Who Can Use, and Who Must Follow, the Fair Debt Collection Practices Act
The Fair Debt Collections Practices Act only applies to consumer debts and, by and large, the actions of debt collectors (or original creditors pretending to be debt collectors). This is broken down into the questions of the type of debt for which collection is sought and the type of entity seeking the debt. In this article we will first discuss what the FDCPA covers, and then what that means to you.
Consumer Debts only
The FDCPA applies to “consumer debts,” or debts incurred primarily for personal, family, or household purposes. 15 U.S.C. Sections 1692a(3) and (5), Creighton v. Emporia Credit Service, Inc., 981 F.Supp. 411 (E.D.Va. 1997). When the debt is rung up on a corporate or business credit card, the courts will look into the nature of the debt – and not simply the name on the card. As I have pointed out elsewhere, however, making this argument can be dangerous to the “corporate shield” since it suggests a merging of assets which is sometimes used to defeat the corporate shield and allow a creditor to pursue an owner of the corporation.
Natural Persons Only
The act also only protects “natural” persons, which means it applies only to actual people and not corporations or separate associations. Again, since debt collectors never actually speak to corporations or businesses, but only to human individuals, this simply means that if a debt collector is calling on a debt rung up for business purposes, or calling a business regarding its debt (and harassing whoever picks up the phone, for example), the FDCPA does not apply.
Transactions Only
Because the FDCPA applies to only consumer debt, it applies only to “transactions” engaged in primarily for personal, family, or household debt. In other words, it does not apply to debts generated by child support obligations, tort claims (lawsuits against you for harming another person), or personal taxes, for example. Mabe v. G.C. Services Limited Partnership, 32 F.3d 86 (4th Cir. 1994); Zimmerman v. HBO Affiliate Group, 834 F. 2d 1163 (3rd Cir. 1987); Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367 (11th Cir. 1998).
On the other hand, the term “transaction” can be fairly broad, and would include things like condominium fees or other fees or debts incurred as part of a transaction that might, in fact, have occurred years before the debt in question arose. Because the FDCPA applies to debts arising out of transactions, it has applied to condo fees for a house the consumer once lived in but later (at the time of the FDCPA violation) was renting out to others for the purpose of generating income. This would suggest the reverse might also be true – a condo originally purchased for business purposes but later converted to personal use might not be covered by the FDCPA, but I have not seen a case with that holding.
The Act does apply to things you might consider “non-credit” obligations, such as bad check debts, condominium assessment fees, residential rental payments, municipal water and sewer service, and other non-credit consumer obligations – Bass v. Stolper, Koritzinsky,Brewster & Neider, S.C., 111 F.3d 1322 (7th Cir. 1997); FTC v. Check Investors, 502 F.3d 159 (3d Cir. 2007).
Debt Collectors Only
In general, the FDCPA applies only to “debt collectors.” What that means used to be a lot clearer than it is now.
The Supreme Court confused the question of who was a debt collector in some decisions in 2018. Primarily, it determined that when a company buys a debt – regardless of its status at the time of purchase – it is a “creditor” under the part of the law debt defendants had been using to sue junk debt buyers.
Instead, a person buying a debt might be a debt collector if its “principle business” is the collection of debts. It is not clear HOW MUCH of a company’s business must be collection of debts for that to be its “principle business.” I would guess a sizable majority – perhaps 90% or more – but the term has rarely been litigated, and has never been quantified to my knowledge. It would seem clear that a bank with a sizable business providing credit cards would not be a debt collector if it happened to buy someone else’s debts and bring suit on them. Likewise, law firms buying debt and suing on them would probably not be debt collectors if they do anything else – a truly unfortunate result, in my opinion.
But classic debt collectors (i.e., those working for someone else) would still be debt collectors, and so, probably, are the largest junk debt buyers.
