Laws on Collecting Old Debts
- Under new laws, debt collectors may not threaten or otherwise harass you.money image by shime from Fotolia.com
Debt collection can cause a great deal of stress if you are trying to pay your bills and maintain enough income with which to live. Laws have been put into place enumerating your rights and the actions debt collectors may take in pursuing an old or new debt for repayment. The laws restrict calling times, language and whom a debt collector may speak to regarding your debt, thereby reducing the stigma and stress associated with default and debt collection.
Disallowed Actions by Debt Collectors
- Debt collectors may not publish a list of consumers who refuse to pay their debts in any location other than with a credit bureau. The information a debt collector provides to a credit bureau may not be false or misleading, and the debt collector may not imply that failure to pay any debt may result imprisonment, arrest or garnishment of wages. Old debts may not be collected on or attempt to be collected on while the debt is in dispute and before the debt has been verified independently.
What Debt Collectors May Do
- A debt collector or creditor may threaten legal action against you if legal action is intended to be taken. Old debts are often met with legal action (such as lawsuits) as the creditor feels this is the last resort in attempting to reclaim some or all of an investment. A settlement may also be reached where you agree to pay a sum of the total debt owed, with the remainder being forgiven. Debt collectors may also set up monthly payment plans with you in order to recoup the debt, but this monthly amount must lead to timely payment of the debt.
Fair Debt Collection Practices Act
- This law has been created by the U.S. Congress to specifically enumerate the powers of debt collectors attempting to secure funds for a debt owed. This law specifically states when debt collectors may contact you, the language they may use with you and what action a debt collector may take subsequent to such a conversation. Debt collectors may not contact you at a time when it is known to be "inconvenient" for you, and they may not contact third parties (neighbors/employers) in connection with any debt (new or old) without prior agreement given by a court with jurisdiction over you.