Understanding the Fair Debt Collection Practices Act

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Carrie Pallardy

By Carrie Pallardy

January 7, 2019

If a borrower defaults on their student loan debt, the lender can hire a debt collection agency to recover the debt. These agencies, whether hired by a private lender or the federal government, are subject to the Fair Debt Collections Practices Act (FDCPA). Anyone who has been contacted by a debt collection agency should understand their rights under the FDCPA, what happens if those rights are violated, and how to best communicate with debt collectors.

Know Your Rights

The FDCPA legislation is enforced by the Federal Trade Commission (FTC) and designed to protect consumers from unfair debt collection practices. The FDCPA covers student loans, as well as other kinds of debt like car loans and medical bills. If borrowers are contacted by a debt collection agency, they have rights designated by the FDCPA. Debt collectors are legally bound to respect these rights. Here are some of the consumer rights protected by the FDCPA, according to the FTC.

  • Information debt collectors are required to give. Debt collectors are required to tell the people they contact how much debt is owed, to which lender, and the actions the person can take to dispute the debt.
  • When and how debt collection agencies can contact you. Debt collectors can use multiple methods of contact including telephone calls, text messages, email messages and letters. But, the FDCPA prohibits collection agencies from contacting borrowers before 8 a.m. or after 9 p.m., unless the borrower gives them express permission to do so. Borrowers can also request that debt collectors do not contact them at work.
  • Disputing debt. Consumers have the right to dispute a debt if they do not believe they owe it. Under the FDCPA, collection agencies are required to provide written verification of debt at the consumers’ request.
  • Actions debt collectors cannot take. Debt collection agencies have an arsenal of aggressive tactics at their disposal, but the FDCPA stipulates a number of actions they cannot take. Debt collectors cannot threaten or lie to consumers. They also cannot resort to unfair practices, such as such as cashing a check before its postdate.

When Debt Collectors Violate the FDCPA

While the FDCPA is in place to protect consumers, debt collectors do not always obey these rules. For example, the FTC decided to take action against a student loan debt collector in 2017. The debt collector allegedly used tactics such as phone messages that revealed debt information without the borrower’s permission. Under a settlement, the collection agency agreed to pay a fine and to comply with the FDCPA.

If student loan borrowers suspect their rights under the FDCPA are being violated, they can file a complaint with the FTC.  The borrower may be able to sue the debt collector and obtain monetary damages from the debt collector, including statutory damages of up to $1,000 and attorney fees.

How to Communicate with Debt Collectors

Under the FDCPA, debt collectors can lawfully contact borrowers and take action, like a lawsuit, to recoup student loan debt. If a borrower is contacted by a debt collection agency, the FTC provides a few tips about effective ways of communicating.

  • Requesting written verification. Once consumers receive a validation notice of debt from a collection agency, they have 30 days to send a letter requesting verification of debt. Debt collectors must send this verification letter before resuming collection efforts.
  • Requesting a cease of contact. Under the FDCPA, consumers have the right to request a debt collection agency stop making contact. Consumers can send a letter via mail requesting a cease of contact. The FTC recommends sending the letter via certified mail. After that, collection agencies cannot make contact, unless they are notifying the consumer of a specific step the collection agency is taking, such as filing a lawsuit.
  • Responding to a lawsuit. Debt collection agencies do have the legal right to sue student loan debtors, as dictated by each state’s statute of limitations laws. The FTC recommends responding to any legal action either individually or with the help of a lawyer. Failure to respond to a court order can result in a default judgment against the borrower, as well as the possibility of the borrower being arrested for contempt of court.

A good place to start:

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