When debts fall past due, a number of lenders will attempt to collect the past-due amount. If all else fails they will forward the delinquent receivables to a collection agency, which is a third-party debt collector. Collection agencies must abide by the guidelines established by the Fair Debt Collection Practices Act (FDCPA). Some collection agencies still operate outside of the rules and regulations of the FDCPA, but they are subject to fines, penalties and even lawsuits.
Call Procedure
When a collection agency begins collection activities, it will make phone calls to a debtor's residence and place of employment. According to the FDCPA, phone calls can only be made between the hours of 8:00 a.m. and 9:00 p.m. If a debtor tells the debt collector not to call his place of employment, the debt collector must honor the request. You can even request that a debt collector not call your place of residence.
References
A collection agency will call the personal references listed on your credit application to obtain information. The agency may not disclose the fact that you have a debt or that you are past due to your personal references. It can only attempt to get location information such as address, home phone or phone number at a place of employment. References can only be contacted once unless the debt collector believes the reference has new information about the whereabouts of a debtor.
Post-Dated Checks
A debt collector will occasionally ask a debtor to send a post-dated check. If a post-dated check is received, collection agencies must handle them in a certain manner. When a post-dated check is received and dated five days or more in advance, the collection agency must send written correspondence which is not later than 10 days nor sooner than three days prior to banking the check, informing the debtor of its intent to bank the check.
Statute of Limitations
A debt collector cannot pursue legal action on a debt once the statute of limitations has run out. The time frame is dependent upon the rules of each state and the type of debt involved. The types of debts involved are oral contracts, written contracts, promissory notes and open-ended accounts. Some third-party debt collectors will attempt to collect after the statute has run out and even seek a judgment. If you receive a summons from the court regarding a debt upon which the statute has run out, you must attend court and provide proof that the statute of limitations has run out. If you don't show up the collection agency will receive a default judgment.
Abuse
A collection agency may not participate in any type of activity that is abusive, threatening or harassing while collecting a debt. It cannot threaten the reputation or property of the debtor while attempting to collect a debt. Language deemed profane, abusive or obscene cannot be used by a collection agency.
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