Debt Collection: Part 2

In our last post, we mentioned that you cannot go to jail for not paying your bills (with child support being the main exception). Creditors do have certain rights afforded to them under state and federal law, but there are laws in place to protect debtors from being harassed by aggressive and abusive creditors.

Here’s what usually happens in the debt collection process: once you miss a payment, a creditor can start contacting you. They will typically start off with a friendly reminder that you did not make your last payment, just in case you simply forgot. The calls and letters may increase in frequency after that. If you do not make any payments the account will then go to a collections law firm to commence a lawsuit. 

While the entire collections process should be taken seriously, you definitely should not ignore a lawsuit. If not opposed, that creditor can get a judgment and enforce that judgment in ways that will only worsen your financial hardship. The last thing you want is to see a wage garnishment (10% of gross wages) or find your bank account frozen. A creditor can also record a judgment to create a lien on your house.

To stop abusive creditors, Congress passed the Fair Debt Collections Practices Act (FDCPA) in 1977. Under the FDCPA, debt collectors are prohibited from using false, misleading, or harassing tactics to collect a debt. While this is the largest debt collection legislation, there are other consumer protection laws on the state level as well.

What can debt collectors do?

  • Contact a third-party in an attempt to locate you or confirm your contact and employment information (but may only call them once)
  • Report non-payment to credit bureaus
  • Sell your debt to a debt buyer
  • Sue you for the balance owed, including accrued interest and late fees 
  • Later this year debt collectors will be permitted to contact you via text, email, and social media

What debt collectors cannot do?

  • Call before 8 a.m. or after 9 p.m., or at work if you advised them that you cannot receive calls at work
  • Use profanity, obscene language, or threaten violence (to you or your property), arrest, or imprisonment
  • Represent that they are attorneys if they are not
  • Harass a debtor including repeated daily calls or calling and hanging up often
  • Sue to collect on a debt that is beyond the statute of limitations for collections (6 years in NY)
  • Publicize or advise any third-party that you are in debt

The FDCPA also provides penalties to any debt collector who violates this act. Penalties include statutory damages up to $1,000, actual damages, and reimbursement of legal fees and costs. It is important to remember that even if a collector violates the FDCPA, that does not mean that the underlying debt is invalid.

If you advise a debt collector that you are represented by an attorney, that collector can no longer contact you and must only contact your attorney. Zimmelman Law regularly deals with debt collectors to put an end to the stress and aggravation created by debt collection. We take debt collection very seriously and will fight any harassment by creditors.

To find out more how we can eliminate debt collection and set you on a path to being debt-free, please drop us a line.

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Zimmelman Law PLLC

With over twelve years of experience, Matthew D. Zimmelman, Esq. has helped thousands become debt-free and saved countless New Yorkers from losing their homes in foreclosure. Whether you are an individual or a small business, looking to file bankruptcy or looking to eliminate your debt without filing bankruptcy, we are here to help you get a fresh start.

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