The exact legal definition of a debt collector may differ by state, but in general, a debt collector is defined as any person or company that collects debts that are owed to another entity. In most cases, these are debts that have not been timely paid and are past due. Debt collection is common in many credit card arrangements and other situations, such as foreclosure.
A debt collector is typically a third party in a lender-borrower arrangement that acts for a fee on behalf of the lender’s interests. Utilizing a debt collector allows a lender to devote less time and resources to collection efforts. A debt collection company, debt collection agency, or a collections agency sometimes employ debt collectors.
What Is the Fair Debt Collection Practices Act (“FDCPA”)?
In short, the Fair Debt Collection Practices Act (“FDCPA”) is the federal law that limits the actions of debt collectors attempting to collect debts on behalf of another person or entity.
One way the FDCPA protects debtors is by restricting the ways collectors are allowed to contact debtors, such as the time of day and number of times that the debt collector can contact the debtor. Under the Fair Debt Collection Practices Act (“FDCPA”), it is illegal for a debt collector to call a debtor before 8 a.m. or after 9 p.m. in the debtor’s time zone.
What Are Other Common Examples of Unfair Debt Collection Practices?
Once again, debt collection practices are typically attempts by a debt collector to try and contact a debtor and persuade them to make payments on their past-due debts. In many cases, a debt collector may initiate legal proceedings to have the collection efforts enforced by order of the court. However, debt collectors must abide by state and federal collections laws and not engage in unfair debt collection practices.
Examples of unfair debt collection practices include:
- Making harassing or threatening comments to the debtor;
- Using offensive or abusive language when communicating with the debtor;
- Misrepresenting debts or consequences of not paying debts;
- Making false or misleading statements when attempting to collect a debt;
- Adding charges to the debt amount without proper authorization or
- Misrepresenting debt certification or identification.
Since the FDCPA prohibits collection agencies from engaging in the above practices, the act also gives the debtor the right to demand that the collection agency stop contacting them if they engage in such activities.
The only exceptions to a debtor that has been informed to cease contact with the debtor is that the collector can tell the debtor that collection efforts have either ended or that the creditor or collection agency will file a lawsuit to collect on the unpaid debt. It is important to note that a debtor’s demand that a debt collector stop contacting them must be made in writing.
What Are Limitations on Debt Collections?
In addition to the above protections, there are other limitations on whom a debt collector may contact in attempting to collect a debt.
For example, a debt collector may only contact certain people other than the debtor, such as:
- The debtor’s attorney, if they have one;
- A credit reporting agency, if permitted by local laws regarding debt collection;
- The creditor;
- The creditor’s attorney or
- The debt collector’s attorney.
As can be seen, the list does not include a debtor’s employer, friends, neighbors, or relatives. There is an exception to not being able to contact an employer or relatives, and that is if the debt collector cannot locate the debtor. In these cases, the debt collector may ask a third party, e.g., an employer, neighbor, friend, or relative, for the debtor’s most updated home address, telephone number, and place of employment.
Importantly, if the debt collector makes such contacts, they must give their name and state that they are confirming or correcting information about the debtor’s location. The debt collector may not identify the collection agency or reveal any details regarding the debt a debt may owe.
Additionally, the debt collector may not contact any third party more than once unless the collector believes that the information from the first contact was either wrong or incomplete and that the third party has new and better information that justifies additional contact.
Are There Local Protections for Consumers Regarding Debt Collection?
In short, yes. In addition to the above-discussed federal laws regarding the collection of debts, your state may also have laws surrounding the fair collection of debts. For example, Texas has the Texas Fair Debt Collection Practices Act, which provides additional protections to debtors by extending federal protections.
Florida has the Florida Consumer Collection Practices Act (“FCCPA”), which also supplements the federal debt collection protections prohibiting creditors and debt collectors from engaging in deceptive, abusive, or otherwise misleading acts to collect a debt from a consumer. Other states also offer similar supplemental protections to the Federal Fair Debt Collection Practices Act. As such, it is important to research your local state’s laws on debt collection.
What Are Common Legal Issues Related to Debt Collection?
Legal disputes between collection agencies and debtors are fairly common. This is largely because many debtors may continue to refuse payments, in which case legal action could become necessary. Financial disputes are also extremely common between the collection agency and the business initially requesting their services.
Common examples of common legal disputes involving collection agencies may include:
- The borrower’s continued refusal to make debt payments resulted in lawsuits;
- The hiring company suing the collection agency for not making diligent efforts to collect on the debt, as the agency is generally bound by contract to make reasonable efforts to collect payments;
- Illegal, deceptive, or unethical collection tactics, such as harassment or fraud. Such actions can lead to a lawsuit between the borrower and the agency;
- The unauthorized practice of law, where a collection agency can be found guilty if they attempt to give legal advice or if they step outside the scope of their collection practices and
- The collection agency assumes a principal-agent relationship with the business that they’re collecting for, and in the event of a violation, the consumer may then sue both the business and the collection agency.
What Should an Individual Do if They Have a Legal Issue Involving a Debt Collector?
As mentioned above, debt collection lawsuits are fairly common. Debt collection lawsuits also often involve a wide range of legal issues. In some cases, the debtor may have various legal options before becoming involved in a lawsuit. For example, many laws allow a debtor to request that a debt collector refrain from contacting them until the debt collector takes certain actions.
Additionally, suppose the debt collector engaged in unfair debt collection practices. In that case, the debtor may be able to get the debt they owe discharged or have the debt collector cease debt collection practices.
Importantly, a debtor may wish to retain any contracts, forms, e-mails, and correspondences regarding the debt agreement. These documents and communications may be used as evidence or references if a lawsuit needs to be filed against the debt collector.
Do I Need a Lawyer for Help With Debt Collector Disputes?
As can be seen, debt collectors must abide by very strict state and federal guidelines. As such, if you believe you have a valid legal dispute against a debt collection, it is in your best interest to consult with an experienced collection lawyer.
An experienced collection attorney can advise you of your legal rights and initiate a lawsuit against debt collectors if necessary. Finally, an attorney can also represent you in court, as needed.
