SideBAR
By ATTY. REY D. TANCINCO, ESQ.
Debt collection harassment and abuses are not unusual occurrences in the current financial climate. A lot of consumers are unemployed and many are facing financial troubles. Thus, collection agencies are having lots more work now than they did during financial boom times.
Consumers having debt collection problems need to be aware of their rights as debtors. Federal laws as well as many State laws specify what collection agencies can and cannot do.
If the consumer’s debt is a secured obligation, then the creditor can, of course, take the house, the car or the property that secures the loan. However, if a debt is unsecured (such as credit card debts), the creditor can only do three things against you: (1) they may stop doing business with you; (2) they can report your problem to a credit bureau; and, (3) they have to first sue you in court, then win their case; and, finally look for your assets to satisfy their judgment.
On the other hand, if a debt collector comes knocking on debtor’s door, there are certain things the debtor can do:
1. The easiest way to stop harassment is to write a “cease” letter to the collector. Federal law requires a credit collector to stop collection efforts after they receive a written request to stop. The debtor should send the letter by certified mail with return receipt so there is proof that the collector has received the letter. Some collectors may not stop even after the cease letter. If so, debtor should keep a careful record which may help the debtor sue the collector for harassment later on.
2. If a cease letter from the consumer does not stop the collection calls, usually getting a lawyer to write a letter for you will. A lawyer’s letter will raise certain defenses and claims of violations of law that prohibit harassment.
3. The creditor may, of course, complain to a government agency about the debt collection harassment. Different states have consumer protection agencies. For the federal government, debtor may file the complaint with the Federal Trade Commission at www.ftc.gov.
4. The debtor may also dispute the debt if it contains mistakes. Collection agencies are required by law to inform the creditor of their right to dispute the debt. If the debtor disputes the debt in writing within the next 30 days, the collection agency has to stop collection efforts while it investigates.
5. The debtor may also sue the debt collector for illegal conduct under federal and state fair debt laws that prohibit debt collection harassment. It is not unusual for debt collector to break these laws as consumers rarely fight back. Consumers who do want to fight back against harassment have consumer protection laws on their side.
6. When all else fails, then filing a petition for bankruptcy protection triggers an automatic stop on debt collection efforts. A bankruptcy petition is indeed an all-powerful tool for “protection” from creditors. However, it is too much of a powerful tool to use just for debt collection harassment. As a rule, bankruptcy should only be used by consumers who have serious financial problems beyond mere debt collection harassment.
(DISCLAIMER: material presented above is intended for informational purposes only. It is not intended as professional advice and should not be construed as such. Rey Tancinco is a partner at Tancinco Law Offices, a professional corporation with offices in San Francisco, Vallejo, and Manila. The law office website is at: www.tancinco.com. Rey Tancinco can be contacted at (800) 999-9096 or (415) 397-0808 or via email at: attyrey@tancinco.com)
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