The definition of debt collector under the Fair Debt Collection Practices Act does not include original creditors or servicers of an account for a creditor. There are certain exceptions to the rule, but for the most part, the statute only applies to third party debt collectors. Therefore, your creditors are not held responsible for following the FDCPA’s guidelines. Absent any laws in your state addressing creditors collection practices, an original creditor can get away with most conduct that a debt collector cannot. However, the economic downturn over the last few years have impacted not just the consumers, but the banks and financial institutions as well. As such, the banks that once owned our loans have been gobbled up by bigger or more successful financial institutions. This circumstance can cause the creditor’s role to change into that of a debt collector, and cause them to fall into the ambit of the FDCPA.
The FDCPA includes in its definition of debt collector those creditors that take over an account from another after the account is already in default. If one is behind on a loan payment or credit card payment with a bank, and that bank sells off its accounts , the new bank that has taken over the defaulted accounts may just have become a debt collector with respect to those accounts.
This is something we have seen recently on a few occasions. A consumer was unable to pay a car note resulting in a repossession. Ultimately the vehicle was sold at auction and the creditor then sought to collect the deficiency still owed on the loan. Thereafter, another large auto lending institution bought the accounts of this consumer’s former lender. The new account owner then began a campaign of collections upon the account wherein the conduct surely violated the FDCPA. Here is a great example of how a company that typically views itself as a creditor actually becomes a third party debt collector under the FDCPA.
SmithMarco, P.C., has over 30 years of combined experience practicing law protecting the rights of consumers around the country. If you have questions regarding debt collection, need help disputing errors on your credit report, harassing debt collection calls or debt defense, check our website or call one of our attorneys now.