With the economic downturn, consumer debt is on the rise. Not surprisingly, debt collector complaints are also on the rise. There are strict legal limits on how far debt collectors can go, but unfortunately many debtors don’t know about them. Debtors and their attorneys need to know these limits and hold debt collectors to them.
Congress enacted the federal Fair Debt Collection Practices Act (15 USC §§1692-1692o) because it found abundant abusive, deceptive, and unfair debt collection practices. California governs debt collection practices with the California Rosenthal Fair Debt Collection Practices Act (Rosenthal Act) (CC §§1788-1788.33), which is preempted by the federal law except to the extent it provides greater protection for consumers.
Here are the main requirements of the Fair Debt Collection Practices Act:
- When the consumer says stop, it means stop. If a consumer notifies a debt collector in writing that the consumer refuses to pay the debt and wants the debt collector to end further communication, the debt collector must stop further communicate with the consumer, except for certain specified communications. 15 USC 1692c(c).
- The debt collector can’t take it too far. A debt collector can’t engage in “any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt.” This includes repeated calling and using obscene language. 15 USC §1692d.
- Lying is not allowed. A debt collector can’t lie about the character, amount, or legal status of any debt. 15 USC §1692e(2). This includes not disclosing clearly in all debt collecting communications that (1) the debt collector is trying to collect a debt and (2) that any information obtained will be used for that purpose. 15 USC §1692e(11).
- Hollow threats are prohibited. A debt collector can’t threaten to take any action that cannot legally be taken or that is not intended to be taken (such as preparing and sending a notice of default without any intention of pursuing foreclosure further). 15 USC §1692e(5). See also 15 USC §1692f(6).
- Postdated checks won’t work. Debt collectors can’t accept a check or other payment that is postdated by more than 5 days, except under certain conditions. 15 USC §1692f(2).
Besides these things that debt collectors can’t do, there’s also some requirements that debtor collectors must do. Within 5 days of the initial conversation, a debt collector has to send the consumer a written notice with (15 USC §1692g):
- the amount of the debt,
- the name of the creditor,
- a statement that unless the consumer disputes the validity of the debt within 30 days after receipt of the notice the debt will be assumed to be valid, and
- a statement that the debt collector will obtain verification of the debt under certain circumstances.
For everything you need to know about the Fair Debt Collection Practices Act, turn to CEB’s Debt Collection Practice in California, chap 2. Also check out CEB’s program Creditors’ Remedies and Debtors’ Rights, available On Demand.
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