What the FDCPA does not cover is actions by an “original creditor” (i.e., the company or person who claims you borrowed from it) unless it is pretending to be another entity. Sometimes original creditors seek to exert additional pressure on delinquent bill payers by pretending to be a debt collector, and when they do this they are not only covered by the FDCPA but also often in violation of it, since the Act prohibits deception and unfair collection methods. The Act will also not cover the actions of loan “servicers,” which are financial companies that buy debt not in default and manage it as if they had extended credit in the first place.
What It Means to Be Covered by the FDCPA or Not
As I am sure you know, the FDCPA requires and prohibits certain actions, giving you defenses and the right to counterclaim or file suit against a debt collector. If the FDCPA does not apply, you simply cannot claim any rights under it – cannot require verification, bring claims for deception or abusive conduct, or seek to enforce any other rights under the FDCPA against non-debt collectors or against debt collectors for their actions in pursuit of non-covered debt.
Making such a claim could damage your ability to defend against these debts, so you should carefully consider whether the Act applies before attempting to assert rights under it.
If your debt or bill collector is not covered under the FDCPA, that does not necessarily mean that you have no rights worth asserting. It just means that you must look somewhere else for them. Many states have their own debt collection laws, and these may apply to situations the FDCPA does not. Also, more generally, most states have laws regarding how “outrageous” a person – including a debt collector – is allowed to be.
One of the great things about the FDCPA is that it gives some specific rules – debt collectors cannot call before 8 in the morning, for example, whereas a few calls by an original creditor early in the morning will probably not be illegal. As the behavior becomes more and more extreme, however, the more likely it is to be “outrageous” enough to give you the right to sue. Threats of physical harm or police activity probably go over this line, for example; cussing you out a time or two? – maybe not. It is simply not clear what non-debt collectors are allowed to do in many instances. Courts have been pretty tolerant of some surprisingly bad or extreme actions by original creditors.
Who can use FDCPA and Who follows it
Who Can Use, and Who Must Follow, the Fair Debt Collection Practices Act
The Fair Debt Collections Practices Act only applies to consumer debts and, by and large, the actions of debt collectors (or original creditors pretending to be debt collectors). This is broken down into the questions of the type of debt for which collection is sought and the type of entity seeking the debt. In this article we will first discuss what the FDCPA covers, and then what that means to you.
Consumer Debts only
The FDCPA applies to “consumer debts,” or debts incurred primarily for personal, family, or household purposes. 15 U.S.C. Sections 1692a(3) and (5), Creighton v. Emporia Credit Service, Inc., 981 F.Supp. 411 (E.D.Va. 1997). When the debt is rung up on a corporate or business credit card, the courts will look into the nature of the debt – and not simply the name on the card. As I have pointed out elsewhere, however, making this argument can be dangerous to the “corporate shield” since it suggests a merging of assets which is sometimes used to defeat the corporate shield and allow a creditor to pursue an owner of the corporation.
Natural Persons Only
The act also only protects “natural” persons, which means it applies only to actual people and not corporations or separate associations. Again, since debt collectors never actually speak to corporations or businesses, but only to human individuals, this simply means that if a debt collector is calling on a debt rung up for business purposes, or calling a business regarding its debt (and harassing whoever picks up the phone, for example), the FDCPA does not apply.
Transactions Only
Because the FDCPA applies to only consumer debt, it applies only to “transactions” engaged in primarily for personal, family, or household debt. In other words, it does not apply to debts generated by child support obligations, tort claims (lawsuits against you for harming another person), or personal taxes, for example. Mabe v. G.C. Services Limited Partnership, 32 F.3d 86 (4th Cir. 1994); Zimmerman v. HBO Affiliate Group, 834 F. 2d 1163 (3rd Cir. 1987); Hawthorne v. Mac Adjustment, Inc., 140 F.3d 1367 (11th Cir. 1998).
On the other hand, the term “transaction” can be fairly broad, and would include things like condominium fees or other fees or debts incurred as part of a transaction that might, in fact, have occurred years before the debt in question arose. Because the FDCPA applies to debts arising out of transactions, it has applied to condo fees for a house the consumer once lived in but later (at the time of the FDCPA violation) was renting out to others for the purpose of generating income. This would suggest the reverse might also be true – a condo originally purchased for business purposes but later converted to personal use might not be covered by the FDCPA, but I have not seen a case with that holding.
