Debt Compliance

Debt compliance refers to practices used by collection agencies to get people to make good on their debts. The total U.S. consumer debt is $2.4 trillion, according to the website Money-Zine. This works out to almost $8,000 per person. With such high debt figures, you are likely one of the people in debt. Knowing about debt compliance will allow you to be prepared and know what creditors can do -- and what they can't.

Debt Compliance

Debt compliance doesn't have to be the domain of a private business. Individuals, governments and even non-profit organizations may employ debt compliance practices. Debt compliance often begins with an in-house collection agency making phone calls and sending out letters. Your debt may then be sold to another, third-party collection agency that may or may not use more aggressive tactics. Regardless of who owns your debt, there are still legal limits on what a debt collector can do to enforce compliance.

Your Rights

Federal law provides you with a number of protections against unethical debt compliance practices. Most of these are under the Fair Debt Collection Practices Act. For example, a debt collector can contact a third party only once and only to find out your contact information. A collection agency must provide you with a debt validation notice, including how much you owe and how to dispute it within five days of contacting you. Harassment, false statements and other unfair practices are prohibited under the law.

Potential Consequences

One potential consequence of failing to comply with your outstanding debts is damage to your credit. This generally follows you for seven years. You can also have a judgment levied against you in civil court. This is an official recognition by the courts that you owe the money in question. Garnishment is the next step, with a court issuing a writ of garnishment. This is a legal order to deduct a portion of your wages to pay down your debt.

Dealing With Debt Compliance

The simplest and best way to deal with debt compliance is to pay your bills on time. This will avoid dealing with collection agencies -- inside or otherwise. After this, you can speak with your creditors to see if a mutually beneficial payment plan can be worked out. If not, or if you feel that you have been the victim of unscrupulous or illegal practices, you may want to consult a lawyer. Bankruptcy is an extreme and last resort.