Financial difficulties can be all encompassing. The stress associated with not being able to pay your bills touches on everything from being able to pay for your kid’s schools lunch to wondering if your car is going to get repossessed – making it impossible for you to get to work.
And then the calls start. It is understandable that your creditors are going to start calling you when they don’t get payment. I run my own business – if my clients don’t pay me then even I will shoot them an email or give them a quick call and see if they are in a position to make a payment.
Where the problems start is when debt collectors go from inquiring why you haven’t made a payment or when the next payment will be sent to treating people in demeaning, harassing, and sometimes outright abuse ways.
Fair Debt Collection Practices Act – Leveling the Playing Field
In response to abusive debt collectors Congress enacted the Fair Debt Collection Practices Act, usually know by the acronym “FDCPA”.
There were four (4) reasons Congress enacted the FDCPA: Jobs, Marriage, Bankruptcy, and Privacy.
Jobs: The FDCPA prohibits debt collectors from calling you at work if you have informed them that you are not allowed to receive calls there. Despite this I routinely have clients who experience debt calls to their employment on a daily basis.
If federal law prohibits debt collectors from calling you at work and they still do it anyway, imagine what tactics would be taken if there wasn’t a law. One of the four main goals of the FDCPA is to preserve jobs that would otherwise could be impacted by aggressive debt collectors.
After all, if you don’t have a job, no one is getting paid.
Marriage: Financial problems are one the leading causes of divorce. Not having enough money to pay the bills puts everyone on edge. Having bill collectors call at all hours of the day and night makes things ever worse. Having bills collectors call and swear, yell or threaten your spouse can make turn a debt problem into a full blown family crisis.
Bankruptcy: I have helped nearly a thousand families go through the bankruptcy process in my law practice and have met with literally thousands more that were thinking about it.
Almost always there is something in a persons life that triggers the decision to file for bankruptcy. Sometimes the filing of a debt collection lawsuit will trigger a bankruptcy, other times a wage garnishment, and many times people just need the collection calls to stop.
One of the core purposes of the FDCPA is to eliminate some of the abusive tactics debt collectors use and thus hopefully reduce the number of unnecessary bankruptcy filings. It is easy to see how a consumer who is facing abusive or harassing debt collectors would decide to file for bankruptcy – even if it wasn’t in their best interests – simply to make the debt collectors stop.
Privacy: The FDCPA prohibits debt collectors from speaking to third parties about your debt. They can’t call your neighbor, brother, sister, employer, etc. and speak with them about your debt.
You can see why debt collectors would be tempted (and often to) to use this tactic. If you knew a debt collector was calling your brother and discussing your debt problems with him you would be very motivated to make that stop.
Privacy is one of the most important reasons that the FDCPA was enacted – to protect your private financial information.
How Do I Know If I Have an FDCPA Claim Against a Debt Collector?
There are four questions that I use to evaluate whether there has been an FDCPA violation that will result in a claim against the debt collector: (1) Consumer (or person affected by an FDCPA violation)? (2) Did the violation occur while trying to collect on a defaulted consumer debt? (3) Was it a debt collector that committed the violation (not the original creditor)? and (4) Was there an actual violation of a provision of the FDCPA?
1. Consumer? – The first question seems a little obvious – of course the violation has to been against a person, however it does not have to be the person who owes the debt. An FDCPA claim can be brought by anyone who has been affected by an FDCPA violation.
For instance, if you owe a debt but a debt collector is constantly harassing your sister at work with phone calls your sister would have standing to bring an FDCPA claim against the debt collector.
2. Was there a Consumer Debt that was in Default? – There is really two parts to this; the first question you need to ask yourself is whether or not the debt that was being collected on was a consumer debt. A consumer debt is a debt that was incurred for personal, family, or household use.
FDCPA does not apply to business debts. If the debt being collected on was incurred as part of your business or if it is a personal guaranty on a business loan or line of credit you do not get the protections provided by the FDCPA.
