Laws on debt recovery cover consumers.
Debt recovery, also known as debt collection, involves the attempt to collect debt from consumers who owe money to a credit card company or bank. The collection of debts in the United States falls under the federal Fair Debt Collection Practice Act (FDCPA) of 1977. Some states also pass additional bills to supplement available protection to consumers from collectors.
History
The FDCPA was enacted to help curb abuses by third-party collection agencies against consumers. The intent of the law also works to ensure that debt collectors who refrain from using abusive debt collection practices do not experience a competitive disadvantage compared to those who use abusive collection tactics. The FDCPA offers protection from harassment and threats for consumers, but not for business debt or any debt incurred for business purposes.
Definition
Debt recovery gets handled by debt collectors who work for companies and banks that issue credit cards. The collectors work on a commission basis. Sometimes the debt collectors, also referred to as collection agencies, purchase bad credit card and other loan debt. That makes the collection agency the owner of the debt, with the legal right to collect the full amount of debt due. To collect the debt, collection agencies must follow the FDCPA. Otherwise, consumers may take recourse for any harassment or abuse they receive in an effort to collect the debt.
Types of Debt
The FDCPA offers provisions for personal, family and household debts. The debts may come from personal credit card accounts, auto loans, medical bills or mortgages. Utility bills and other household debt are also included.
Types of Protection
The FDCPA provides several types of protection for consumers. One type of protection makes it illegal to for collection agencies to place unwanted calls to the consumer's workplace or to disclose the debts to friends, co-workers, family member and neighbors. Debt collectors must also stop calling once a person sends a letter to the agency disputing the debt. The collector can start calling again once they send proof of the debt. If the consumer hires an attorney to represent them, the collection agency may not directly contact the consumer unless the attorney authorizes it.
Debt Information
A debt collector must provide certain information about the debt, including sending a written notice five days after the first contact. The notice needs to indicate the amount of money owed, the name of the creditors and the action the consumer needs to take if he feels he does not owe the money.
