In our practice of representing debtors in their claims of improper debt collection practices under the
Fair Debt Collection Practices Act by collection agencies and
attorneys, we have come across quite a few misconceptions about how
the law works. Here are 5 common ones and the truths
1. If I demand in writing that the collector
validate my debt, then they have to do it or I don’t have to
That is only true in limited circumstances. A debt collector
does not have to validate a debt any time a consumer demands
it. In the first communication, or within 5 days of the first
communication if the original communication has not done so, the
collector must notify you in writing regarding the debt: how much
you owe, to whom it is owed, and that you have the right to dispute
the debt and seek validation.
See 15 U.S.C. §1692g(a). You must, within 30 days of
receiving that letter, make the demand for validation in
writing. If you do, then the collector must provide you the
validation, and must cease collection efforts until they have done
so. Outside of this window, there is no obligation whatsoever
of a debt collector to provide validation of a debt under the
Fair Debt Collection Practices Act. If there was no
offer of validation, that may be another issue altogether.
But once that notice is given and 30 days passes, the obligation to
validate a debt is gone.
2. If my account is closed, my balance cannot go
This is untrue in most circumstances. There are several different types of
debt. Most of them carry with them an interest
expense. In nearly every credit card agreement or auto loan
there is a provision that provides that interest may continue to
accrue on any unpaid balance. Thus, just because the account
is closed, if a balance remains interest may continue to
accrue. Even if the debt is sold to another creditor,
that new creditor often buys the account and all rights that go
along with it – such as the right to collect
3. If there is no signed agreement between me and
the collector contacting me, I don’t have to pay
Debts are often not collected by the original creditor. Many
times a creditor will assign a debt to a collection agency for
collection, and many times the debt is sold to another creditor or
debt collector. A collector does not have to have a signed
agreement with you in order to collect the debt. What they
must be able to do, however, is prove a chain of title of ownership
in a court of law should that collector elect to sue as a way of
collecting a debt.
4. I can go to jail if I don’t pay the
Untrue. There is no such thing as a debtors’ prison.
Though many collectors of payday loans tend to make this threat and
scare people with telling them they have committed check fraud, the
collector has no power or authority to have someone arrested for
non-payment. Some states have even taken steps to modify laws
to assure that people are not being sent to jail because of unpaid
debt. Still we have heard many stories of debtors that have
been sued for a debt and found themselves being taken to
jail. There is some great confusion here, because while the
debtor may think they are being taken to jail for not paying a
debt, that is not at all the reason why. A debtor can find
themselves in jail is for ignoring a court order to come to
court. After the lawsuit is filed, and assuming the
creditor wins and gets a judgment, the creditor can use some
post-judgment tools to find out how to collect the judgment.
One tool is a citation to discover assets. That is, they
bring the debtor into court to testify under oath about what assets
they have that can help pay toward the judgment. If one
ignores the request to come to court for that particular hearing,
or refuses to attend, they are held in contempt of court and a body
attachment (like an arrest warrant) can be placed on
them. Thus, it is not the failure to pay the debt that
causes the arrest, its ignoring a court’s request to be
present. You may not have any assets at all and may walk out
of that hearing having had to pay nothing at all, but failing to
show altogether can get you in trouble.
5. If I tell the collector I want to cease and
desist all calls, then they have to stop calling me.
Untrue. Telling the collector to stop calling you will get
you nowhere. You may tell them that the time is inconvenient
or the number they are calling is a bad one to call, and they have
to heed those warnings. However, a
cease and desist request must be in writing. There is
much more to the topic of the proper way to request that a
collector cease calls. For more insight read our blog on the cease
and desist letter.
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