Laws for Debt Collection Agencies

If you've ever fallen behind on a bill or failed to pay a debt, you've probably been contacted by a debt collection agency. Debt collection agencies typically purchase old debts from your original creditors and then try to collect what's owed for a profit. The Fair Debt Collection Practices Act and the Fair Credit Reporting Act establish the guidelines for debt collection agency practices and your consumer rights.

Communication

The Fair Debt Collection Practices Act specifies the circumstances under which a debt collector may contact you. According to the FDCPA, a debt collector must identify himself when contacting a third party in an attempt to gain information about your location. Debt collectors are also barred from communicating with your friends or family members if they already know your location. If a debt collector contacts you directly, he may do so by telephone only between the hours of 8 a.m. and 9 p.m. A debt collector may not contact you at a time or place that is known to be inconvenient to you. Debt collectors may not contact you at work if your employer restricts personal communications or if you are represented by an attorney. If you want a debt collector to cease contacting you, you must make the request in writing.

Debt Validation

If you're notified by a collection agency that you owe a debt, you may request validation within 30 days of receiving the notice. To do so, you must send a written request to the debt collector to verify the debt by providing you with the name and address of the original creditor and documentation saying the collector is legally able to collect the debt. Typically, a debt collector must be able to provide the original signed agreement between you and the creditor or a copy of a court judgment against you.

Credit Reporting

Under the Fair Credit Reporting Act, collection accounts may remain on a consumer's credit report for only seven years from the date the original debt first reached 180 days overdue. Collection agencies are required to report the original date of default to the credit bureaus and must remove any negative information once the reporting period expires.

Unfair Practices

The FDCPA prohibits debt collectors from engaging in unfair practices, including harassment, abuse or false representation. A debt collector may not threaten you with physical harm, use obscene or profane language, call you continually with the intent to annoy or harass, advertise the sale of your debt as a means of coercing payment or refuse to identify itself. Debt collectors are also barred from providing false or misleading information or threatening to sue you unless they actually intend to do so.

Violations

If you feel a debt collector has violated the FDCPA, you have the right to sue for damages in state or federal court. A judge can order a debt collector to pay up to $1,000 in damages as well as your attorney's fees. You may also sue a debt collector for violating the FCRA for up to $1,000 or actual damages, whichever is greater.