Creditors Behaving Badly: What Are Your Rights?

The United States debt collection business is a 15 billion dollar industry. Not surprisingly, consumers who interact with debt collectors find their experiences frustrating. In 2020 alone, the Federal Trade Commission and Consumer Financial Protection Bureau found that 82,700 people filed consumer complaints against collection agencies, which was an increase from the previous year. 

Creditors can be pushy and unrelenting. It can seem as though there are no protections for people who are dealing with them. However, there are laws that empower consumers to fight against rude and unlawful creditors. It’s essential to know what to look for in unlawful behavior from creditors and how to deal with them. 

What Is the Fair Debt Collection Practices Act (FDCPA)? 

The FDCPA became effective in March, 1978. The law was created to eliminate abusive, deceptive, and unfair debt collection practices toward consumers. Collection agencies, debt buyers, and lawyers who collect debts as part of their business are all required to comply with the FDCPA law. The law covers collections on medical, credit cards, mortgages, and personal debts. 

It also outlines the shady and deceptive practices these agencies are prohibited from using, including: 

  1. Harassing the consumer – Debt collectors aren’t entitled to harass a consumer for the unpaid debts. Tactics that are considered abusive are:
  • Threatening the consumer with violence or harm 
  • Using profane language 
  • Calling repeatedly
  • Calling the person at work if they specifically forbade it
  • Calling before 8:00 AM or after 9:00 PM 

All of these can be seen as a form of harassment by the consumer under this law. Be aware that if any of these things happens to you, you have every right to report it. 

  1. Telling the consumer they work for a government agency – When debt collectors call the consumer, they have to be clear about who they are. Under the FDCPA, the collectors can’t pretend to work for law enforcement, a government agency, or the consumer reporting agency. When debt collectors do this, they will face criminal charges. An example of this is the case involving Williams, Scott & Associates LLC. The owner, Williams, and six employees were arrested in 2014 for using threats and pretending to be government officials. From their deceptive tactics, 6,000 customers were duped into paying almost 4 million dollars to the debt collection agency. The owner was sentenced to five years in prison for these tactics. 
  1. Trying to collect a debt that the consumer doesn’t owe – In the debt collection industry, it isn’t uncommon for information to be incorrect. The reason for this misinformation may be that your debt was sold by the original creditor to a debt collection agency or a debt buyer. The transaction can result in the loss of the original debt information, including the fact that it was paid off. Unfortunately, sometimes creditors will knowingly try to collect a debt they’re not entitled to.There are many reasons a person won’t owe a debt anymore. When people file for bankruptcy, debts will be discharged. In other cases, the creditor’s time limit to collect on the debt may run out, which means the person is no longer responsible for it. If they try to collect, it will be considered a violation of the FDCPA. After five days of contacting a consumer about debt, creditors have to send them a written notice stating how much is owed, who it’s owed to, and how to make payments. If there are discrepancies, a letter may be sent to the creditor to dispute incorrect information.

This is also a good time to contact an attorney, who will review the discrepancies and know what actions to take to resolve the matter. 

  1. Discussing your debt with others – Whatever debt you owe is strictly between you and the debt collectors. They cannot contact family members, friends, or co-workers about what is owed. There is one exception: if you have an attorney who represents you, they can discuss the matter with them. Barring this exception, it’s possible to file a complaint against a creditor who contacts your loved ones and friends. 
  1. Time-barred debt — Creditors are under time limits when trying to collect money owed. When a creditor doesn’t sue for debt promptly, creditors won’t be able to collect on it. It will be illegal for the creditor to sue to regain the debt. Consumers should be aware of their state laws in these situations. In some states, if the debtor acknowledges the debt to the creditor or makes even a small payment, the statute of limitation is reset and the time-barred rule no longer applies. An attorney will be aware of tactics creditors use to get around time-barred debt. 

Remember Debt Collectors Must Verify Your Debts

Debt collectors’ goal is to collect as much money from the consumer as possible. Unfortunately, sometimes they do so dishonestly. Before a debtor pays anything, creditors are required to do their diligence and determine if the debt is actually owed. A debt validation letter must be provided within five days of contact to the debtor outlining all relevant information. 

The validation letter should include: 

  • Name of the creditor owe money
  • Amount owed 
  • Notification that you have the right to dispute any inaccurate information within 30 days of being contacted

If the debt is disputed, the debt collector must provide evidence of the debt they claim is owed. 

When creditors come calling, it can seem impossible to defeat them. However, consumers can win when wrongdoing is discovered. This was the case with Forster & Garbus. They were held responsible for their wrongdoings against consumers. The debt collection law firm was based in New York, and a lawsuit was filed against them for multiple deceptive practices. One of those practices included filing thousands of debt-collection lawsuits against consumers while only having documentation to prove a fraction of those lawsuits. The court forced the firm to pay hefty penalties. In addition, the court dismissed some debt-collection lawsuits against consumers. 

Victims of creditors can bring a lawsuit against creditors in state or federal courts. If successful, consumers can be awarded damages if it can be proven the creditors broke the law.

Debt collectors may have to pay for any of the following: 

  • Lost wages 
  • Medical bills 
  • Emotional distress
  • Refunds on wage garnishment collected due to violations 
  • Other monetary losses the person suffered because of the violations of the debt collector 
  • $1,000 in statutory damages for attorney fees and court costs

When your rights as a consumer are being violated, be sure to keep track of every violation and share it with an attorney. This information will help them build a strong case on your behalf. 

What Are My Rights Against Creditors When I File for Bankruptcy? 

Filing for bankruptcy is a great tool to discharge debts and reclaim control over personal finances. As soon as you declare a chapter, an automatic stay is initiated. An automatic stay stops collections against the debtor for the duration of the bankruptcy proceeding. Everything must come to a halt while the bankruptcy chapter you’ve chosen is making a plan to resolve the debts. 

The collectors must stop:

  • Wage garnishments 
  • Home foreclosure 
  • Civil lawsuits 
  • Phone calls to the debtor 

The handling of debt will depend on the bankruptcy chapter filed. In some cases, debts will be discharged, but they can also be addressed by a more manageable repayment plan. For debts eligible for repayment in bankruptcy, creditors must provide proof of claim. This documentation will state that the creditor has justifiable rights to access the person’s funds in the bankruptcy case. If the debt is discharged in bankruptcy, the person is no longer liable for the amount. 

Even when creditors provide proof of claim, it can be disputed for several reasons, including inadequate documentation to prove you owe the money and inaccurate amounts in the claim. A bankruptcy attorney will make sure your rights are being upheld. If creditors step out of line and try to manipulate you during the bankruptcy proceeding, they’ll be able to address it.

Where to Get Help

Hiring an attorney to represent you against debt collectors is a wise idea. It’s easy for Americans to miss laws and protections that exist in their favor. It’s also not always easy to identify all the behaviors that creditors are barred from using. With legal representation, laws will be followed and any actions that aren’t above board will be addressed immediately. 

At Rosenblum Law, our lawyers are ready to represent you if you are being harassed by debt collectors or looking to file for bankruptcy. We’ll assess your situation, provide guidance on the best course of action, and be there to help you through the entire process. Contact us today for a free consultation. 

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