Reasons for Fair Debt Collection Practices Act

The reason that the Fair Debt Collection Practices Act was created is that debt collection agencies were not following honest, straightforward and principled approach to debt collection. Even now they are known to be unreliable and unethical in their collection practices. Collection agencies are often guilty of going after the wrong people or misstating the amount of money owed.

Some  of the salient features of the Fair Debt Collection Practices Act are:

  • You can ask the debt collector to validate the debt in which case he is required by law to stop collection efforts from you till the time that he can provide you proper proof from the original creditor of the transfer of debt.
  • You can ask the debt collector to cease and desist in which case he is required by law to stop making all collection efforts from you.
  • The Fair Debt Collection act also makes clarifications about a lot of other things like the debt collector cannot call you before or after certain hours of the day, he cannot contact your employer and place of work and make them aware in any way of the debt, he cannot send mail that in any way discloses that it is concerned with debt collection etc.
The right to ask a debt collection agency to validate the debt is meant to protect the consumer against collection mal-practices.

To verify a debt the debt collection agency will need to present documentation and paperwork from the original creditor that will prove that you are responsible for the debt. The right to debt validation is an important tool in your hands since it can help in clearing your credit report of various collection accounts. It is common for collection accounts to pass from one collection agency to another every six months. It is quite possible that the collection agency does not have the documentation required especially if the debt happens to be an old one. Just providing use a computer printout a statement of the amount owed does not constitute as proof as the federal Trade Commission has made it clear that America itemize edition cannot constitute sufficient proof of the validation of a debt.

The process of debt validation can not only get rid of the debt that belong to you, but it might also help you get rid of some of the collection accounts that don’t belong to you.

While the law prohibits removal of negative information that is accurate from the credit report, if a collection agency cannot validate a debt, it can no longer collect on it since they’re not following the legal regulations that apply to a debt collection agency as per the Fair Debt Collection Practices Act.

You must also understand that your application for debt validation applies to only one collection agency. If your debt happens to be sold transfer to another debt collection agency then you will need to repeat the process all over again.

How To Report A Violation of the Fair Debt Collection Practices Act

The Fair Debt Collection Practices Act lays down rules and regulations on the practices that a debt collection agency supposed to follow when collecting a debt of you. Every consumer should be aware of these guidelines even though you may not have a debt that is in collection. This is because it is not uncommon for a person to receive a collection calls on a debt that does not belong to him. In such a scenario you should be aware of your rights and the action you can take to refute and fight a debt collection agency. In case your rights have been violated under the Fair Debt Collection Practices Act, these are the actions that you can take.

Whenever you are making a claim against a debt collection agency, it helps to have as much paperwork, documentation and hard evidence to prove your claim. You should try and have at least a record of the dates and times of phone calls, name of the collection agency and the name of the person that you spoke to.

 

· File a complaint with the Federal Trade Commission against the collector.

· File a complaint with your state’s attorney general.

· File a complaint with the Better Business Bureau.

· File a civil suit in your state or federal court for up to $1,000 including damages.

How to Deal with and Handle Debt Collection Agencies

The truth is that when it comes to dealing with unpaid bills and unpaid debts many people do not know how to tackle it. Many people use the opportunity to settle their debts and his of their credit issues because they do not know how to go about it. Being reactive rather than proactive results in people staying under debt and not dealing with their creditors and debt collection agencies when they should be making an effort to work these issues out.

Ignoring unpaid credit bills and debts is not going to make them go away. The longer you wait and procrastinate over and out of control’s debt situation the worse it is meant to get. Accounts that have been reported as late and is delinquent may soon be sold to a collection agency. Having collection accounts means that you are letting yourself open to subterfuge and harassing tactics of debt collection agencies. Furthermore you might soon be facing a lawsuit in a court of law which will force you to make payments on a debt if the creditor or the debt collection agency can get a judgment against you.

Here are some of the common questions and answers that will help you to work out a deal with a debt collection agency.

Can an account sent to collection be deleted from your credit report?

Is a paid in full collection account better than a settled account?

Can you be sued for a debt when the statute of limitation is over?

Can a collection account be deleted from your credit report?

