The debt collection industry is a $13 billion industry. And the individuals and companies that pursue this line of work frequently don’t do things the legal way. It is estimated that about 77 million adults in the United States have debts in collection with the average amount in collection being $5,178.00. Debt collection agencies that contract with creditors to collect on those creditors’ debts generate nearly two-thirds of the industry revenue while “debt buyers” generate roughly one-third of the industry revenue. To learn more about “debt buyers”, see my post dated January 16, 2015 entitled Are You Being Sued Or Harassed By A Debt Buyer? Most of the revenue generated by debt collection agencies comes from medical debt, student loans, credit cards, auto loans, and mortgages. The use of consumer credit is expanding and the debt collection industry is expected to grow over the next five years.
Most Common Abusive Debt Collection Practices
Abusive collection tactics can come in many forms. According to the federal Consumer Financial Protection Bureau (the “CFPB”), in 2014 the most frequent consumer complaints were:
- Continued attempts to collect a debt not owed (37%)
- Communications tactics used by debt collectors (20%)
- Failure to provide disclosure about and verification of debts being collected even after being requested to do so (13%),
- Threatening to take or actually taking illegal collection actions (12%),
- Making false statements or false representations (10%), and
- Contacting improper persons or improperly sharing collection information (7%).
The attempts to collect debts not owed included debts that did not belong to the consumer or that had already been paid. These attempts also included debts that were the result of identity theft and debts discharged in bankruptcy. The abusive communication tactics included frequent or excessive calling, calls to the consumer’s employer or friends, the use of abusive, obscene, or profane language, and calling the consumer during the times prohibited by law. The illegal actions threatened included threats of arrest, jail time, lawsuits on debts too old to sue for, unlawful property seizures, and threats to collect from income exempt from the collection process. Some of the common false statements or false representations made by collectors included debt collectors posing as debt collection lawyers or as law enforcement officers, advising the consumer that failure to pay the debt being collected was a crime and advising consumers that the consumer should not respond to a lawsuit filed against the consumer.
Fair Debt Collection Practices Act
If you are struggling with such tactics or debt collection harassment in general, the important thing to remember is that you have legal rights to combat it. The cornerstone of those rights is found in the federal Fair Debt Collection Practices Act. This law has powerful remedies available to consumers to effectively combat abusive debt collection practices. Further, your state may have additional laws providing similar or additional protections. The Fair Debt Collection Practices Act places specific limitations on the tactics used by third party debt collection agencies and law firms. For example, the law mandates that consumers cannot be called between certain hours of the day. Any third party debt collector or lawyer who violates the Fair Debt Collection Practices Act faces potentially serious liability for doing so. Consumers can collect “statutory” damages of up to $1,000.00 per violation. Further, all of the consumer’s reasonable attorney’s fees and expenses incurred in bringing suit under the Fair Debt Collection Practices Act must be paid by the party or parties who violated the law. This is meant to encourage consumers whose rights have been, or are being, violated to bring suit to vindicate their rights under the law.
The smartest thing you can do in an abusive debt collection situation is to meet with an experienced consumer protection attorney to discuss your situation and review your options. Reading blog posts such as this one and learning as much as you can about your rights is important and helpful; however, to fully understand your rights in your situation, a face-to-face consultation with a competent attorney is by far the preferred approach. Our attorneys have extensive experience in helping consumers protect and forcefully assert their rights. We offer free initial consultations where you can get advice from a knowledgeable and compassionate attorney who can help you determine the best course of action for you.