This blog is a brief overview of what the Fair Debt Collection Practices Act is and how it applies to consumers. https://www.ftc.gov/news-events/media-resources/consumer-finance/debt-collection . The ACT can be found at 15 U.S. Code § 1692. https://www.govinfo.gov/content/pkg/USCODE-2011-title15/pdf/USCODE-2011-title15-chap41-subchapV-sec1692e.pdf
What Type of Bills and Debts Are Covered?
Almost all types of consumer debt is covered by the Fair Debt Collection Practices Act. This would include your personal credit cards, automobile loans, medical bills, student loans, mortgages, short term loans, and any other household debts that are owed. It is important to note that business debts are not covered by the Fair Debt Collection Practices Act. Only personal debts.
Times and Place That Debt Collectors Can Contact Consumers
A debt collector cannot call you at any time they want or at any place they want. They are not permitted to contact you at inconvenient times or places. In fact, they are not permitted to call before 8 AM or after 9 PM. Therefore, if you receive calls from debt collectors outside of those times, they are violating the Fair Debt Collection Practices Act. Also, it is very important to note that they are not allowed to contact you at work if you advise them not to call you at your place of work. So, if you are at work and you receive a call from a debt collector, you need to immediately tell them that they are calling you at your work and that it is not permitted. Advise them not to contact you again at work and document the call. Take a screen shot of the call log and if they call you again do the same.
Ways to Stop Debt Collectors from Contacting You
It is important to note that the collectors can still use the courts and file a civil lawsuit against you if the debt is not too old and the debt is owed. However, they must not contact you to try to collect a debt in inappropriate ways. If you want them to stop calling you, send them a letter. It is best to have proof the letter was sent either by fax or certified mail with a return receipt. When a debt collector receives a letter from a consumer, they must stop contacting you by phone. They can still file a civil lawsuit, but they cannot continue to call and harass you after they receive the notice. Also, if you are represented by an attorney and you advise the debt collector that you have hired an attorney regarding the debt, the debt collector must only communicate with your attorney from that point forward. Many debt collectors ignore this as has been the experience of our office. If you do not believe that you owe the debt, send them a letter immediately advising that you dispute the debt that they are claiming that you owe. If you are not sure of the debt for which they are calling, they must give you the information regarding the origination of the debt. Be very careful to never share any personal or financial information with the debt collector because they often engage in illicit practices.
Debt Collectors Cannot Contact Third Parties About Your Debt
Debt collectors are prohibited by that Fair Debt Collection Practices Act from discussing your debt with anyone else except you, your spouse or your attorney if you are represented. They are permitted to contact people you know to obtain your address or phone number, but they cannot discuss the debt with those people.
The Debt Collector Must Be Truthful and Give You Information About the Debt
The law requires the debt collector must send you a validation notice within five days of their first contact with you. The notice is required to state the amount of the debt that is owed, the name of the creditor who is owed the money, and instructions for you to refute the debt if you do not believe that you owe that particular debt.
You Believe You Do Not Owe the Debt
Debt collection agencies are hired by creditors to obtain money that is believed to be owed. The debt collector receives a small percentage of the amount they recover. Debt collectors generally have very little information about the validity of the actual debt itself. If you do not believe that you owe the debt, send the debt collector a letter. It is important to make sure you have proof that it was sent either by fax or by certified mail. Advise the debt collector that you do not owe the debt and to stop contacting you.