Can You be sued if you have more than $2000 in debt collection account?

Can You Make a Payment Arrangement With A Debt Collection Account?

Will You Get Sued for Debt Collection Account? How to Try and Settle a Collection Account For Deletion From Credit Report

It wast believed that you will not be sued if you have more than $2000 in debt collections. In fact you have more likely to be sued the higher the balance of credit is. This is because once a statute of limitation is over there is more money to be lost by the creditor. For a lender to decide whether he is to sue or not he will first look at the total amount of the debt. He will also look at the employment status of the person along with other financial information. They will also review the credit report in order to determine whether it is worthwhile to  pursue the consumer are not.

In most of the cases the creditor or a collection agency will sue once it can determine that a consumer has the ability to pay back the debt but is unwilling to.

It is usually advised that you should pay in full for a deletion of the account from your credit report for debts that are greater than $5000.

A settlement for credit cards that will also depend on whether the person intends to keep the card account opened. If the person intends to use it in the future then they should be willing to pay a higher amount to settle or delete the debt from the credit report. Deletion from the credit report of a collection account is not something that can be very easily negotiated.

When it comes to collection accounts of less than $2000 getting a deletion of the account is usually better than getting a deal. If you’re only willing to pay less amount of money such as $.50 for a dollar to settle the account it may not be possible for you to get the deletion. The higher that you’re willing to pay the more willing the collection agency will be to delete the account. For someone who is more concerned about his credit report for the sake of a better credit rating in the future, making a higher payment and getting the account deleted may be more important than settling the account for less.

Should You Settle a Debt Collection Account Or Pay in Full

Once the collection account has been reported on your credit file it may not necessarily cause much improvement in your credit score if you pay the account in full rather than settle it. If it is not possible for you to get the account removed completely from your credit report it might not make a great deal of sense to pay the account in full when you can settle it instead. Settling an account has advantages that it prevents the resale of your debts to another collection agency, prevents the lawsuit being filed against you and cause further damage to your credit score and credit report.

Whether or not you can settle a debt with a collection agency will also depend upon the terms and conditions of the original creditor. In most scenarios when setting a debt the collection agency will act as middlemen. When flying and suckling you should try to pay as less as possible. It is better to save $.50 on the dollar and close a couple of points on your credit score during a settlement than trying to pay in full because the two will not be very much different as far as the influence on your credit score goes.

A statement from a spokesman from fair Isaac Corporation explains “as far as the FICO credit risk score goes, the paid in full status is going to have little, if any, effect on the person’s score”. So it is basically the collection and the charge of status of the account that is hurting the credit score.

Can A Collections Account Be Deleted from The Credit Report?

It is possible to delete a collection account from the credit report. The trick lies in being able to negotiate with a collection agency to send notification to the credit bureau that’s the account being reported was in error. This depends a great deal on the collection agencies and the practices that they implement. The consumer may or may not be able to convince them to delete the account entirely from the credit report as opposed to reporting the account is settled or paid in full. There is one thing that you should keep in mind. The leaking a collection account from your credit report does not mean that the original credit account will be dropped off from your credit history as well. The original credit account gets reported to the credit bureau as late or delinquent much before a collection account is reported. While a debt collection agency may agree to remove the collection account from your credit report the original creditor may continue to report the account which will have the status of being delinquent and of having been transferred to a collection agency. In this case the effect on your credit score will not be of great value.

If you can also convince the original creditor remove the collection and the original account from the credit report then this will help your credit score because your credit file will be like the debt never happened once the debt is deleted completely.

Another manner in which the creditor can delete the debt from your credit report is if you dispute the debt and the creditor finds that the debt had been reported in error and deletes it.

If you do happen to reach an arrangement with collection agency to account from the credit report make sure that you get the agreement in writing and it is signed by someone with authority at the company.

One of the biggest reasons against the complete deletion of an account in exchange for payment is that it is against the basis on which credit reporting works. The reason that credit bureaus and creditors to prisons together is because lenders look for accurate information about the credit worthiness and the risk of an individual. If creditors and debt collection agencies take to deleting past delinquent accounts in exchange for payment, the credit reporting and credit file of a consumer becomes deceptive. For this reason it is hard and difficult to convince a creditor to delete the account completely from a credit report in exchange for payment.

