After Bankruptcy Discharge

Debt Harassment

Disputing Debt Collection

If you recently received a letter from a debt collection agency or law firm and wish to prevent or stop calls from this particular debt collector, read this article. This article is also a must read, if this debt collector or their law firm has threatened to sue you on an old or bogus account.

With the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692g(b), consumers have a tool that may delay or prevent being sued or harassed, if used responsibly. It is so much more effective than a so-called “cease and desist letter,” discussed in a separate article.

Before getting into those tools, we need to clear a major misunderstanding about the scope of the FDCPA. Except in rare instances, creditors are not subject to the FDCPA. Thus, if you want to stop collection calls from the bank that issued a credit card, the FDCPA will NOT work. Also, many types of debts are not subject to the FDCPA. A debt subject to the FDCPA must have been incurred in a transaction primarily for personal, family, or household purposes. Courts have said that the collection of taxes, fines, child support, civil shoplifting claims, and torts are not subject to the FDCPA, because there was not consensual transaction involved. Perhaps Congress or some courts will change these more narrow interpretations, but that’s the dominant view, and the FDCPA have no legal impact, unless the account being collected is a “debt,” as defined by the FDCPA.

The FDCPA at § 1692g(b) gives consumers a fantastic tool to temporarily perhaps permanently get the debt collector–even a debt collection law firm–to back off. The most effective way to dispute a debt collection is to send a letter to the debt collector, within 30 days of receiving the initial notice of collecting a debt from the debt collector. Sample letter 1.1 has a good format to follow. It is always better to have a certified proof of delivery from the post office that the consumer’s dispute letter was mailed to and received by the debt collector, together with a photocopy of the letter and all enclosures. It is also important for the consumer to know the date on which he or she received the debt collector’s initial letter, to prove that their dispute was timely. The consumer’s dispute letter may either ask for verification of the debt, dispute the debt, or both.

An alternative to a formal dispute letter under § 1692g(b) is to dispute the debt orally within the 30-day period of receiving the initial letter. This is typically during a collection call, though if there is a face-to-face encounter with the debt collector, an oral dispute may be made then. If the consumer is called and disputes a debt on the phone, why not follow this call with a formal dispute letter, just to be safe and have the dispute well documented?. Perhaps even put in the letter what the debt collection representative said on the phone.

Upon receiving a timely dispute, the debt collector must decide whether to continue collecting the debt or not. If the collector wants to continue collection activities, it must obtain verification of the debt or a copy of any judgment, and mail this to the consumer. Thereafter, the debt collector may resume collection activities. The consumer may also request that the debt collector provide the name and address of the original creditor, to which the debt collector must mail such information to the consumer, but this basic information is often provided in the initial collection notice. The courts have currently set a fairly loose standard for debt collectors on what information they must mail to the consumer to verify the debt, but perhaps future cases will sharpen this standard.

The courts have more opinions explaining the FDCPA’s directive that collection activities must cease after receipt of the consumer dispute: everything must be put on hold. Meaning, no more calls to the consumer about the debt (or anyone else, for that matter), no filing of any more papers in court, no new reporting the account to a credit reporting agency, nothing. They may not even sell the debt to another debt collector! For failing to follow this directive, the courts have come down pretty hard on debt collectors and debt collection law firms, awarding actual damages, a statutory damage, and attorney’s fees.

So, when you or a friend receives that first debt collection letter, save the letter and the envelope. Note the date when the letter was actually received, both on the envelope and on your calendar. Then, within 30 days, send something similar to sample letter 1.1 and monitor the debt collector’s next moves, if any. If they call you, remind them of your dispute and the letter you sent. Anything that they say after that can and will be used against them in a court of law, so be sure to keep track of each call and what they say, as they are violating your rights under the FDCPA. Then, seek experienced legal counsel, but please don’t wait a year (365 days), as the FDCPA has a one-year statute of limitations for any consumer claims against a particular debt collector.