While there are multiple reasons why a consumer may become buried in debt and get behind in their payments, creditors generally expect payment on time or they will eventually refer the account to a debt collection agency. When that happens, a consumer may face pressure, intimidation, or even harassment. However, those actions and more are against federal laws such as the Fair Debt Collection Practices Act and Fair Credit Reporting Act. In addition, some states have similar statutes that not only reiterate those statutes, but also expand upon them. While state laws vary widely, it is important to consider contacting an attorney if a consumer faces any such forms of abuse.
Colorado has written extensive consumer protection and debt collection statutes affirming and expanding upon the federal laws in this area. These protections provide consumers with an opportunity to file complaints against abusers with the attorney general's office or the Federal Trade Commission.
While federal debt collection statutes apply only to debt collectors, agents, and agencies, Colorado statutes extend those rules to original creditors as well. In addition, Colorado requires debt collection agencies to obtain state licenses and be bonded or face penalties.
Harassment is against both federal and state laws protecting consumers.
Once a consumer has missed a significant number of payments or defaults on a loan, creditors may be more open to negotiating for even a portion of the original debt. There are companies that specialize in that kind of service, and they can be helpful. However, there are also con artists who exploit that need to charge high fees and provide little or no service. These schemes are fraudulent and against the law.
Consumers would be wise to consult debt settlement attorneys to discover whether the service they propose to use is legitimate or not. Consumers should be skeptical of companies that:
In some cases, debt settlement attorneys will provide more reliable forms of those services that may make a wiser choice.
Debt repayment plans may seem simple, but it has become difficult at times to even discover who owns a debt, much less how many other creditors have owned it since the debt was incurred. In addition, with identity theft becoming big business, consumers may be charged with debts they never incurred. It can be vital to have an attorney in their corner to examine all collection requests and be sure they are legitimate, as well as to explore all debt negotiation or settlement options to learn how best to clear old debts and begin to repair a consumer's credit rating.