Alabama Debt Collection Laws

No one wants to face out-of-control debt; however, there are circumstances where borrowers may be unable to keep up with payments and fall behind. In those cases, consumers may need protection from over-aggressive collection agencies. As a result, the federal government has enacted laws protecting consumers from debt collection agencies. Those laws include the Fair Debt Collection Practices Act and the Fair Credit Reporting Act. In addition, some states have expanded on those laws to protect their citizens. Those facing financial difficulty, however, can find help with a debt settlement attorney whether they are already facing debt collection agencies or they fear having to do so in the near future.

Debt Collection in Alabama

Alabama relies on federal laws to protect its citizens from unfair and abusive debt collection practices in most areas. If any consumer needs relief from illegal actions in this area, they should contact the office of the Attorney general in Alabama or a local district attorney for help.

Alabama Statute of Limitations

  • Alabama law includes a statute of limitations of 6 years for law suits due to unpaid debts from oral agreements, written contracts, and promissory notes
  • Consumers may still receive calls and letters from creditors that conform to federal laws even after the statute of limitations expires

Collections Practices and Rules for Alabama

Alabama conforms to federal standards concerning debt collections and protections for consumers. However, Alabama requires a license tax for all collection agencies operating in the state. That tax is prorated, depending on the size of the city or municipality served, ranging from $25 to $100.

Legal Collections Actions

  • Creditors and collection agencies are permitted to contact borrowers and seek payment using normal methods such as phone, fax, and mail
  • Creditors may also pursue other legal means, such as lawsuits and repossessions if the situation warrants them
  • Creditors and collection agencies have the right to report relevant credit activities and delinquencies to credit bureaus

Illegal Collections Actions

  • Debt collectors cannot harass, abuse, intimidate, or threaten violence against borrowers
  • Cannot contact a borrower if they have requested in writing that they not do so unless they are informing the consumer of an impending action
  • Cannot contact the borrower if they have informed debt collectors that they are being represented by a lawyer
  • Cannot contact a borrower at their workplace if they have informed the debt collector that such contact is prohibited by their employer
  • Cannot deceive consumers or misrepresent themselves, claiming to be a law enforcement or government officials or pursuing legal action when such action is illegal or not part of the agency's regular or planned procedures
  • Cannot make frequent or disruptive phone calls at unreasonable hours, such as before 8:00 a.m. and after 9:00 p.m. without permission

Laws for Debt Harassment in Alabama

Both federal and state laws prohibit Alabama debt collection agents or agencies from harassing debtors, no matter what the status of their debts. Consumers may report such acts to the office of the Alabama Attorney general or the local district attorney.

Alabama Debt Negotiation and Settlement Rules

In addition to protection from illegal harassment and collections, federal and state laws protect Alabama citizens from fraud. There are a number of ways in which consumers may obtain help in negotiating a settlement at a reduced rate from some creditors. However, there are a number of illegitimate companies that offer services at high fees but fail to provide the promised services. Generally, debt negotiation and settlement services offer:

  • Negotiation with creditors to reduce interest and principal on debts for a full payoff of an agreed-upon amount
  • Representation with the creditors to save the consumer from having to face constant collection calls
  • Assurances that their credit report will reflect balances as paid, although previous late payments or defaults remain on the record for the standard 7 years
  • Oversight of an escrow account in which the debtor saves money to pay the debt settlement company's fee and the agreed-upon settlement amounts

If the contract is a sham, the debtor will end up losing more money, losing the good faith of their creditors, and showing entries that are even more negative on their credit report.

Victims can call debt settlement attorneys to help find the perpetrators and file legal claims against them. They can also provide valuable advice before such contracts is signed, protecting the consumer from serious financial errors.

Help from an Alabama Debt Collection Attorney

Because the debt collection industry is not stringently licensed in the state of Alabama, there may be inconsistencies and improprieties among debt collectors and agencies, as well as debt settlement companies and creditors. The economy can make anyone a target today, which is why it is vital to call on accurate and expert advisors when help is needed. Debt settlement lawyers have expertise in all of these areas to protect their clients and pursue their credit repair to the greatest extent possible.

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