Debt Collectors Are Prohibited from Engaging in Certain Conduct
Debt collectors will use all sorts of illicit tactics to attempt to get people to pay money even if they do not owe the debt. There are specific things that they are not permitted to do by the statute, but often continue to engage in. The following is a short list of specific practices that debt collectors are not allowed to do when trying to collect money that is owed:
1. They are not allowed to use any obscene or profane language when speaking to you;
2. They are not allowed to threaten you or your family with violence or harm in anyway;
3. They are prohibited from repeatedly calling you to annoy you;
4. They cannot lie about the amount of the debt that you owe;
5. They are prohibited from claiming that they are attorneys or government representatives. We see this frequently in our practice. A debt collection agency will send a letter and use a law firm name at the top. When we contact the alleged law firm, they have no record of the debt or the attempted collection;
6. They cannot claim or make false assertions that you would be arrested, or some other legal action taken against you that is not allowed in order to attempt to coerce you to pay the debt;
7. They are also prohibited from attempting to collect interest fees or charges on top of the amount owed unless whatever contract the debt stems from allowed for such costs;
8. They are prohibited from asking you to send a post-dated check meaning a check that is dated at some time in the future for them to deposit to collect the debt;
9. They are prohibited from threatening you that they will take your property unless it can actually be legally done, which would be very unusual. The debt would have to be larger than the value of the property and they would have to obtain a legal judgment in a court through a lawsuit filed against you and then they would have to file a separate lien action. At that time, they would have to actually try to foreclose on a lien on a piece of real property which is not always permitted by the court. This is why you should file a homestead on your home. https://www.leg.state.nv.us/Division/Research/Publications/Factsheets/HomesteadExemption.pdf
If debt collectors are harassing you or trying to collect more than one debt, you may choose which debt you would like to make a payment regarding. A debt collector is prohibited from applying a payment to any debt that you dispute. If you do receive a lawsuit from a debt collection agency it is very important that you respond or have an attorney respond. If you fail to make any response to an actual lawsuit that is served on you by Process Server, they could get a default judgment against you and execute that judgment meaning collect that judgment on your property including bank accounts or your job through a garnishment of your wages. If you receive any type of lawsuit on a debt, it is important to contact an attorney or the legal aid society to get help and respond to the lawsuit. https://www.lacsn.org/
Statutes of limitations On Collecting Debts
In Nevada, most debts are subject to the six-year statute of limitations meaning that if the debt was contracted more than six years ago the statute of limitations has run and they can no longer collect this money against you. This is referred to as “time barred” in the law. We have seen in our practice at TheOneLawyer.com, debt collectors attempt to collect debts that are older than six years against clients. Every state has a different statute of limitations but in Nevada it is six years. Before you pay any debt that is alleged to be owed make sure you find out where the debt originates and on what date they alleged that the debt was incurred. If it is more than six years from the present date, they are time barred from collecting that debt and they will no longer be permitted to file a lawsuit on that debt. If the debt is time-barred, immediately send the creditor a letter and advise them that it is time barred and that you are not paying the debt.
Remedies for illegal debt collection
If a debt collector has used any of these illegal processes to attempt to collect a debt from you, you should contact the appropriate agency to report their actions. You have options. You can report their contact to your state Attorney General’s office to take action. You can also report their actions to the Federal Trade Commission https://www.ftc.gov/ or the Consumer Financial Protection Bureau. https://www.consumerfinance.gov/ In addition, some states have their own debt collection laws. Nevada’s law follows the Fair Debt Collection Practices Act closely. Unfortunately, the remedy under the act is not as strong as it needs to be to prevent abuse. This is likely why many debt collectors ignore the law. The penalty is too small. You can sue a debt collector in state or federal court within one year of the date that they violated the act. However, damages are limited to $1000 for reimbursement for attorney’s fees and court costs. It is permissible to bring a class action lawsuit for a violation of the Fair Debt Collection Practices Act. However, damages for such a suit are also limited under the act for which I highly disagree. Damages for violating the act in a class action suit are limited to $500,000 or 1% of the debt collectors net worth, whichever is lower. It is perplexing that Congress chose to put in such a low deterrent for violation of this important federal statute. However, with such a low recovery potential, it is difficult to find an attorney to incur the costs of a class action to go after debt collectors for their illegal practices. This is likely why you may find yourself in a situation where debt collectors are in fact, violating the statute.
If you are in a situation where they are contacting you, be sure to put in writing that you either do not owe the debt or you wish to make some payment arrangement in order to have them stop calling you and try to resolve the debt as best you can. If you have any questions regarding any debt that you may be getting calls on and you have a question about their debt collection practices, please do not hesitate to call us here at the TheOneLawyer.com for answers to your questions.
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