The Act does apply to things you might consider “non-credit” obligations, such as bad check debts, condominium assessment fees, residential rental payments, municipal water and sewer service, and other non-credit consumer obligations – Bass v. Stolper, Koritzinsky,Brewster & Neider, S.C., 111 F.3d 1322 (7th Cir. 1997); FTC v. Check Investors, 502 F.3d 159 (3d Cir. 2007).
Debt Collectors Only
In general, the FDCPA applies only to “debt collectors.” What that means used to be a lot clearer than it is now.
The Supreme Court confused the question of who was a debt collector in some decisions in 2018. Primarily, it determined that when a company buys a debt – regardless of its status at the time of purchase – it is a “creditor” under the part of the law debt defendants had been using to sue junk debt buyers.
Instead, a person buying a debt might be a debt collector if its “principle business” is the collection of debts. It is not clear HOW MUCH of a company’s business must be collection of debts for that to be its “principle business.” I would guess a sizable majority – perhaps 90% or more – but the term has rarely been litigated, and has never been quantified to my knowledge. It would seem clear that a bank with a sizable business providing credit cards would not be a debt collector if it happened to buy someone else’s debts and bring suit on them. Likewise, law firms buying debt and suing on them would probably not be debt collectors if they do anything else – a truly unfortunate result, in my opinion.
But classic debt collectors (i.e., those working for someone else) would still be debt collectors, and so, probably, are the largest junk debt buyers.
What the FDCPA does not cover is actions by an “original creditor” (i.e., the company or person who claims you borrowed from it) unless it is pretending to be another entity. Sometimes original creditors seek to exert additional pressure on delinquent bill payers by pretending to be a debt collector, and when they do this they are not only covered by the FDCPA but also often in violation of it, since the Act prohibits deception and unfair collection methods. The Act will also not cover the actions of loan “servicers,” which are financial companies that buy debt not in default and manage it as if they had extended credit in the first place.
What It Means to Be Covered by the FDCPA or Not
As I am sure you know, the FDCPA requires and prohibits certain actions, giving you defenses and the right to counterclaim or file suit against a debt collector. If the FDCPA does not apply, you simply cannot claim any rights under it – cannot require verification, bring claims for deception or abusive conduct, or seek to enforce any other rights under the FDCPA against non-debt collectors or against debt collectors for their actions in pursuit of non-covered debt.
Making such a claim could damage your ability to defend against these debts, so you should carefully consider whether the Act applies before attempting to assert rights under it.
If your debt or bill collector is not covered under the FDCPA, that does not necessarily mean that you have no rights worth asserting. It just means that you must look somewhere else for them. Many states have their own debt collection laws, and these may apply to situations the FDCPA does not. Also, more generally, most states have laws regarding how “outrageous” a person – including a debt collector – is allowed to be.
One of the great things about the FDCPA is that it gives some specific rules – debt collectors cannot call before 8 in the morning, for example, whereas a few calls by an original creditor early in the morning will probably not be illegal. As the behavior becomes more and more extreme, however, the more likely it is to be “outrageous” enough to give you the right to sue. Threats of physical harm or police activity probably go over this line, for example; cussing you out a time or two? – maybe not. It is simply not clear what non-debt collectors are allowed to do in many instances. Courts have been pretty tolerant of some surprisingly bad or extreme actions by original creditors.
Welcome to Fightdebt
Welcome to Fightdebt (Youtube) and YourLegalLegUp
Welcome to Your Legal Leg Up. Our channel on Youtube is @fightdebt. Please be sure to subscribe.
Welcome to Your Legal Leg Up.
Our goal is to help ordinary people who are facing debt problems now or trying to live down the effects of older debt problems. We want to help you protect what you have and build for tomorrow.
