Credit-Know Your Rights

Often times people will fall behind on their obligations and have collections on their credit report. This can be the result of a medical problem, reduced income, loss of a job or increased expenses in other areas. These situations can result in the account being sent to collection. When this happens, it is important to understand your rights so that you can deal with the collection agency companies and hopefully reduce the damage these collections can inflict on your credit score.

There are various federal laws that protect the consumer and define what a collection agency can and cannot do to collect a debt. The most significant is the Fair Debt Collections Practice Act (FDCPA). For a more detailed look at the FDCPA and its other sections, go to http://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-textdebt.

Keep in mind that the original creditor is not subject to the FDCPA, only the collection agencies are governed by this act. This means if you have a medical debt, for example, and someone from the accounts receivable department of the medical practice calls you and tries to collect an outstanding balance, that person is not subject to rules laid out in the FDCPA. If you are dealing with collection agency and it violates the FDCPA, you may be able to collect damages in small claims court.

The three most important of the sections of the FDCP are:

a. FDCPA 806 – Harassment or Abuse
b. FDCPA 807 – False or Misleading representation
c. FDCPA 809 – Validation of Debt

Below is a summary of these sections. If you want to challenge the collection agencies, these sections are the best place to start:

FDCPA 806 – Harassment or Abuse

• Threatening or the threat and use of violence or the reputation of an individual
• Use of profane language
• Letting the telephone ring, or engage any one in a telephone conversation repeatedly with the intent to annoy, abuse, or harass

FDCPA 807 – False or Misleading representation

• Telling you they work for the State or Federal Government Agency
• Telling you they are an attorney or represent an attorney when they do not
• Implying that nonpayment will result in an arrest, garnishment, lien, ETC. When the collector has no intent or legal ground to do so. Keep in mind that there cannot be a garnshiment or lien unless the creditor goes through court system by starting a lawsuit and obtaining a judgment.
• Telling the consumer they committed a crime in order to disgrace you

FDCPA 809 – Validation of Debt

• Written notice of debt must be sent to you within 5 days of initial contact by phone
• You have 30 days from the time you receive the collection letter (Dunning Letter), to dispute validity of the debt and ask for proof.  If you want a form letter that you can use to send to the collection agency to request them to validate the date and stop collections calls, please e-mail me at pwarkow@weberlawpc.com and I will send you the  letter.  It is possible that the debt has already passed through several hands and the collection agency does not have the proper documentation because it has been lost, destroyed or misplaced.
• Upon disputing the debt the collection agency MUST cease all collection activities until verification is mailed to consumer.

It is very important to Keep records of all phone conversations if you want to win a dispute with the collection agency. Retain all letters and correspondence received by the collection agency in a file, this will help you if you need to go to court. If the collection agency continues to try and collect the alleged debt without providing you validation you are then able to take them to small claims court in your local area and file suite for $1,000. Wouldn’t it be nice if you are suing the collection agency and turning the tables on them.  Remember, the collection agencies count on the consumer’s ignorance of their rights.

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