Please continue to read for important information regarding consumer debt collection.
After searching various sources, we have found many people have questions when it comes to business law. Written by Callagy Law’s litigation team, this blog will focus on many common questions and concerns surrounding legal matters. Our mission is to answer any litigation and business law questions.
You loaned a consumer money, you have a right to contact that consumer and collect that money, right? But now, you are the one being sued?! But, they owe you X amount of dollars, how can this be possible? How is this justice?
Unfortunately, many debt collectors find themselves in this predicament simply because they are unaware of what is proper and improper debt collection practice. You see, due to harassing and abusive debt collection practices in the past, debt collectors today need to be cautious of how and when the attempt to collect debts from consumers. In the late 70’s an Act was put in place to eliminate abusive and unfair debt collection practices. The Fair Debt Collection Practices Act (FDCPA) (15 USC 1692 et seq.), was designed to protect consumers from abuses in debt collection and protects debt collectors from unfair competition. However, the FDCPA does not apply to all debts; for example, commercial debts (debts owed for business purposes) are not protected by the Act. Further, the FDCPA only applies to the collection of debt incurred by a consumer primarily for personal, family, or household purposes. Debt collectors must be conscious of these provisions as the failure to comply with any of the provisions of the FDCPA could result in actual damages, punitive damages of up to $1,000.00 per individual action or up to $1,000.00 for each named plaintiff in a class action and an award to be divided among all members of the class of an amount up to $500,000.00 or 1 percent of the debt collector’s net worth, whichever is less, as well as attorneys fees and costs.
Additionally, it is important to understand that the defenses to violations of the FDCPA are limited. Thus, the best way for consumer debt collectors to avoid liability is to be aware of what is a fair debt collection practice under the FDCPA and any applicable state law as well. While many collectors are aware of the general rule that debt collectors may not use abusive or harassing conduct in their attempt to collect a debt, may not communicate with the consumer before 8 a.m. or after 9 p.m. and that a debt collector may not contact the consumer at his/her place of employment if the collector has reason to believe that the employer prohibits such communications or if there has been an attorney retained to handle the debt, many debt collectors are unaware that if a consumer refuses, in writing, to pay a debt or requests that the debt collector cease further communication, the collector must cease all further communication, except for the limited purpose to advise the consumer that the collection effort is ceased, inform the consumer that certain specified remedies ordinarily invoked may be pursued or, if appropriate, that a specific remedy will be pursued, and that mailed notices from the consumer are official when they are received by the debt collector. If you are unsure of whether you are abiding by the FDCPA, reading and understanding the Act is the first step. Once, you have reviewed the provisions of the FDCPA and assure that they are implemented and abided by it will be extremely difficult for a consumer to sustain an action against you. In sum, when it comes to debt collection, awareness of what is considered fair practice is the best way to avoid liability.
We hope you found the information provided in this article helpful to your everyday life and business. Please free to reach out to Sean Callagy or the Callagy Law team at any time for questions you may have concerning personal and business matters. Callagy Law’s headquarters is located conveniently in Paramus, NJ. Beyond the scope of information, Sean Callagy has developed multiple areas of business legal practice and business coaching, if you need help with anything, please reach out to us by calling 201-261-1700 or by emailing us here. Feel free to connect with us on Facebook, Twitter or LinkedIn! Additionally you can subscribe to our daily videos on YouTube by clicking here.
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Dos & Don’ts of Consumer Debt Collection | Callagy Law
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