Collection agency laws

Laws in the United States

In the United States, there are individual collection agency laws for each state and there is a main federal collection agency law called The Fair Debt Collection Practices Act (FDCPA). This article discussed the FDCPA as it applies at a national level. Your own state likely has its own collection agency regulation laws and you should call the state attorney’s office for your state for further information. These state laws are often more comprehensive at protecting individuals from illegal or shady activities of collections agencies.

FDCPA – The federal government’s collection agency laws

The FDCPA applies to all credit agencies in the US. This act was enacted by congress because the lawmakers realized that credit agencies are often abusive and engage in illegal activities. Such actions by a collection agencies lead to an increased rate of bankruptcies and the ultimate invasion of the consumer’s privacy. Congress also felt that a national set of laws regulating collections agencies was required since a lot of the abusive activities of the collections agencies were being carried out at an inter-state level. The main goals of the FDCPA are to protect consumers from illegal activities of the debt collectors and at the same time allow those collections agencies that operate in a professional and legal manner to not be disadvantaged.

If you are the victim of an overly aggressive collection agency, then do not be intimidated. The FDCPA collection agency laws exist to protect you. Learn your rights and fight back.

What is not allowed under the collection agency law

It is important to understand that the FDCPA applies to all collections agencies external to the original creditor. The law does not apply to internal collection departments. In other words, if the collection agent calling you is an employee of the original creditor, the FDCPA does not apply to them. Your individual state may have a law that governs these internal collectors.

The FDCPA clearly states what the collection agency can legally do and not do. Having this knowledge will empower you if and when you have to deal with the collections agencies. Under this law, the external collection agencies cannot do any of the following:

- the collection agency cannot call you on a Sunday

- the collection agency cannot call your employee regarding your debt (except in the case of unpaid child support payments)

- this law forbids the collection agency from calling you at your place of employment if they have been advised that your superior does not allow you to receive calls at work

- the law forbids collection agencies from calling you before 8am or after 9pm unless you have given them permission to call at these times

- the collection agency cannot contact you at a time that you have indicated is inconvenient for you, for example if you have asked them not to contact you between 5pm and 9pm for whatever reason, then they are legally not allowed to call at those times

- the debt collector cannot call your relatives or neighbors and tell them about your outstanding debt, this is an invasion of your privacy and an pressure tactic to try and embarrass you into paying your debt; similarly, the law forbids them from any sort of mail correspondence which clearly shows without being opened that it is from a collection agency

- the collection agencies are not allowed to threaten you with any actions to which they are not legally entitled, for example they cannot threaten you with possibility of jail if the laws do not provide for jail time for unpaid debts

- the collection agency is required to provide you with a written verification of the debt, indicated the amount you owe and to whom, thereafter they are absolutely forbidden from collecting any money above the actual debt owed

What they can do under the collection agency law

The collection agency law does give the collector the right to sue you for the outstanding debt. They may also notify the credit bureaus regarding the unpaid fine. Usually if the debt is small and unsecured, the collectors will eventually stop calling you since it is not worth their time if you are not paying. On the other hand, if the debt is large or secured such as a mortgage or auto loan, then they will continue to pursue the collection. In such cases they will most likely sue you and if they win, the court can give them permission to garnish your wages and go after your assets. Whenever you are in such a situation, always retain the services of an attorney specialized in consumer law.

You should not think of the collection agency laws as some sort of 'get out of jail free card'. Collection agencies that operate ethically and professionally are fully entitled to pursue collection action for any legitimate debts you may owe.

Collection agency laws in Canada

In Canada the collections agencies are regulated by provincial laws. You should contact your provincial government to obtain information on the legislation in your province.

Collection agency law in the UK

In the UK, the collections agencies are regulated by the Office of Fair Trading (OFT). The OFT provides guidelines and not laws regarding how a collection agency should operate. These guidelines could however be referred to by the OFT when renewing the collection agency’s license.

Note that the above article is for information purposes only, may not be entirely accurate, and should not be used as a replacement for legal advice.

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