How to deal with a Debt Collector
By Tim Binder
I get a fair number of calls from clients and friends of clients asking how to deal with debt collectors.
Two statutes primarily regulate debt collectors. The first is the federal Fair Debt Collection Practices Act, and the second is its California counterpart called the Rosenthal Fair Debt Collection Practices Act. These statutes permit debt collection practices that are fair, honest and responsible. The statutes place reasonable limits on the activities that debt collectors can use to obtain payment of a debt.
The statutes apply to consumer debt, which is generally defined as debt incurred by a person for personal, family or household purposes. The statutes do not apply to corporations or other entities, or to debts incurred by businesses.
When contacting a debtor, the law requires debt collectors to:
1. Disclose the purpose of the contact, inform the debtor that the collection agency is trying to collect a debt, and that any information obtained will be used for that purpose;
2. Inform the debtor that he has the right to dispute the debt; and
3. Correctly identify the caller and the agency.
The debt collector may not misrepresent or use misleading statements. The collector cannot imply that he is affiliated with any federal, state or local government, or falsely represent that the person calling is an attorney or that the communication is sent on behalf of an attorney or legal department.
The debtor has the right to require the debt collector to verify the name and address of the original creditor. If the debtor disputes the amount of the debt, the debt collector must stop collection efforts until the debt is verified and that information is provided to the debtor.
The debtor also has the right to require the debt collector to stop communicating with the debtor or to require the agency to communicate only with the debtor’s attorney.
Debt collectors have a duty to respect the debtor’s privacy. In general, this prohibits a collector from communicating with a debtor’s employer and other third parties, or communicating with a debtor at an inconvenient place (such as at work) or time (such as before 8 a.m. or after 9 p.m).
A debt collector may not threaten physical force, criminal prosecution, or harm to the debtor or any other person. The collector cannot collect more than is lawfully owed, such as service charges, interest, collection charges, or other fees unless the charge is expressly allowed by statute or by agreement with the creditor.
A debt collector may not harass a debtor, use profane or obscene language, or use abusive language.
If a debt collector willfully violates the law, he may be liable for any damages incurred by the debtor, a civil penalty of up to $1,000, and the payment of the debtor’s attorney fees.
The above is a brief summary of the Fair Debt Collection Practices Act. More information is available from the California Department of Consumer Affairs. If you believe that a debt collector is using unfair tactics, contact an attorney. In my experience a letter from an attorney to the collection agency is often enough to stop the unlawful conduct.
Tim Binder is a San Diego-based attorney concentrating on business, real estate, employment, construction and tax law.z