If you have fallen behind on credit card payments, mortgage payments, or other bills, you may be receiving phone calls from creditors and third party debt collectors. You may feel like these calls will never stop. However, Debtors have rights against creditors and debt collectors under both California and Federal law. In the alternative, filing for bankruptcy can put an end to these calls (and any other communications) attempting to collect a debt.
This post will provide an overview of the Fair Debt Collections Practices Act. It will also discuss how filing bankruptcy can end creditor and debt collector communications forever.
How Creditors Seek to Collect Outstanding Debt
There are many ways in which creditors may seek to collect outstanding debts. A creditor may try to collect the debt by contacting the Debtor directly. The creditor can also file a lawsuit against the Debtor. A creditor may repossess or sell property that secures a debt. A creditor may hire a debt collector to pursue a debtor on its behalf. No matter which avenue a creditor seeks to collects its debt, the creditor and/or its appointed debt collector MUST follow the rules or be held to answer for their illegal conduct.
What is the Fair Debt Collections Practices Act?
The Fair Debt Collections Practices Act (FDCPA) is a Federal law that is designed to protect consumers from unfair and abusive practices by debt collectors. It was enacted in 1978 and gives Debtors broad protections against the unsavory conduct of debt collectors.
It is important to understand that the FDCPA only applies to debt collectors as defined in the statute. The FDCPA does not apply to original creditors that contact a Debtor directly to collect valid debts. If you are behind on credit card payments, the FDCPA does not stop your credit card company from calling you to discuss the account. If the credit card company turns your account over to a 3rd party debt collector, then the FDCPA controls the behavior of this debt collector. Luckily for Californians, we have a similar law called the Rosenthal Fair Debt Collection Practices Act (RFDCPA) and it applies to original creditors as well as third party debt collectors. Much of California’s RFDCPA is a carbon copy of the FDCPA. However, this article will focus only on the FDCPA.
The FDCPA prohibits debt collectors from harassing you by mail, telephone, or in any other way. The FDCPA states that a debt collector may not use, “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” A few examples of the type of debt collector misconduct outlawed by the FDCPA include:
- Using obscene or profane language;
- Calling repeatedly or continuously with the intent to annoy the Debtor;
- Calling before 8 a.m. or after 9 p.m.; or
- Representing or implying that failing to pay a debt may result in arrest or imprisonment.
Know Your Rights
If you do not want to talk to a debt collector, you are free to hang up the phone. You have no legal obligation to speak with a debt collector. If you decide to speak with a debt collector, you should take clear notes about the coversation. What was the agent’s name? What time did they call you? Did they identify themselves properly? Did they provide a correspondence address? Was the debt collector being loud or abusive? Did they threaten you in any way? Make a good written record of your contact with the debt collector as this is the best weapon in your arsenal against an abusive debt collector.
You can also send the debt collector a written notice instructing them to stop contacting you. These notices are sometimes referred to as “cease and desist letters.” Once a debt collector receives such a letter, they may contact you only one additional time to notify you that they have received the letter and to let you know what action they plan to take in relation to the debt. Prior to sending a cease/desist letter, you may want to send a debt validation request to make the debt collector validate that the debt they claim you owe is, in fact, legitimate.
After sending a cease and desist letter, if the debt collection agency contacts you more than the one time allowed by the FDCPA, they are in violation of Federal Law. You likely have a legal claim against them for violation of the FDCPA. You should speak with a consumer protection attorney immediately to determine whether you are entitled to bring a lawsuit against the debt collector based on a violation of the FDCPA.
It is important to understand that sending a cease and desist letter will not eliminate the underlying debt. Sending such a letter only means that the debt collector must stop contacting you. You may still be sued over this debt. If a creditor prevails in a lawsuit against you, they will be awarded a judgment. This means that the creditor may then use that judgment to garnish your wages, levy your bank accounts, or record a lien against your property.
Will Bankruptcy Stop Calls From Creditors?
When you file bankruptcy, an injunction provided for in 11 U.S.C. 362 known as the “automatic stay” immediately goes into effect. The automatic stay prohibits nearly every creditor and/or debt collector from taking any action to collect a debt from a debtor who has filed for bankruptcy protection. The moment you file a bankruptcy petition, the automatic stay protects you from creditors. This means that creditors and debt collectors cannot contact you about a debt by phone, in writing, or by any other medium. Further, the automatic stay will stop an ongoing lawsuit; or if a creditor is threatening to sue, but has not yet done so, the automatic stay will typically stop this creditor from ever being able to file such lawsuit. The automatic stay is an extremely powerful tool against creditors and debt collectors.
It can be very difficult to determine whether or not to file bankruptcy. If you are in debt and would like to know more about your options, call Spaulding Law Group for a free consultation. Dial (714) 731-7595 to speak with an experienced bankruptcy lawyer today.