The federal Fair Debt Collection Practices Act (FDCPA) was adopted in 1977 to protect both consumer debtors and creditors in the debt-collection process. In a 2003 report, the State of California Department of Consumer Affairs writes the FDCPA requires that debt collectors exhibit "honest, fair and reasonable" debt-collection practices. The process by which debt collectors attempt to collect a debt, both written and verbal, are addressed by this legal mandate, and may vary slightly depending on states' laws.
Disclosure of Purpose
The first communication between a debtor and an agency attempting to collect a debt must describe the purpose of the communication and disclose to the indebted consumer that all information obtained by the agency will be used for that purpose. Failure to disclose this information is a violation of the FDCPA.
Validation of Debt
The opportunity for a debtor to validate the debt must be offered either during the initial communication by the debt collector or no later than five business days after first contact. After receiving this written communication, the consumer has 30 days to dispute the debt if he believes the debt is invalid. Also during this time, the debtor may also research the validity of the agency attempting to collect the debt, including whether it actually owns the debt it is attempting to collect.
Legal Action Notice
Many debt collections agencies are either law firms or work closely with law firms to collect a debt. Often, a letter of legal action will follow a debt-collection attempt that has been ignored or that maintains an unpaid balance. Terms contained within a notice of legal action often include the opportunity for arbitration between the consumer debtor and the debt-collection agency, as well as notice of court judgments and liens.
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