This post is part of Priori’s blog series “From Our Network,” where we feature lawyers in our network discussing important issues small businesses face. In today’s post, collections lawyer Ariel Berschadsky discusses what rights and remedies your small business has when a debt collector is harassing you.
Debt is a common feature of American life. Most Americans use credit cards, many have borrowed money to purchase a car, and most home-owners have a mortgage. Most businesses also use various forms of credit. And, inevitably, many fall behind on their payments at one time or another.
If you or your business is having trouble meeting your debt obligations – or, if you’re one of the many people or businesses with perfectly good credit and no overdue obligations but are nevertheless harassed by confused debt collectors-- what are your rights when a debt collector comes calling?
In the not-so-distant past, your rights were very few indeed, and debt collectors freely engaged in various kinds of abusive collection practices in order to obtain repayment. They could call at unusual hours, leave embarrassing messages at work, send harassing or misleading letters, and threaten to ruin your credit rating.
The Fair Debt Collection Practices Act
In an effort to stop these abusive practices, Congress enacted the Fair Debt Collection Practices Act (the “FDCPA”) in the late 1970s. The FDCPA applies regardless of the merits of the underlying debt – whether or not it is truly owed is irrelevant. Instead, the FDCPA protects debtors by setting limits to the actions debt collectors may take in order to be repaid.
A complete list of restrictions on how a debt collector can contact a debtor would take an entire book. Among the most important ones, a debt collector may not:
- Contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree;
- Contact you at work if he knows that your employer disapproves of such contacts;
- Use obscene language;
- Repeatedly use the telephone to annoy you;
- Make false or misleading statements or writings, such as falsely implying that he is an attorney or government representative, that you have committed a crime, or that he represents a credit bureau;
- State that you will be arrested if you do not pay your debt;
- Send you anything that looks like an official document from a court or government agency when it is not;
- Use a false name;
- Deposit a post-dated check prematurely;
- Deceptively make you accept collect calls or pay for telegrams;
- Contact you by postcard;
- Apply a payment you have made on one debt to another debt without your approval.
What to do if a Debt Collector Contacts You
You have the right to tell a debt collector, in writing, to stop contacting you. At that point, the debt collector may no longer contact you except to say there will be no further contact or to notify you that he intends to take some specific action. Of course, sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.
A debt collector must contact your attorney, rather than you, if he knows that you have retained one. If you do not have an attorney, a debt collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Debt collectors usually are prohibited from contacting such third parties more than once. In most cases, the debt collector may not tell anyone other than you and your attorney that you owe money.
Within five days after you are first contacted, the debt collector must send you a written notice telling you the amount of money you owe, the name of the creditor to whom you owe the money, and what action to take if you believe you do not owe the money.
A debt collector may not contact you if you notify him, within 30 days after you receive the written notice, that you do not actually owe the money being sought. However, a debt collector can renew collection activities if he sends you proof of the debt, such as a copy of a bill for the amount owed.
Your Remedies for Improper Debt Collection Activities
Although the FDCPA is not a particularly complicated law, some debt collectors, either willfully or erroneously, repeatedly engage in abusive collection practices. If you suspect that you have been the victim of an unlawful attempt at debt collection, you should contact an attorney familiar with debt collection law within one year of the date the occurrence so that you can take action before it becomes barred by the statute of limitations.
Taking action against a bad debt collector typically costs nothing because lawyers will take such cases on a contingency basis. Filing a lawsuit will almost certainly put an end to the abusive collection practice and could also entitle you to recover money for the damages you suffered plus an additional amount up to $1,000.
Questions about your business' rights when a debt collector is bothering you? If so, submit your questions in the comments section below, twitter, facebook or to firstname.lastname@example.org before Friday 2/28 at 11:59pm and Ariel will pick 1-2 to answer. We will post his answers to the blog early next week.
A version of this post was originally published on the author's website.
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