Debt Defense
We got our start in helping people defend against debt lawsuits brought by debt collectors. This is possible because debt collection is really a “factory” operation. The debt collectors find out practically nothing about individual cases before they bring suit, and in litigation they don’t like to spend any more time on them. Instead, they bring dozens, hundreds, or thousands (depending on the collector) of suits that are virtually identical. Because most people – we estimate somewhere between 80 and 95% of people – default or give up without paying any attention to the law suit whatever, the debt collectors really don’t need to do anything to rake in huge amounts of money.
And that’s what they do.
But the problem with that approach for them is that if you are willing and able to fight a little bit, they rapidly find it unprofitable to continue to fight with you. They make their money by collecting debts, not fighting them. We teach you to fight them in a way that increases the debt collector’s costs and improves your chances of winning. It takes some work, but your chances of winning are excellent.
Credit Repair
If you have had debt problems at one point, there’s a good chance your credit report is still suffering. And that means that good things are passing you by. You’re spending more for housing, insurance, and many other things, and there are some things you just can’t get – all because you have bad credit. You can fix that, and we can help. There are laws that help you get your credit report reviewed and straightened out, and there are practical ways to reconstruct your credit history so that you’re better off than you were before your debt problems.
Debt Negotiation
If you have debt collectors after you for a debt you can’t afford to pay, you must wonder whether there’s a way to make them go away without suing you. Of course, any one company can do whatever it pleases, but in general, the debt collectors can be brought to the table. They’ll negotiate, and you can get back on your feet without being sued. And without having to pay what you can’t afford.
Of course there are no free lunches, and anything you do to negotiate will cost you in various ways. We help you minimize those costs so you don’t pay more than you have to for less beneficial results. It’s all about making the best of a bad situation, and part of that means to keep it from getting worse. We can help.
Sometimes a Raindance is just a Dance 2
Sometimes a Rain Dance is Just a Dance – – and it Rains (Pt. 2)
This is part two of this video and article. In the first part we talked about how some people do a bunch of things which may or may not be effective, and win their cases. Sometimes this is from sheer amount of effort, which causes the debt collector to think the whole thing will be more trouble than it’s worth. Sometimes it’s from doing something right (among all the things that are done). Sometimes it’s just from doing ANYTHING at all.
The point is, just because someone wins a case doesn’t necessarily mean that any one thing he or she did “worked.” Sometimes you just get lucky.
There is some (essentially random) luck, but most luck comes from doing the right things. Knowing how to do these things the right way gives you your best chance to win. Our materials help you figure out how to do the right things.
How Debt Lawsuits begin
A debt lawsuit starts with a “petition” (although it is sometimes called a “complaint,” and there may be other names for it, too). This is the statement that you supposedly owe the debt collector money, some legal reasons why the court should order you to pay, and a “request for relief” (also known as the “wherefore clause”). The debt collector can file this petition with the court without any permission from the court. When they file it, the also get a summons.
Some courts let the debt collectors write up and send the summons, too, although technically it comes from the court. The debt lawyer, as an “officer of the court,” writes it up, a clerk stamps it (or they may come pre-stamped), and the power of the court – over the case and over you – has been invoked. The summons tells you when to be at court and what to expect (“default judgment for the amount sued upon”) if you fail to show up. In all courts of which I am aware, proper service of the summons, which can happen in several ways, is necessary for the court to have jurisdiction over you. It is a constitutional requirement, but just what the constitution requires isn’t always clear, whereas the rules usually are.
What the debt collectors know is that somewhere between 80 and 95% of people who are served will not show up in court. If you do show up, and the other side does not, you should immediately ask that the case be dismissed, and many courts (perhaps most) will grant that motion. That would be lucky – but only if you were there and knew enough to request the court to dismiss the case, as absent the request the courts will often simply continue (postpone) the case until the next court date.
Assuming the other side actually appears for court as scheduled, your next step is (a) either to move to dismiss the case or (b) answer the petition. Check your rules to see what the rules of pleading are, and if the plaintiff’s case does not comply with those rules – and they almost never do in Pennsylvania, for example – you might file a motion to dismiss or its equivalent (Preliminary Objections in PA). Often enough they don’t comply in whatever jurisdiction you may be in, and a motion to dismiss can be a quick way out of the lawsuit. Or you may file an Answer. Whichever action you take, the debt collector might choose to walk away from the suit at this point. As I have often pointed out, there are a lot easier people to chase than those who file bothersome Motions to Dismiss or Answers.
