When Credit Companies Perform Collections

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.