Is It Possible to Make a Payment Arrangement on Debt Collection?

A debt collection agency typically goes on to a debt to a period of six months before it is transferred or sold to another collection agency. In case the debt is too large or you cannot afford to pay the amount it may be possible for you to reach some sort of a payment agreement with your debt collection agency to make payments in small installments and gradually over a period of time. Whether or not you can reach this arrangement with the debt collector depends on whom you are dealing with and the practices that they normally implement.

If you’re looking to reach a payment arrangement with a debt collection agency to make the payment gradually then you have a better chance of reaching the arrangement if you try reaching this agreement sooner than later. A debt collection agency may be more willing to come to a payment arrangement after they have owned the debt for one or two months. If you approach them much later they may not be so willing to deal with you since they are going to be using the account shortly anyway. If you wait for a few months before proposing a payment agreement it is more likely that they will refuse.

You should be aware of the fact that trying to come to a payment agreement with a debt collector may research the clock on the statute of limitation. Statute of limitation is the duration of time in which a debt collector can sue you in a court of law in order to force you to pay on the debt. This duration varies from state to state, is typically 3 to 6 years but can be as long as 15 years. You can reset the clock on the statute of limitation by making a payment to the agency, reaching an agreement for payment to the collection agency, making a charge on the account or by promising to pay the collection agency. Before you try and reach an agreement with the collection agency make sure that you have calculated carefully how much you can afford to pay. Do not get forced into paying more than you can afford as it will not only put a strain on your finances but can result in you being unable to complete the payment plan. In case your debt collection agency does not accept payment arrangements you can start saving money every month until you have saved enough money to pay off the account in full or settle it in one go.

Overview of the Fair Debt Collection Practices Act (FDCPA)

The debt collection agencies are not exactly known for practicing honest and fair means of collecting debt from cost consumers. The reason why they rely on underhanded tactics is that many times they actually do get away with it. It could be because of consumers were not aware of their rights or the laws dictating how a collector can and how they cannot collect a debt from consumer. The debt collection agencies are supposed to work under the guidelines and restrictions of a federal law known as the fair debt collection practices act (FDCPA).

The FDCPA governs the actions of parties acting as debt collectors for personal debts. Automobile loans, home loans, medical bills and credit card accounts are all considered to be personal debts.

Whenever third-party collection agency attempt to collect a debt from you it is supposed to work under the rules and regulations of the FDCPA. These are some of the common and basic guidelines that prohibit a debt collection agency from indulging in certain practices.

They cannot call you before 8 AM or after 9 PM.

They cannot call you at work if they are aware that your employer does not approve of these phone calls.

They cannot harass, oppress, use coercion or abuse you.

They cannot lie to you or falsely imply that you have committed a crime.

They cannot Use unfair practices in an attempt to collect a debt.

They cannot conceal their identity on the phone.

They cannot ignore a written request from you to cease further contact.

The FDCPA also lays guidelines for how a debt collection agency is supposed to communicate with you.

The debt collection agencies prohibited from giving out information about your debt to anyone else except your wife, your parents if you’re a minor and your attorney.

Debt collectors are not allowed to communicate via post card use any kind of symbol or language on an envelope that indicates that they are a debt collection agency. Once a collection agency learns that you are represented by an attorney and has the contact information for the attorney, they can only communicate with the attorney.

Debt collection agencies are prohibited from using any form of harassment or abuse while collecting a debt. They cannot threaten violence against the debtor; threaten the reputation or the property of the consumer. The debt collection agencies cannot use obscene or profane language will communicating with the debtor via phone or through mail. Collection agencies and their collectors cannot publish any kind of listing of consumers that have not paid debt except to a consumer bureau.

 

If your rights under the FDCPA and have been violated you can file a lawsuit against a debt collector within one year of the date of violation. You can sue them for up to $1000 in punitive damages in addition to the actual damages and attorney fees.

Frequently Asked Questions for Debt Validation

What is initial communication?

