Debt Collection
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Filed under Debt Collection
Debt collection is an act of collecting money owed by an individual or a company. For instance, credit card holders are required to pay on time for their purchases. In case, they do not make timely payments, the creditor or the debt collector gets in touch with them to recover the money owed. They try to do this even when the debtor is not in a position to pay off debts due to financial or other problems, such as dispute with the creditor. However, debtors are protected by law against certain debt collection practices. Therefore, it is important for debtors to understand the various debt collection practices thoroughly.
Debt Collection: The FDCPA
The Fair Debt Collection Practices Act or the FDCPA is a United States law, passed by Congress in 1978. It aims at promoting fair debt collection by eliminating the violent conduct of collection agencies. Moreover, maltreatment at the hands of collection agencies forces many people to file for personal bankruptcy. The act defines consumer rights in the form of protection. Debt collectors are required to adhere to the debt collection guidelines as stated in the statute.
Debt Collection: Practices
Debt collectors, who work on a commission basis, might adopt violent methods to extract money from debtors. In such an event, debtors are forced to file complaints against debt collection agencies. Many debtors also complain of not receiving sophisticated customer services from debt collectors. Some websites work towards exposing this maltreatment. In many cases, consumer rights attorneys make consumers aware of their rights as mentioned in the FDCPA.
Collection Calls: Many collection agents call debtors to remind them of their payment obligations. This is prohibited under the FDCPA. Collectors can send mails to debtors. They are not permitted to use foul language or threaten the debtors with law enforcement to recover debt. The FDCPA allows collectors to call a relative or neighbor or at the workplace of the debtor to locate the debtor. Collectors are required to mention their information when asked.
Collection Account: This involves submitting a description of the debt with a collection agency. The agency keeps a credit report where this account features along with the agency’s name, money owed by the debtor and contact information of the agency. If one or more accounts have been referred for a debtor in the last seven years, their collection account would feature in the credit report. When the collection account is paid off by a debtor, it is marked as paid and not removed from the report. If there is a dispute regarding the debt, it cannot feature on the credit report until it is settled. The debt needs to be confirmed as accurate.