The Fair Debt Collection Practices Act Gives You Some Debt Collection Practice Safeguards
No one is perfect, and we get that. Despite our best efforts, sometimes mistakes happen and bills go unpaid. It's when debts pile up that debt collectors reach out in an attempt to collect on those debts. It's important to know that there are some rights and protections you have from the Fair Debt Collection Practices Act that can help you breath a little easier when debt collectors come calling.
When you're contacted by a debt collector, chances are good that you don't really know what to do. On the other hand, the person calling you does this sort of business every day. The person contacting you may not tell you that you have a right to have proof of the debt. Under the Fair Debt Collection Practices Act, you have the right to have the following information in writing within five days of the initial communication from the debt collector unless this was already provided or you pay the debt:
- The total amount of the debt;
- The name of the current creditor;
- A statement that the debt is assumed to be valid unless you dispute the validity within thirty days of the notice;
- A statement that the debt collector will obtain verification of the debt, which will be mailed to you, if you make a dispute within the thirty day period; and
- A statement that, upon written request within the thirty day period, the debt collector will provide the name and address of the original creditor if it is different from the current creditor.
Ask for collector information
Under the Fair Debt Collection Practices Act, you have the right to ask for the name of the debt collection company. Legitimate debt collectors have no problem providing this information, as well their business address and full contact information. Use this information to perform a quick web search or a check with the North Carolina Attorney General's Office to see if the company is legitimate. If you have any doubts about the legitimacy of the company, do more investigating before handing over anything.
Harassment is prohibited
No one likes to be annoyed endlessly. So when it comes to debt collection, you are protected from harassment. This doesn't mean you can arbitrarily make up your own definition of harassment, but you do typically get protections you can enforce when it comes to debt collectors. These include:
- They can only call between 8am and 9pm.
- They can't yell at you or use profane or other abusive language.
- They can't threaten you will anything, including arrest or physical harm.
- They can't do anything else that would reasonably be considered harassment, such as calling every hour, calling and hanging up, or calling family members incessantly.
Debt Collection and your workplace
When debt collectors call you at work, put a stop to it. If you clearly advise a debt collector that calling you at work is not an acceptable thing to do, the debt collector should stop calling.
It's not against the rules for a debt collector to come to your place of work, but this doesn't happen too often. They usually pursue you by phone and mail since it's much cheaper than sending someone to track you down. But since debt collectors can't reveal your debts to anyone at your place of employment, showing up can be a tricky spot for any debt collector. But just because it's risky doesn't mean a debt collector won't show up. If one does, clearly advise that showing up at your place of employment is not acceptable. Alternatively, your employer or the property owner could trespass a debt collector from the property if he/she continues to show up, which could also be construed as harassment.
Payment Plans are legal
Even though the Fair Debt Collection Practices Act gives you protections, nothing says that the debt collectors can't ask you to pay the debt so long as they aren't breaking any rules. They will often ask you to commit to a payment plan, which will allow you to pay the debt slowly over time, since payment plans are usually the only way most people with large debts can pay them off. So if you are being asked to pay over time, it's not a red flag of a scam. If you are agreeing to a payment plan, make sure you can actually afford it before you commit.
Pay What You Owe
When you are dealing with a debt collector, you don't have to pay anything other than what you owe. Debt collectors aren't allowed to charge interest or fees unless your original contract or state law gives that option. If any amount that you are legally assessed seems high, you should dispute it.
Pay the debts you want to pay
If a debt collector has multiple debts for you, you can choose which ones, if any, you want to pay. That means that if you make a payment you can specify which debt that payment should go towards. And the debt collectors can't apply your payment to a debt that you are disputing.
Don't presume that making payments or paying off the debt entirely will protect your credit score. If the debt is less than seven years old, the debt collection company can report the debt to the credit bureaus. Once you finally pay the debt, assuming you do, the debt may stay on your credit report for seven years. You can, of course, dispute the item on your credit report if there is an inaccuracy. Any time you dispute an item, it must be verified. If the company is unable to verify it, it must be removed from your credit report.
You May Get Sued
Depending upon the debt collection company and the amount of the debt, you may get sued in order to collect on the debt. This is ultimately up to the debt collection company as it's their time and money on the line in order to take you to court. But it can be done. A successfully lawsuit against you could result in wage garnishment. Even if the debt is past the statute of limitations, the debt collection company may still sue you with hopes that you ignore it or miss the court date, resulting in an automatic judgment against you. If you are sued, you should contact a lawyer immediately.
There is a time limit
Most, but not all, debt in North Carolina is subject to a statue of limitations on the amount of time where you are legally obligated to pay the debt. The exception is usually federal student loans. When the statute of limitations runs out, the debt collection company can no longer sue you to collect on the debt or even indicate that they have any recourse through the courts. But they can and will still try to collect it. The time limit is different for each state and may depend upon the type of debt, but it's typically three years in North Carolina from the time of last activity on the account, such as a charge or payment. We can't tell you what to do since the choice is yours. Just remember that if the statute of limitations expires in a month or two and you make a payment, you reset the statute of limitations. Debt collection companies will often ask for a "good faith" payment of any amount from you in order to keep resetting the time limit.
Red Flags of Scams and fake debts
Before you pay a debt, you should make every effort to verify that the debt is legitimate. Paying off a debt is a very important step to getting back on track to financial freedom, but only if the debt is really yours. The Federal Trade Commission has brought lawsuits against fraudulent debt collectors over the years who collected millions of dollars in "phantom" debt that did not exist or did exist but simply did not belong to those debt collectors.
If you run into a debt collector who does any of these things, seek out help from the North Carolina Attorney General's Office:
- Demands immediate payment;
- Requires you to pay by gift card, wire transfer or Bitcoin;
- Asks you for personal information;
- Refuses to answer your questions;
- Is unable or unwilling to provide information about the debt collector or collection company;
- Uses high pressure tactics; or
- Threatens you or makes you feel uncomfortable in any way.
Tell the Debt Collector to Stop
If you don't want to be contacted by the debt collector, you do have the right to have the company stop all contact. Often known as the 'drop dead letter,' it's something that has to be done in writing. Once you send the letter, the debt collector must honor your request. It's a good idea to make sure your letter is sent with tracking information so you can prove that it was received.
If you want to contact any of the debt collectors contacting you, you can check out one of the sample letters provided by the Consumer Financial Protection Bureau. You should send your letter as soon as possible. You can view sample letters for the following: