We are a society of buyers surrounded by offers of easy credit. Minors get solicitations for credit cards through the mail. College students are flooded with credit card offers. It’s easy to buy on credit and plan to pay later what you can’t afford today. Reports show the average American household carries over $9,000 in credit card debt. Unfortunately, some people fall behind on their payments and end up hounded by debt collectors. You should know there are laws that define what debt collectors can not do. When the line is crossed and debt collectors violate the law, consumers may actually sue the debt collector.
Once you fall behind in payments, your debt can be turned over for collection, either in-house by the creditor or to a third-party collector. In the past, credit card companies rarely went past the stage of requesting payment through debt collectors. Recently, though, companies are suing debtors over credit card debt, and there has been an increase in illegal collection activities before a lawsuit is filed.
While some collection practices are allowed, many are prohibited by law. Both federal and Texas law regulate collection activity and prohibit unfair and deceptive collection practices. If these laws are violated, consumers can sue the debt collector.
The federal Fair Debt Collection Practices Act (FDCPA) was enacted to protect individual consumers. Business debt is not covered under the Act. The FDCPA also only covers third-party debt collectors and companies that buy debts after consumers have defaulted on payment. Violations by an original creditor are not covered.
Certain conduct by debt collectors constitutes flat-out violations. This includes communication with a third party without the consumer’s authorization and harassment or abuse used to force a person into paying the debt. Even if you owe money on a credit card, the debt collection company cannot call your parent or sibling, for instance, and talk to them about the debt. A debt collector cannot use profanity or threaten the use of violence. Repeated calls with the intent to annoy the individual are also prohibited. Any written collection attempts must contain certain notices required by law. Failure to include these notices violates the law.
Often, debt collectors push the boundaries of what is legal and count on consumers being unaware of what is and is not allowed. For example, debt collectors cannot garnish wages in Texas for consumer debts, nor can they usually attach a lien to your homestead. If a debt collector threatens to collect a consumer debt through wage garnishment or by attaching a lien on your homestead, he may have violated the law. Threatening a lawsuit or arrest may also be a violation. Unless the debt collector can sue and actually intends to sue over a debt, that threat is illegal. Threats to sue on very old debts barred by legal limitations are deceptive under the law. Consumers who encounter such threats or who are actually sued should consult an attorney
Individuals may want to contact debt collection agencies in two situations. First, a consumer can request that the debt collector stop contacting them about a debt. Pursuant to federal law, if a debtor makes that request, any subsequent phone call and more than one written communication to the consumer would violate the law. Second, a debtor who receives notice that a debt is in collection may request that the debt be validated. In response to a validation request, the debt collector should disclose the amount of debt and the original creditor. Until the debt collector validates the debt in writing, all collection activity must cease if the request to validate was made in writing.
A consumer being harassed on a debt is protected by the FDCPA and can file a lawsuit against the violating debt collector. Federal law allows plaintiffs to recover actual damages plus up to $1,000 as a statutory penalty against third-party collectors. The Texas Debt Collection Act, the Texas counterpart to the FDCPA, has fewer consumer protections, but violations of the Texas act sometimes allow for a $100 penalty. Both the federal and the Texas acts allow plaintiffs to recover their attorney’s fees and costs. When confronted with an abusive debt collector, consult an attorney to explore your rights to see if you can pursue the pursuer.
Richard Tomlinson is Board Certified in Commercial and Consumer Law by the Texas Board of Legal Specialization. In this series on consumer issues, they will focus on consumer issues such as defending yourself if sued for credit card debt, car warranty and title issues, violations of law by debt collectors and consumer’s rights under arbitration agreements. Richard Tomlinson is married to Ann Pinchak.
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