In order to protect consumers from harassment by unscrupulous debt collectors, Congress enacted the federal Fair Debt Collection Practices Act (FDCPA) and placed limitations on debt collectors in the bankruptcy law.
The Fair Debt Collection Practices Act
The FDCPA, which is enforced by the FTC, protects consumers from abusive, harassing, or deceptive debt collection practices. It outlines the rules debt collectors must follow when collecting consumer debt, and provides for penalties if the collector violates the Act. The FTC summarizes the main provisions of the Act as follows:
“Under the FDCPA, debt collectors are not permitted to:
- call you before 8 a.m. or after 9 p.m.
- contact you at work if you’ve told them verbally or in writing that your employer doesn’t allow you to get such calls in the workplace
- contact a third party about you for any reason other than getting your contact information; simply put, they may not tell anyone that you owe money
- harass or abuse you or anyone else they contact about you
- lie about the amount you owe
- Ignore a written request to verify the debt and continue to collect
- use deceptive methods to collect a debt from you. For example, they may not:
- falsely claim to be law enforcement officers
- claim that you’ll be arrested if you don’t pay your debt
- threaten to seize, garnish, attach, or sell your property or your wages — unless they are permitted by law to do it and intend to do so
- give false credit information about you to anyone, including a credit reporting company
- use a fake company name.
Although consumers can exercise their rights under the Act independently, many seek guidance or assistance from an attorney. If an attorney-client relationship is formed, the client may choose to use the attorney as a human shield. Once a debtor informs a debt collector that they have legal representation, the collector must cease direct communications with the debtor, and instead funnel all contact through the debtor’s attorney.
Bankruptcy’s Impact on Debt Collection Efforts
Bankruptcy provides much greater protection for debtors from collection efforts than the FDCPA, but it comes with strings attached. Bankruptcy should never be filed just to protect a consumer from harassing collections efforts.
Once a debtor has filed for bankruptcy, almost all debt collection efforts must be put on hold. Creditors are not allowed to try and collect debt included in the bankruptcy outside of the formal bankruptcy process. This is one of the many reasons it is critical that debtors be very thorough when providing their list of debts to the court.
It is important to note that not all collection efforts are covered by a bankruptcy stay. The stay does not stop criminal cases, covers very few child support actions, and generally does not protect renters from eviction. In addition, the stay obviously does not apply to debts incurred after the bankruptcy case was filed.
Post-bankruptcy, creditors are forbidden from attempting to collect debts that were discharged. The whole point of bankruptcy is to give debtors a fresh start, and creditors must respect that.
Everyone has the right to be treated with respect and decency. Going through financial difficulties should not change that. If you are considering bankruptcy in part due to collections harassment, contact an experienced bankruptcy attorney today.