The federal Fair Debt Collection Practices Act (F.D.C.P.A.), which was adopted in September 1977, regulates the activities of debt-collection agencies by stipulating the form and content of communications with consumer debtors. The statute outlaws a plethora of deceptive or otherwise unfair debt collection practices, and it gives debtors the right to dispute a debt, require an agency to verify the debt's validity and cut off future contact by the collection agency.
The F.D.C.P.A. covers debts of a personal, family or household nature. This includes debts owed on auto loans, credit card accounts, medical bills and mortgages. While the statute extends certain rights to consumer debtors, it neither offers any type of debt relief nor protects individuals or families from the threat of a lawsuit. No protection is extended for debts incurred while running a business.
Collection agencies may not contact debtors at inconvenient times or places, such as between 9:00 p.m. and 8:00 a.m. While it is wise to attempt resolving the situation through an initial contact, agencies are not allowed to call persons at work or at home after receiving written instructions to cease. According to the U.S. Federal Trade Commission, collectors are allowed to contact third parties one time, but only to obtain information regarding residency, phone numbers, etc.
If a debt collector initiates a lawsuit, the court may enter a judgment against the debtor, thereby stipulating that a third party, such as a bank, garnish wages or a certain percentage of funds from the debtor's account. Under the Fair Debt Collection Practices Act, various types of income cannot be garnished. Exempted income sources include Social Security and Supplemental Security Income benefits, service members' pay and railroad retirement benefits.
The F.D.C.P.A. prohibits collection agencies from engaging in certain types of behaviour, such as threats of violence and the use of obscene language. Creditors can neither falsely claim that they are attorneys or government agents nor threaten a debtor with arrest. The federal statute also prohibits collectors from charging interest on the amount owed, and from threatening to take a person's property without a court order.
When a debtor wishes to contest some or all of the debt, he has a right to make a written request for verification within thirty days of receiving notice. If an individual believes that the collector has violated the F.D.C.P.A, he may file suit against the creditor in federal or state court. If the plaintiff prevails, the judge may order the collector to pay damages. The creditor may also be compelled to pay the plaintiff's court costs and attorney fees.