If you have fallen behind in paying your bills and the debts have been referred to a collection agency or law firm, you have certain rights under the Fair Debt Collection Practices Act (FDCPA). The act defines who can collect the debt, the practices they can use, the procedures they must follow and the penalties for violating those procedures. In the United States, there is no debtor's prison, so you cannot be jailed for simply not paying a debt.
Debt Collection
When you owe a creditor, there are several avenues he may take to collect the debt. He can work out a payment arrangement, settle for less than you owe, freeze your bank accounts, garnish your wages, or seize your assets. He can also place a lien on your property for the debt that you owe. He cannot have you sent to jail. He can negotiate payment on his own, but to seize your assets -- both real property and financial -- or to garnish your wages, he must get a judgment against you in court. If you are sued and go to court and the judge enters an order for you to pay a certain amount to the creditor -- either in installments or as a lump sum -- and you don't pay, the judge can charge you with violating a court order. You are then considered in contempt of court and for this, you can be jailed.
Prohibited Practices
A debt collector, under the FDCPA, cannot lie when he contacts you to collect a debt. He cannot do, or threaten to do, anything that he cannot do legally. He cannot misrepresent who he is or why he's calling. He also cannot threaten to have you arrested or tell you that you've committed a crime for nonpayment of your debt. Unless he intends to take legal action, he cannot threaten to take your home, car, wages or assets through legal action. He also cannot threaten to take it without legal action.
Penalties
If a debt collector has violated the regulations, such as by threatening you with jail, you can sue him in your local courts for real damages, such as lost wages and medical bills. You must be able to prove these damages were suffered directly due to the debt collection practices. The judge can order the debt collector to pay for the actual damages you suffered. According to the Federal Trade Commission, he can also order the debt collector to pay you $1,000 plus attorney's fees and court costs, even if you didn't prove that you actually suffered the damages.
Class Action
If a debt collector uses prohibited practices routinely, such as threatening you with jail, you may be able to file a class action lawsuit against him. In this case, anyone who was a victim of the prohibited practices and agrees to be a party to the suit could collect -- split among the plaintiffs -- up to $500,000 or 1 percent of the debt collector's net worth, whichever is lower, states the Federal Trade Commission.
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