The Fair Debt Collection Practices Act
The attorney collecting on behalf of his client has to abide by the Federal Fair Debt Collection Practices Act. If he speaks to debtor directly, he is free to ask debtor about debtor employment, salary info, social security number, etc., but debtor is not an obligated to furnish any information. Plaintiff attorney can also contact debtor employer if he wants to locate debtor; however any discussion about debtor debt is strictly prohibited and will violate Fair Debt Collection Practices Act. Attorney can't ask about debtor work, disclose any personal information about debtor or speak with any of debtor co-worker about debtor debt. Debtor should not provide any information to the Plaintiff attorney, unless requested by the court. The lesser information Plaintiff attorney knew the better for debtor to win if lawsuit if file.
How debt collection works
When debtor can’t pay his/her obligation his/her bank will charge off account as uncollectible. Bank need to take down that account from their book so they can keep healthy account on record. This account is then sold to 3rd party company known as debt buyers or debt zombies. The 3rd party company has a full legal right to collect full face value of this account plus collection fee plus interest fee. The debtor must be notified when a debt is assigned so that he or she will know who to make payments to and where to send them. If the debtor sends payments to the old creditor after the debt has been assigned, it is likely that the payments will not be accepted, which could cause the debtor to unintentionally default.
For example Person A owes Person B $100. Person B cannot collect so he sells the contract to person C for $10.00. Person B taking loss of $90.00 and write off the full $90.00 as a lost. Now Person C has your account and is "owner" of that note. Person C can call you and demand payment from you for $100.00 plus collection fee and interest.
The game of Debt Collection
In a lot of occasion, debt buyer doesn’t have a standing to sue. Under basic common-law principles, a party must establish title to a debt in order to have standing to sue and prevail on that claim. Debt buyer must prove purchase of the debt in order to prevail on a claim may seem obvious, but the collection industry is typically so unaccustomed to having to prove its case, and so intent on spending nothing on litigation, that failure to produce sufficient evidence of ownership of the debt is common. For debts assigned more than once, debt buyers' problems are exacerbated, as they must prove a transaction to which they were not party and so must produce third-party witnesses. Typically a debt buyer produces a one-paragraph document entitled something like bill of sale which occasionally refers to an earlier agreement. This bill of sale generally makes no mention of the alleged debtor or the account and in-stead refers to a separate section, exhibit, or attachment that is not supplied. At trial the bill of sale may be excluded as irrelevant on this basis alone since it has no tendency in reason to prove or disprove whether the original creditor sold or otherwise assigned the account. The debt buyer occasionally produces a single line of text and claims that it is the exhibit or attachment to which the bill of sale refers. The document is usually produced for purposes of litigation and is not a valid business record.
The most common FDCPA violation
A lot of debtors are not familiar with Fair Debt Collection Practices Act and allow collectors to harass them on daily basis. Here is a list of what debt collector can’t do:
- Call your before 8:00 a.m. or after 9:00p.m in your local time
- Call you at work for more than once
- Call third parties such as your neighbor, employer and harass you at work, or treating you to fire you. (however, debt collector can call multiple times when they try to locate you)
- Contact you after you have written to the debt collector and asked them not to contact you
- Debt collectors cannot lie to you or use deceptive methods in trying to collect a debt
- Say or imply anything about arrest, going to jail, or the like.
- Leave a message on an answering machine without saying that the collector is trying to collect a debt; he must leave his name and his company.
- Threaten to sue you when the collector has no intention of doing so
- Threaten to garnish your wages without explaining that first the creditor must file suit and get a judgment.
- Use profane or other abusive language, scream, or get angry.
- Try to collect the wrong amount, add collection fee when not permitted by card agreement
- Threaten to deposit a post-dated check, particularly when the collector knows you do not have the money to cover the check.
- Ask you to pay interest, fees, or expenses that are not allowed by law.