Negotiated Resolutions For Tough Legal Problems

  1. Home
  2.  → 
  3. Collection Defense
  4.  → How do you know when creditors violate the law?

How do you know when creditors violate the law?

On Behalf of | Nov 7, 2016 | Collection Defense, Firm News |

If you have an account that has gone to collections – maybe you couldn’t pay a staggering medical bill following an illness or a credit card balance after divorce – you are not alone. Seventy million American have debts in collections.

This has spawned a whole industry. Debt collection companies, an estimated 9,000 of them, buy debt for pennies on the dollar. They bring in approximately $13.7 billion in revenue each year. And their practices often go beyond what is legal.

It is often tough to identify violations on your own, but you need to know that when they occur remedies exist that do not involve bankruptcy. A consumer protection lawyer can explain whether one might be available during a free consultation.

Illegal tactics underlie a recent lawsuit

Earlier this month, the Consumer Financial Protection Bureau (CFPB) along with the New York Attorney General brought suit against three collection companies – Northern Resolution Group LLC, Enhanced Acquisitions LLC and Delray Capital LLC. The Wall Street Journal reports on the allegations contained in the complaint.

The alleged tactics included routinely adding $200 to each of the accounts they purchased and often overstating amounts owed (sometimes by as much as 600 percent). As a part of their business model, they also threatened legal action they were never going to take.

Then they went one step further. They faked calls or sent correspondence that appeared to be from the government or court officials.

These practices have been ongoing since 2009 and brought in tens of millions each year.

Fair Debt Collection Practice Debt (FDCPA)

Just because you owe money, it does not mean that your rights have gone out the window. Here are a few of these rights:

  • Collectors cannot call you before 8 a.m. or after 9 p.m.
  • Any collections rep cannot threaten or harass you in order to collect on the debt
  • If you retain an attorney, the debt collection agency cannot communicate directly with you anymore

Over the summer, the CFPB outlined some new rules that would shut down other aggressive debt collection practices.

Attempting to collect old credit card debts

This term the U.S. Supreme Court also accepted a case filed against Midland Funding LLC related to a violation of the FDCPA. The debt collection company tried to collect on credit card debt ($1,879.71 to be exact) from the plaintiff, Ms. Johnson, even after too much time had passed to file under state law.

Complicated interplay between the bankruptcy code and FDCPA is at issue and you can learn more about the case here. If the court finds that Midland violated the FDCPA, it would be exposed to a maximum penalty of $1,000 plus damages and Ms. Johnson’s attorneys’ fees.

This case shows the teeth of the FDCPA and how an attorney can represent you at no cost. Clients often tell us they wish they had called sooner and that they didn’t realize help was available. If you are being hounded by collections, find out who the company is, what you really owe and what remedies – without bankruptcy filing fees – might be available to help deal with the debt.