Knowing and Asserting Your Rights as a Debtor-Consumer

Oct. 16, 2012 - PRLog -- If you have a credit card, you are more or less familiar with that part of the credit card statement which states that failure to settle the obligation could translate into interests being added to the principal.  Your account can be referred to a collection agency to make sure that you pay the credit card company.  

Collection agencies do their job by sending the debtor letters of collection or by incessantly calling by phone.  They drop by the debtor’s residence hoping he will be there and if not, and inquire about his whereabouts from relatives and friends.

Is this not an invasion of privacy or harassment?  Are there any laws that protect consumers from creditors even after you have expressed your sincere intention to settle the financial obligation?

The Federal Trade Commission (FTC) acknowledges in their website that such abuse actually  happens in the process of collecting payment for a debt, to wit: “There is abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.”

The  FTC enforces the Fair Debt Collection Practices Act (FDCPA) and protects a debtor from his creditors, collection agencies and debt collectors in several ways. The Consumer Protection Act also does the same thing on the state level. Legislators respect the privacy of the debtor and expect the creditor and his representatives to do the same. Consumers and debtors must be aware of their rights in order to protect themselves from unlawful acts of creditors and collection agencies.

It is lawful contact the debtor’s friends, family or employer to know the debtor’s whereabouts but the creditor or agent is prohibited from disclosing or implying that there is a financial obligation that is due.  They may not announce or label the debtor as a person who does not pay his debt.  Consequently, they cannot post notices in the classified ads section of a local newspaper to this effect in an effort to locate the debtor.  By analogy, posts on Facebook to this effect are likewise covered in the prohibition.

When sending notices by mail, creditors and agents are expected to be discreet so as not to openly display or even hint that the debtor owes them money, that it is due and/or that they are collecting from him.  Postcards which can be openly read, and see-thru envelopes or a return address that is a dead giveaway that it is for a collection of a debt due are not allowed by law.

If upon initial contact, the debtor responds in writing, denying or disputing the amount due, the collection agency must cease from contacting the debtor and get a copy of documentary evidence to prove the debtor wrong before contacting him again to assert the creditor’s claim.

If the debtor is represented by an attorney, the creditor is bound to respect that and contact the attorney instead and nobody else, not even the debtor.  A debtor can also hire the services of a bill consolidation/negotiation specialist to handle creditor calls through power of attorney.

Collection phone calls may be legally made within the hours of eight o’clock in the morning and nine o’clock in the evening, hours that the debtor expected to be awake.  If the creditor and the debtor have different time zones, the debtor’s hours prevails.  They cannot charge the debtor for long distance phone calls or other forms of communication expenses; a creditor can only charge an interest or impose fees that are allowed by law.

Phone calls to a location other than the debtor’s home are limited twice in a period of thirty days. Calls to the debtor’s work place are allowed provided that it should stop once the creditor is notified that the debtor cannot receive such phone calls at work. A verbal order not to call one’s workplace remains in effect for up to ten days while a written order sent within seven days from the verbal order remains in effect until annulled by the debtor.

When calling a debtor over the phone, the collection agency is mandated to reveal their true identity and the name of the person/company they are representing or collecting the debt for. They are not allowed to misrepresent themselves by claiming to be a government agent, state agent, credit bureau agent, attorney in order to compel disclosure of whereabouts or payment of the debt.

Personal visits to locate a debtor or to directly collect from him is limited to once every thirty days, unless they are expressly allowed to make frequent visits.

Any form of abuse is not sanctioned by the law no matter how huge the debt is.  The creditor or his agent may not harass, oppress, or abuse the debtor in order to collect a debt, and threats of physical harm, damage to reputation, use of foul language are likewise not allowed by the law. They cannot imprison or arrest the debtor for not settling a debt; only the government has the power to do that. If physical attack ensues in the collection process, the debtor or his family should immediately call 911, get medical attention, file a police report and make sure that the incident is documented.

Public Laws 95-109 and 99-361, also known as the Fair Debt Collection Practices Act allows a debtor to inform the creditor or the collection agency that collection letters, phone calls, visits are not desired.  

The notice a debtor gives the creditor or collection agency, is in essence a cease and desist letter, a demand letter which advises a person to stop (cease and desist) doing offensive actions by specifying legal rights. It is an effective way to make creditors stop harassing a debtor for payments.

After receiving the notice, contacting the debtor shall be limited to an acknowledgement of receiving it and a commitment not to contact the debtor any further, or to send notices of further remedies to collect the debt in issue.  Just as the law protects the debtor, it also protects the interests of the creditor; hence he can take judicial action, garnish wages or personal property upon court approval to collect the amount due, interests, legal fees, etc.  

If the creditor is violation of the law, the debtor can sue for actual damages or bring a class action (all debtors they have been trying to collect from, including the debtor versus the creditor and/or collection agency).  Actual damages may be emotional, monetary such as job loss as a consequence of unwarranted collection calls at work, physical. Claimed actual damages must be proved by the debtor and his witnesses in a court of law.

Legalbargain.net is in no way encouraging the consumer to abscond payment, more so if the debtor is in a position to pay.  A cease and desist letter should come hand in hand with good faith and a sincere effort to settle one’s financial obligation within a reasonable period of time.  Extra consideration is usually asked from a creditor in the event of an unexpected expense such as an emergency, or job loss or income less than expected.  Legalbargain.net prepares cease and desist letters for a minimal fee.  Do-it-yourself- forms are available for an even lesser fee.

This article should not be taken as a legal advice but rather a sharing of information found in the law that most consumers are unaware of.  We are living in hard times; people lose their jobs and majority are struggling to make ends meet.  Legalbargain.net gives back to society by producing advocacy videos in addition to affordable legal document preparation services in an effort to make justice within the reach of those who believe that it is only for the monied.