Know Your Rights

Not All Debts Are Covered Under the FDCPA

All too often I have potential clients come to me with Piggy _bankcomplaints that they have been treated unfairly by a debt collector.  I listen to situations where the collector used profane language or spoke in a harassing voice, how a collector threatened to file suit or send the debtor to jail for failure to make payment.  These collection tactics all clearly fall within the boundaries of conduct directly in violation of the Fair Debt Collection Practices Act ("FDCPA"). One major detail can derail the entire case.   The FDCPA is the statute enacted to protect consumers from unfair and abusive treatment from debt collectors in their efforts to collect consumer debts and not all debts fall under this category. 

Many consumers do not understand what a consumer debt is and that all debts are not covered under the Act.  In today's blog I explain the definition of what a consumer debt is and is not.  The statute specifically states that to succeed on a claim under the FDCPA, a consumer must present evidence that the debt being collect what a consumer debt or a debt "primarily for personal, family, or household purposes."  Some examples of these types of debt include delinquent credit card accounts, auto loans, medical bill, utility bills, your mortgage or student loans.  Another way to determine whether a debt is considered a consumer debt is whether at the time you made the purchase whether it was for personal use. 

The FDCPA does not cover debts that are non-consumer or related to your business.  Some examples of debt that are classification as business debt and not covered under the FDCPA are:

  • Taxes.  Taxes, including property, state and federal income taxes are not consumer debts.  While this may seem contrary, taxes are not considered a consumer debt because no one voluntarily "incurs" tax debt for personal, family, or household purposes.
  • Domestic support obligations.  Most courts consider Child Support or Alimony payments as non-consumer debt.
  • Personal guarantees of business debts.  Personal guarantees of business debts are not consumer debts.  They were incurred to be utilized for a business, and thus they remain business debts.
  • Legal fees.   If your legal fees are incurred for family or household purposes, they will be considered consumer debt, however if they are incurred in connection with a business dispute then they will be considered non-consumer or business debt and not covered under the FDCPA.
  • Accident liabilities.  These are not consumer debts and are considered business debts.  Subrogation claims from an insurance company are similarly not included as consumer debts.  Though the vehicle may be for personal use there was no voluntary transaction that led to the debt.  i.e. the accident with the vehicle was not a voluntary transaction, it was an accident.
  • Parking tickets.  Parking tickets are not consumer debts. 

If you have any questions regarding whether a collector is calling to collect a debt that may or may not be a consumer debt contact SmithMarco P.C. for a free case review

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