As a creditor, it is critical to know your legal limitations in collection activities. Section 806 of the Fair Debt Collection Practices Act (FDCPA) protects consumers from deceptive, abusive and unfair debt collection practices. Violating any of these rules can result in serious legal consequences.
If a creditor intentionally or unintentionally violates a provision of the FDCPA in an effort to collect the money that is owed to them, it may end up costing them significant fines. To understand the limitations of this consumer protection law, let’s dive into some frequently asked questions of creditors:
The FDCPA places strict limitations on when a creditor can engage in collection activities. Specifically, you may not call a debtor to attempt to collect from them before 8 a.m., after 9 p.m., or at any time when you know or should know is inconvenient for the debtor. If a debtor instructs you to stop contact them, you must do so and can only contact them one more time to tell them that you are ceasing communication or filing a lawsuit against them.
Both the FDCPA and the Telephone Consumer Protection Act (TCPA) prohibit a creditor from calling a debtor an unreasonable amount of times. Any call activity that has the natural consequence of harassing, oppressing or abusing a debtor is prohibited. You cannot call a debtor “repeatedly” or “continuously.” The law focuses more on the frequency of calls than a set number of calls. In fact, there is no set maximum amount of times you can call a debtor to attempt to collect a debt, but a court will look at both the pattern and volume of calls to determine if the activity was annoying, harassing, repeated or continuous.
It depends. Nothing in the FDCPA prohibits a creditor from coming to a debtor’s home to attempt to collect a debt in person, although such efforts may be unusual. However, you may not visit the workplace of a debtor to collect a debt. When visiting the home of a debtor, you must follow the same rules that apply to contacting them on the phone — you cannot visit their home before 8 a.m. or after 9 p.m. You are also prohibited from visiting a debtor’s home at a time you know or should know would be inconvenient for them.
Attempting to contact a debtor at their place of work is generally not a good idea and you should certainly consult an attorney before doing so to avoid a FDCPA violation. While you are not expressly prohibited from contacting a debtor at their workplace, you may not discuss their debt or even indicate their debt exists to anyone other than the debtor.
If you speak to anyone besides the debtor themselves, you may only verify the individual’s phone number, location, employment status, and whether they have medical benefits, if you are collecting a medical debt.
If a debtor instructs you to stop calling them at work or you know or should know that they are not allowed to receive those calls at work, you must stop calling their workplace immediately.
You must be very careful when making any statements to a debtor that may be perceived as a threat. The FDCPA states that a creditor cannot threaten to do anything that they do not have the legal right to do or they do not intend to do.
In practice, this means that a creditor cannot threaten to sue a debtor for an unpaid debt that is past the statute of limitations or if the creditor does not have the immediate intention of filing a lawsuit against the debtor to collect the debt. Before making any threat of a lawsuit against a debtor, you should contact an experienced debt collection attorney who focuses on creditors’ rights.
In your collection activities, you may not use any threats of harm or violence. Even unspoken threats may constitute an FDCPA violation if the surrounding circumstances would put a reasonable person in fear of their safety or the safety of their property. Using a middleman to make threats towards a debtor to get them to pay a debt may not only constitute an FDCPA violation but, depending on the facts, you may also face federal criminal charges for racketeering.
It can be easy to misstep the consumer protection laws of the FDCPA when you are eager to collect on a debt that is owed to you. Rather than navigating this area of the law alone, you should consult a knowledgeable and experienced creditors’ rights attorney to guide you through the most effective ways to collect your money, while protecting your business from liability.
At Stephenson, Chávarri & Dawson, our talented team of bankruptcy and creditors’ rights attorneys are equipped to support you in your specific case so that you recover the payment you are entitled to. To schedule a consultation with a Louisiana creditors’ rights attorney today, contact us at (504) 523-6496.