3. Was it a Debt Collector that Committed the Violation? – this may seem like a stupid question but it is an important one in evaluating FDCPA claims.
The FDCPA is only applicable to debt collectors – NOT original creditors. So what does this mean? Here’s an example: let’s say you owe money to Wells Fargo bank on a credit card. If Wells Fargo calls you at work and tries to collect on the debt they are not in violation of the FDCPA. However, if Wells Fargo hires a collection agency to call you at work, the collection agency can be held liable for violating the FDCPA.
So if the collector calling you is the actual creditor to whom you owe the money to, no FDCPA claim.
*Important Note – Debt Buyers are collectors for purposes of the FDCPA. In my law practice I handle a lot of cases filed against consumers by Junk Debt Buyers. Junk Debt Buyers are companies that purchase large pools of charged-off debts and then sue on them.
Even the debt buyer is allegedly the owner of the debt after they purchase it the law views them as debt collectors for purposes of the FDCPA. This is also true of the law firms that represent debt buyers if the law firm mainly does collection work.
4. Was there a violation of the FDCPA? – Debt collectors have the right to lawfully try and collect a valid debt that is owed. If they are following the rules they have every right to contact you.
Every now and again I will meet with someone who believes they have an FDCPA claim against a collector simply for calling. The law allows them to try and collect the debt, but they must do it without violating the federal law.
So what is a violation? Did the debt collector do or say anything to you that was unfair or untrue? Did the debt collector treat you in an undignified or disrespectful way? If any of these are true then there was likely a violation.
Here are a handful of the most common FDCPA violations:
- Verbal abuse or harassment
- Failing to provide the required notices about them being a debt collector
- Third-party collection contacts
- Illegal fees or convenience charges
- Failing to notate credit report disputes
- Robo-dialing Cell Phones
- Calls being made after you have asked them to cease in writing
- Threatening actions that are unauthorized or illegal
What are the Benefits of the FDCPA to You as the Consumer?
When I talk about having a “claim” against a debt collector what I really mean is that you have the right to sue the debt collector for their unlawful collection activity. You may ask yourself, what would be the benefit of you going through a legal proceeding against a debt collector?
Stop the Illegal Conduct
First and foremost you can get the illegal collection activity to stop. As discussed above there are sound reasons why the FDCPA was enacted. Abusive debt collection can cause real harm to your job and your family life. One of the primary benefits of suing a debt collector engaging in unlawful practices is to stop the behavior.
Statutory Damages of $1,000
Next, the FDCPA allows you to recover statutory damages of $1,000 per case. The FDCPA is a strict liability statute – this means that if they broke the rule they are liable and they will be required to pay you $1,000, end of story – even if you did suffer any other damages.
Actual Damages – No Limit
In addition to statutory damages the FDCPA allows you to collect actual damages that you may have against the debt collector. These are damages that you have to prove.
If you lost your job because a debt collector kept calling your work and your boss had enough then you have actual damages, but you will have to prove that there is a direct link between you losing your job and their unlawful collection activities.
The law also allows you to recover for emotional damages that can come from the abusive tactics of collectors.
In addition to statutory and actual damages the FDCPA requires the debt collector to pay for your legal fees and costs. Most attorneys like myself who handle FDCPA claims do so on a contingency basis. This means that you pay nothing unless we actually collect damages on your behalf.
Conclusion – You Should Expect Common Decency From a Debt Collector
Of the thousands of people I have met with over the years I don’t believe I have ever met someone who simply decided that they didn’t want to pay their bills anymore. Most people are devastated and humiliated by the fact that they can’t meet their obligations.
And this is why I believe the FDCPA is so necessary. It is not too much to expect people to treat other people with decency. I have no problem with debt collectors who do their jobs and try and collect what is owed within the bounds of the law.
But to those debt collectors who think they can ignore the law and beat up on a family who is already going through what is likely one of the biggest crisis of their lives – I will sue you.