As the year comes to a close, debt is a common concern for many consumers. Whether you were a little less than conservative during the holiday season or accrued debt during the year that you have not been able to pay off, the Fair Debt Collection Practices Act (“FDCPA”) will protect you from debt collectors. Consumers all to often fall prey to collectors who violate the statue and take advantage of consumers who are not aware of their rights. Below is a list of five basic facts that every consumer needs to be aware of and that debt collectors try to make sure you don’t find out about.
1.Not all debt is collectable, even if it belongs to you.
Regardless of a what a collector tells you, not all debt can be collected . Debt has a “shelf-life” depending on what type of debt it is. While there are exceptions to the rule (student loans and taxes will follow you forever), every state determines its own statute of limitation, or the length of time a collector has to sue you for a debt. Furthermore, the Fair Credit Reporting Act (“FCRA”) sets limits on how long debt can be reported on your credit file. If you cannot be sued for a debt and it cannot be reported on your credit file, there is very little ammunition that a collector has to force payment – virtually none. While a collector can always try to collect, make sure you don’t fall prey and pay on stale debt.
2. A debt collector cannot discuss your debt with anyone.
In an effort to get you to pay, collectors often times reach out to neighbors, friends and family. The FDCPA sets strict guidelines on who a collector may talk to regarding your debt and what it may say. While a collector may speak to any number of people to reasonably obtain location information for you, discussing your debt or the fact that you even owe a debt beyond ascertaining your whereabouts is a violation of the statute.
3. Paying off your debt does not immediately improve your credit report and may not improve it at all.
Debt collectors often tell consumers that a notation on your collection account as “paid in full” will improve your score, but the reality is, the notation won’t help the fact that your report will still reflect a collection account. The biggest misconception of most consumers is the mistaken belief that paying off your debt will immediately improve your credit score. The reality is, payment may not improve your score at all. The more accounts you pay will reduce your debt to credit ratio which may improve your score over time. Still, a collection account on your credit report hurts your credit regardless of whether it is marked as paid.
4. A collector cannot always sue you or garnish wages to recover payment.
As discussed in number one, a collector cannot sue you or even threaten to sue you on a debt that is beyond the statute of limitations. The statute of limitations is determined by your State and usually ranges from 4 to 7 years depending on the type of debt. Once a debt is outside the statute of limitations period, a collector cannot take you to court to recover the unpaid balance.
5. You can sue a debt collector.
Under the FDCPA, you can sue a debt collector for violation of the statute. If a debt collector violates the law you are allowed to file suit against the collector for actual and statutory damages and reasonable attorney’s fees.
If you believe your rights have been violated under the FDCPA and would like to speak with a licensed attorney, contact SmithMarco P.C. for a completely free case review.