Often the debt collector will not walk away at this point, thought, so the next thing you must do is both serve discovery on it and answer discovery if they serve it on you. It is important for anybody to serve discovery on the other side first, but especially for pro se debt defendants. You would never believe the games the debt lawyers play if you don’t see it, and you want to see those games in action before you start responding to their discovery.
Sometimes the mere service of discovery drives the debt collectors away, but most often, of course, it does not. You will receive vague and unresponsive “answers” like “pursuant to national banking regulation, credit card applications need not be retained beyond a period of two years” (What does that say, anyway?) or “Plaintiff is conducting a search for records and will make them available to defendant as they come into Plaintiff’s possession.” It is the task of the pro se defendant to push past these objections and vague statements to discover what, if anything the debt collector has, and to force it to admit it has nothing more. This, of course, is the reason for a motion to compel. If you do that appropriately, the chance of the debt collector dropping the case is actually pretty good.
Not Bad Faith or Frivolous
Performing legal actions with no reason other than to increase the cost and effort the other side must undertake in order to win its case is “bad faith” in litigation. An action with no reasonable basis in law or fact is “frivolous.” Both of these sorts of forbidden actions and motives can create significant problems for a person caught doing them. None of the actions listed above, however, come anywhere close to these forbidden zones: they all accomplish purposes for which the discovery and pleading rules were designed. The motions seek to weed out unwinnable claims, and the discovery probes the other side to find out what, if anything, they have in support of their claims. Following this broad pattern, you are not only increasing the chances that they will walk away at any point leading up to trial, but you also increasing your chances of winning if the matter does go to trial.
Good Luck
Lawyers are constantly performing a balancing act, always deciding whether it is potentially more profitable to act in one way rather than another. This is not because lawyers are greedy – although many of them are, of course – but is in fact part of their ethical responsibility to act in ways which promote their clients’ interests. These interests are virtually always financial, and thus as you continue to defend yourself with skill, you raise the issue more and more insistently that the lawyer would be better off pursuing other claims.
When your skill has actually pushed the lawyer to take the step of cutting you loose, you are “lucky,” and the debt collector drops its suit. If you have a pending counterclaim at this point, you can force the debt collector to dismiss your case “with prejudice,” which it means no one could ever sue you again for the same debt.
Sued for Debt Action Steps
Finding out that you’re being sued for debt can be a big shock, and it also puts you at risk for losing the things you have. We have good news for you. You can protect yourself.
Could Anything Actually Make You Glad to Get Sued by Debt Collectors?!
It’s hard to believe that could happen, isn’t it – that you could actually end up glad you got sued by a debt collector? And yet it could true.
If you’re being sued by a debt collector, chances are it’s coming at the end of a long process that started with missed bills, phone calls, letters, messed up credit reports, worry, and missed sleep at night. I don’t need to tell you how awful it is. And the lawsuit itself may seem like a nightmare. After all, if you lose, you could face new problems: garnishment of wages, seizure of bank accounts, and possibly even worse.
And you can forget about your credit report if they get a judgment, right?
So How Could Getting Sued Possibly Be Good News?
The lawsuit could actually be the end of your trouble. Instead of hanging back and destroying your credit or just bugging you to death, which you can’t do much about, they’re suing you. And there’s a lot you can do about that.
That’s because the debt collectors usually start their lawsuit without what they need to win. If you play your cards right, that may give you a chance to erase your debt for good. In the process, you can take control of your life again.
Imagine how you’ll feel when you drive the debt collector away and erase the debt. You can start repairing your credit report and get back to your life. You can answer your phone without worrying about debt collectors
Finally.
Here’s what one user of our materials said about his experience:
Thanks Ken,
Frank from Arizona
And another:
Thanks again!
Gary
These people, and many more, could tell you the same thing: you can beat the debt collectors.