Initial communication is the first time that a collection agency communicate with your. It can be through written mail, e-mail or over the telephone. Any kind of communication by the debt collector even if it is the summons to appear in court counts as the initial communication. The debt collection agency is required by the law to send you a notice uprising you of your right to dispute a debt within five days of the initial communication.

What if you do not receive a debt validation notice after the initial communication?

Even if you did not receive a written debt validation notice from the collection agency you can still sending your letter ask for verification of the debt. This is your federal right. If the initial communication was through a letter then it is possible that the notice for debt validation was included in the letter. This is permitted according to the federal law. Whether you did or did not receive a debt validation notice from the debt collection agency make sure that you send your request for debt verification before 30 days of the initial communication to enforce your right.

What does a debt validation notice contained?

When a collector since you are validation notice it should include the amount of the debt, the name of the creditor, the assumption that the debt will be paid unless you choose to dispute it within 30 days and a statement uprising you that you can request the name and address of the original creditor than 30 days.

How to prove that a debt collector received your validation request?

In order to have hard evidence that your letter for a validation request was received by the debt collection agency you need to send your letter through certified mail with return receipt requested. The return receipt will prove that the letter was received at the address as well as use of the person receiving it. You can use a tracking number on the certified mailing receipt to check the status of the letter and find out the date on which it was received.

What If the Collector Does Not Respond to a Validation Request

if the collector does not respond to your validation request within 30 days he loses the right to collect the debt from you. The Fair Debt Collection Practices Act (FDCPA) prohibits a collection agency to make any effort to collect a debt from the consumer once it has failed to respond to a validation request within 30 days.

Can you dispute the debt after the validation period Is over?

You can always ask the debt collection agency to validate a debt that it is seeking to collect from you. However the debt collection agency is under no legal obligation to honour your request or respond to it in any manner. It is not compelled by the law to stop making collection efforts if your request for debt validation is sent after the period of 30 days after the initial communication is over.

A disputed debt Still Appears on the Credit Report

if your debt still appears on your credit report even though you have sent a debt validation request to the collection agency you can check whether the debt collection agency did receive your dispute at all. You should always send your requests through the United States Postal Service certified mail where you can use their website to confirm when the letter was received by the debt collection agency.

You should also make sure that you sent the dispute within a 30 day window from the time that the debt collection agency made its very first initial communication with you. Sending a debt validation request up to 30 days means that the debt collector is not legally bound to stop collection effort or to stop reporting it to the credit bureau.

If in spite of having received your debt validation request in time the collection agency continues to report your debt to the credit bureau than you can file a dispute with the credit bureau by either sending in your dispute through mail or filing it online. Having proof of the delivery of the validation request through certified mail will help you provide concrete evidence of the violation of your right by the debt collection agency.

How do you report a debt collection agency for violating your rights?

If you have sufficient proof that a debt collection agency has violated your rights under the FDCPA you can sue it in a federal court of law or a state court for up to $1000 including damages. You should report the violation of rights to the federal Trade Commission, to the state attorney general’s office and the better business bureau.

Disputing a Collection Debt By Asking for Debt Validation

Your letter asking for the verification of the debt needs to be sent in writing to the creditor. You can dispute a part or the entire debt. You should always send your letter to the creditors and the debt collection agencies through certified mail so that you have hard evidence of the delivery of your letters. Request a return receipt.

The Collection Agency’s Response

After you have sent your request for verifying the debt to the debt collection agency they are supposed to respond to you within 30 days with adequate proof that the debt belongs to you and they have the authority to collect on it.

Just as importantly, once a collection agency has received your letter for debt validation they are supposed to cease all efforts to collect the debt from you tell the time that they have provided you with the necessary documentation for debt validation.

In order to prove that you are responsible for paying the debt collection agency will probably need to include some paperwork from the original creditor. Just sending your statement of the amount will not suffice. If the collection agency cannot respond within 30 days with adequate proof to verify the debt then they lose the right to collect the debt from you any more. The federal law prohibits any other communication all collection efforts on the part of the collection agency. In case they violate this right you can sue them in a court of law. Having send your letters to the collection agency through certified mail with return receipt wristed will help you to provide hard evidence for your claim in the lawsuit.