The Fair Debt Collection Act – Use it to Your Advantage
Aubrey Clark
July 14, 2008
Many people are aware that the Government has passed regulations that regulate how credit collection companies can operate. However, very few people are aware of how they can apply these regulations to their advantage when dealing with a collection company. The piece of legislation we are referring to is the Fair Debt Collection Practices Act. This act regulates collection companies and protects consumers from shady collection practices.
Unfortunately, shady collection practices go on everyday because the average consumer is unaware of their rights under this act. We have outlined, what we feel, is the most important protection that the act provides to the average consumer. There are plenty of other rules and regulations you should know about when dealing with collection agencies, this is only one example.
First and foremost, it is imperative that you act immediately the first time you receive a collection notice or phone call. Your rights as a consumer are turbo-charged within the first 30 days of contact. Within the first 30 days collection companies must fully disclose: where the debt originated, if they bought the debt or are they acting as an agent of that company.
On top of this, they are also required to prove that you actually owe the debt and also prove that they are licensed to perform collections in your state. Many collection companies buy their collections in bulk for pennies on the dollar. Having to trace the original origins of the debt and presenting valid proof that you owe the debt is not cost effective. Therefore, if they have to comply with all of these demands they will usually go on to the next collection.
The way you exercise your rights is to send them a letter of validation, free sample collection letters can be found online at DirectBanc.com. When sending a letter of validation, always send it certified with a return receipt. This time stamps the process and protects you from further collection practices if the fail to respond within 30 days. Should the company fail to answer your letter they must cease all collection practices.
Furthermore, If they are reporting any negative information about you on your credit bureau you can have it removed if they fail to respond to this letter. Simply make a photo copy of your certified return receipt and mail it, with an explanation letter, to each of the credit repositories, Experian, Equifax and TransUnion. Send these letters certified as well, this is because the credit repositories have a certain amount of time to respond to your request as well.
Once the credit repository receives proof that you have made a bona fide request to the collection agency for validation they must remove any reporting from their company. The problem is that if you are dealing with a "second hand" collection agency you will probably have a duplicate collection of your credit from the original creditor.
If this is the case I suggest that you repeat the steps above steps and send them a validation letter as well. The rules of validation are curtailed when dealing with the original creditor beyond the 30 day contact point. However, more times than not, if you contact the original creditor they will refer you to the collection agency that you just dealt with. When they do this, you can almost bet that they have sold the debt to the prior company. Having sold the debt, you can now petition the credit repositories to have their collection removed from your credit bureau as well because they no longer own the debt.
All in all, the Fair Debt Collection Practices Act is a tedious and boring read; on the other hand, it can save you countless hours of worrying and intrusive phone calls. Take a few minutes to familiarize yourself with it and apply it to your specific situation. It was designed to favor the consumer not the collection companies. Keep in mind, if you don´t know your rights when dealing with a collection company you can bet the collection agency isn´t going to tell you about them, nor are they required to.
Aubrey Clark is an Author and editor for Direct Banc, a Fair Credit Credit Card Directory. Aubrey is a financial expert having spent for over twenty years working and training in financial markets. He current project is helping his clients find and qualify for the lowest interest rate credit card on the market. Aubrey lives in Atlanta Georgia with his wife and four children.
Unfortunately, shady collection practices go on everyday because the average consumer is unaware of their rights under this act. We have outlined, what we feel, is the most important protection that the act provides to the average consumer. There are plenty of other rules and regulations you should know about when dealing with collection agencies, this is only one example.
First and foremost, it is imperative that you act immediately the first time you receive a collection notice or phone call. Your rights as a consumer are turbo-charged within the first 30 days of contact. Within the first 30 days collection companies must fully disclose: where the debt originated, if they bought the debt or are they acting as an agent of that company.
On top of this, they are also required to prove that you actually owe the debt and also prove that they are licensed to perform collections in your state. Many collection companies buy their collections in bulk for pennies on the dollar. Having to trace the original origins of the debt and presenting valid proof that you owe the debt is not cost effective. Therefore, if they have to comply with all of these demands they will usually go on to the next collection.
The way you exercise your rights is to send them a letter of validation, free sample collection letters can be found online at DirectBanc.com. When sending a letter of validation, always send it certified with a return receipt. This time stamps the process and protects you from further collection practices if the fail to respond within 30 days. Should the company fail to answer your letter they must cease all collection practices.
Furthermore, If they are reporting any negative information about you on your credit bureau you can have it removed if they fail to respond to this letter. Simply make a photo copy of your certified return receipt and mail it, with an explanation letter, to each of the credit repositories, Experian, Equifax and TransUnion. Send these letters certified as well, this is because the credit repositories have a certain amount of time to respond to your request as well.
Once the credit repository receives proof that you have made a bona fide request to the collection agency for validation they must remove any reporting from their company. The problem is that if you are dealing with a "second hand" collection agency you will probably have a duplicate collection of your credit from the original creditor.
If this is the case I suggest that you repeat the steps above steps and send them a validation letter as well. The rules of validation are curtailed when dealing with the original creditor beyond the 30 day contact point. However, more times than not, if you contact the original creditor they will refer you to the collection agency that you just dealt with. When they do this, you can almost bet that they have sold the debt to the prior company. Having sold the debt, you can now petition the credit repositories to have their collection removed from your credit bureau as well because they no longer own the debt.
All in all, the Fair Debt Collection Practices Act is a tedious and boring read; on the other hand, it can save you countless hours of worrying and intrusive phone calls. Take a few minutes to familiarize yourself with it and apply it to your specific situation. It was designed to favor the consumer not the collection companies. Keep in mind, if you don´t know your rights when dealing with a collection company you can bet the collection agency isn´t going to tell you about them, nor are they required to.
Aubrey Clark is an Author and editor for Direct Banc, a Fair Credit Credit Card Directory. Aubrey is a financial expert having spent for over twenty years working and training in financial markets. He current project is helping his clients find and qualify for the lowest interest rate credit card on the market. Aubrey lives in Atlanta Georgia with his wife and four children.
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