Federal Rules Debt Collectors Must Follow

 Posted on November 27, 2014 in Bankruptcy

When a person owes a defaulted amount on an account, such as a credit card or prior utility bill, the company who the original debt is owed to will often “charge off” that debt after a certain period of time has gone by. Someone who is struggling with overwhelming debt may have multiple accounts which have been declared charge offs by the original creditor.

There are certain guidelines a creditor must follow before they can charge off an account. If the account is an installment loan (such as an auto loan or mortgage), then the delinquency must be at least 120 days past due. If the account is a revolving credit account (such as a credit card), then the delinquency must be at least 180 days past due.

At this point, the creditor has three options for debt collection for the account. The company can continue to pursue collection themselves; they can hire a third-party collection agency to continue collection activity; or they can sell the debt to a debt buying company. Debt buying companies purchase debt portfolio from creditors and any funds then collected on the debt belong to the debt buyer.

Regardless of what option a creditor decides on, there are federal rules that have been established that a debt collector must follow. These rules were established under the Fair Debt Collection Practices Act (FDCPA) and include:

• A debt collector must sent a written notice within five days of the first initial telephone contact which validates the amount of the debt owed;
• Debt collection may only take place between the hours of 8:00 a.m. and 9:00 p.m.;
• A debt collector may not contact a person at their workplace if they have been told either orally or in writing not to do so;
• A debt collector must stop contacting a person if the person sends a certified letter to the debt collection telling them to stop all contact. The only exception to that contact would be the debt collector acknowledging the no-contact letter and/or contacting the person to let them know they will be filing a lawsuit or other activity;
• If a person is represented by an attorney, then the debt collector must contact the attorney and not the person who owes the debt; or
• Debt collectors may not harass, make threats, or make false statements in order to intimidate or scare a person into paying the debt.

If bankruptcy seems like a viable option for your financial situation, contact the Law Offices of Chance M. McGhee. San Antonio, Texas bankruptcy lawyer, Mr. McGhee has helped clients over the past 20 years regain control of their financial lives. Call the law firm at 210-342-3400.