paid
- That legal action will be taken if they do not intend to take the action
- Using a phony company name
- Sending you a false legal document
- Misrepresenting the amount owed
- Using obscene language
- Threatening violence
- Contacting you by postcard
- Collecting a fee or charge unless state law permits it
Each state has its own laws regarding debt collection practices. If you feel the collection agency has violated the law, contact your state Attorney General’s office or you may contact the Federal Trade Commission. In California, you can direct complaints to the office of the Attorney General.
If your debts have reached a point where you can no longer sustain making payments and are facing lawsuits from your creditors, bankruptcy may be an option for you. To learn more about bankruptcy and how it might help avoid creditor lawsuits simply arrange a consultation with one of our friendly staff members using our online scheduler. You consultation is free and you will become more informed about your options.