Debt Collection Process: Legal vs. Illegal Practices

Being in debt is not against the law but the tactics used by creditors and collection agencies may be. Just because you owe money does not mean that you can be treated any way that creditors and collectors deem appropriate. If you are being subjected to questionable debt collection efforts, you should acquaint yourself with the laws that can protect you.

Third Party Collectors

The Fair Debt Collection Practices Act (FDCPA) draws boundaries for the tactics used by third party collectors. Third party collectors are generally agencies that are hired to collect on behalf of a creditor or those who have purchased debt from a creditor. Such arrangements are legal and their attempts to collect can also be legal.

For example, a debt collection agency can correspond with you by mail and telephone. However, there are rules regarding how this is done. The FDCPA forbids correspondence that allows other parties to determine from the packaging that efforts are being made to collect a debt. Likewise, collectors may be within their boundaries if they contact other individuals trying to get in touch with you, but they cross the line when they discuss your debts.

You may be contacted at work, but if the collector is made aware that your employer does not approve or that such calls are a threat to your employment, he must stop. Furthermore, once a collector is made aware that you have obtained a lawyer to handle a debt, all interaction thereafter should be directed solely toward your legal representative.

It is also important to note that you can be urged to pay and you may be advised of actions that will be taken if you don't pay. However, the FDCPA explicitly forbids threats of physical harm, criminal prosecution, or damaging your reputation.

Original Creditors

Legal versus illegal debt collection practices which pertain to original creditors are generally outlined by state law. This makes such laws highly variable, if they exist. States such as New Jersey, Virginia, and Idaho do not have their own debt collection laws.

Don't Stand For It

Even if a debt collection tactic is not specifically deemed illegal by state or federal law, it may be harassing, unethical, and unprofessional, and there are actions that you can take, such as filing a compliant with the attorney general. The most advisable first step when you believe that you are being treated unjustly or unfairly, however, should be to consult with a debt settlement lawyer who can advise you on the best course of action.