And when you do, it will feel even better than you would ever guess. It will change your life. They’ll never push you around again. You’ll never be scared of debt collectors and their lawyers again.
If you know what you’re doing – and that’s what we teach you – you can probably win the case even if the debt collector actually has or can get what it needs. And it usually doesn’t. Your job is to make them start looking for those records, make them start losing money and worrying about whether they will ever see their money again.
The trick is to fight. They’re not really set up to fight you if you know what you’re doing.
I Don’t Want to Tell You You Can Just Get Away with It (But You Probably Can)
I don’t want to tell you you can rack up debt and get away without paying, because we should all pay our debts. But these are tough times, and sometimes things happen that make it impossible to pay.
And sometimes those things are the fault of the banks – they have just about ruined the economy for all of us, after all. not having to pay them would only be poetic justice. Although poetic justice can wait – if they’re after you, you’re in a fight that you just need to win.
Find Out More
If you’re ready to think about taking on the debt collectors, look through our site and consider joining us. We can help you take control of your life and force the debt collectors to leave you alone.
Objections 101
Objections – what they are and how they work
The way you protect yourself in trial from evidence that could hurt you is to object. This video discusses how that all works.
When lawsuits are tried, they are normally decided by the evidence much more than any argument. That means that you want to control what gets seen and considered by the judge or jury. At the same time, the “flow” of the action can make a difference, and so there are times a party might not want to slow things down or stop them even if what is getting said isn’t necessarily within the rules. Therefore, the courts let you waive your objections.
To put that a little differently, if you do not make an objection, a judge will normally treat your silence as a decision not to object, as a “waiver” of the right to object. An objection is the way you let the court know you want it to follow the rules of evidence.
In debt law, there is almost never any reason to waive an objection. Your case will probably be determined on the basis of a few documents, and whether those documents come into evidence will almost always depend on whether you object to them. Therefore, learn the two most important rules of evidence for debt law: the rule against hearsay evidence, and the business records exception to the rule against hearsay. Learn how to object, and be ready to shoot down their attempt to use the business records exception.
South Dakota Stats of Lims
Various South Dakota Statutes of Limitations
Contract: 6 years, (SDCL 15-2-13).
Domestic Judgments: 20 Years, (SDCL 15-2-6).
Foreign Judgments: 10 Years, (SDCL 15-2-8).
Claims of Fraud: 6 Years, (SDCL 15-2-13).
Sealed Instrument: (except real estate): 20 Years, (SDCL 15-2-6).
Actions not otherwise provided for: 10 Years, (SDCL 15-2-8).
Open Accounts: 6 Years, (SDCL 15-2-13).
An “open account” is usually what a charge or credit card is considered. Remember that the statute of limitations does not start “running” on the date the debt is incurred (in the case of credit card debt) but on the date the debt is defaulted on. It is a clock that only ticks after a “wrong” has occurred. Then you are given that amount of time to file suit. The statue of limitations does not apply to the time a lawsuit takes to develop, but only refers to how much time you have before you have to file suit or lose your rights.
Foreclosure and the FDCPA
Cease-Communication Letters
Debt collectors often try to wear down the resistance of consumers by repeatedly calling and harassing them. If this is happening, you can easily make it stop. Here’s how.
Debt Collection Strategies
Debt collection is a huge and growing industry in the United States, and collectors are notorious for some of the strategies they use to force and intimidate consumers into payment.
They’re Trying to Harass You
Debt collectors know that they people they are calling do not have much money-their purpose is to move themselves to the head of the line. The way they do this is by attempting to inflict more pain or annoyance on the consumer than other bill collectors. In other words, debt collectors know you only have so much money to pay your bills – they’re competing with each other. The company that harasses you the most “wins.” Sometimes individual debt collectors claim not to engage in abusive behavior, but rather to be the victims of it. I leave the reader to decide how much sympathy these debt collectors deserve, but my point is that, in general, the debt collectors seek emotional engagement – and, also in general – the best thing you can do is avoid it.
You Can Make them Stop Bugging You
The collectors are not concerned with your priorities or well-being, but you should be, and it is hard to keep a clear head amidst all the noise and all the people trying to use you. Luckily the Fair Debt Collection Practices Act (FDCPA) offers some help. Under the FDCPA, 15 U.S. Code Section 1692(c)c, “if a consumer notifies a debt collector in writing that the consumer wishes [it] to cease further communication with the consumer, the debt collector shall not communicate further…with respect to such debt.”
However, the collector may inform the consumer that it’s efforts are being terminated, or notify the consumer that it “may or will invoke specified remedies which are ordinarily invoked” (i.e., suing or reporting to the credit agencies). Many people fear that by invoking this rule they will cause the debt collectors to sue them – but this fear is probably misplaced (it is according to my experience). The debt collectors have their own guidelines based on what they expect to collect. If anything, writing a cease communication letter may reduce your chance of being sued because it keeps the debt collector from gathering more information about you.
What to Do to Make Debt Collectors Stop Harassing You
Crucially, if the notification is made by U.S. mail, the communication is complete “upon receipt.” In other words, to make sure the debt collector is forced to cease communications, it makes sense (although it is not required by the law) to send the letter by certified mail. That way you have proof that the debt collector received the letter. Any further communication would be in violation of the FDCPA.
When the phones stop ringing off the hook, you will be freer to make decisions according to your own best interests and priorities.
For More Help
Our Debt Collections Pack can give you a sample cease-communications letter and the guidance you need to keep the debt collectors off your back.
Debt Collection Laws – Debt Collectors and Creditors
If you are being threatened with a debt collection lawsuit, or if you are being harassed or sued over a debt by either a debt collector or an original creditor, you should know that there are some laws in place that could help you. This article will briefly discuss a few of the sources of legal rights you may have.
The difference between “Debt Collectors” and “Original Creditors”
First, a distinction that is very important in the law: the difference between debt collectors and original creditors. An “original creditor” is an entity (the law calls it a “person,” but it could be a human or a business) that extended credit to you in some way. For present purposes, it could also mean someone you owe money to in a non-credit transaction, and also means “servicers” of loans. Debt collectors are “persons” a significant part of whose business is the collection of debts due to other people.
Laws pertaining to Original Creditors
Because original creditors have some connection with the public other than debt collection and are therefore at least somewhat vulnerable to negative public opinion, the law gives them much more latitude in dealing with people who owe them money. They are not, however, permitted to assault you, obviously, or engage in other extreme and “outrageous” behavior. Where that line is drawn, however, differs from place to place. Some jurisdictions have allowed original creditors to post your name on a “hall of shame” board, for example, but I’ve never heard of anyone being allowed to chase you down the street calling you names. It’s vague, I know.
Laws do prevent anybody from defaming you (publication of false, seriously derogatory information), and this would include the publication of false information to your credit report. By and large the rule is, that all the basic rules apply to creditors, but very few special ones do. There might be particular laws in your jurisdiction, though, so you must take that with a grain of salt.
Laws pertaining to Debt Collectors
Debt collectors don’t have the “civilizing” connection to the community that most businesses do, and so the law is much more stringent regarding them. The rule there is that the Fair Debt Collection Practices Act makes “unfair” or deceptive debt collection techniques illegal. Again, the law is rather vague, but this time its vagueness is in favor of debtors. Debt collectors try many sneaky and underhanded tricks, and many shockingly abusive and outrageous tricks too, and the law is designed to try to cover them all. For further discussion, please see other articles.
Other sources of legal protections include state merchandizing practices acts (which mostly apply to marketing techniques) the Federal Truth in Lending Act, the Uniform Commercial Code, and the Federal Trade Commission. Other resources could also include the Better Business Bureau and State Attorneys General.
For a much more complete understanding of the debt law – especially if you are being sued, check out the Debt Defense System. If you are still in negotiations and want more information about what that might mean or how to go about it, check out the Debt Negotiation and Settlement System. And of course this website has a wealth of information available for free. Be sure to contact me if you have questions.
Garnishment of Assets