For many people, the announcement last year that the three major credit reporting agencies would remove paid medical debts from credit reports was a welcome relief. Medical bills and the confusion those bills and insurance cause, has led to many people owing debts they never planned for. Here is an update on the changes to credit reports, credit scores, and how to manage medical bills.
Fair Debt Collection Practices Act
Have you ever been afraid to answer the phone because it might be a bill collector? Has someone tried to contact you at work about an overdue bill? Have you ever had a conversation with a collection agency that left you wondering, “Can they really do that?” If so, learning more about the Fair Debt Collections Practices Act may help you.
The Fair Debt Collections Practices Act is a law that outlines your right to dispute overdue bills placed with collection agencies. In addition, the law outlines what practices a collection agency can and cannot use when attempting to collect a debt. And finally, it outlines the penalties for collectors who violate the law.
Who does it apply to?
The first thing to know about the Fair Debt Collections Practices Act is which creditors are governed by the law. Those are:
- Collection agencies (a third party business who purchases the debt from your original creditor),
- An original creditor using a different name to collect a debt, or
- A lawyer collecting a debt for a creditor
Even though original creditors (the first business you owed money too) are not covered under this law, there are many states that have adopted laws similar to the Fair Debt Collections Practices Act, which do apply to those creditors.
How does a debt collector notify me?
The second thing to know about the Act is what information collection agencies are required to provide to you. When a collection agency contacts you, they must tell you how much you owe and the name of the creditor for whom they are collecting. They must also provide you with a disclosure that states you have 30 days to dispute the validity of the debt, and that they will send you proof of the debt if you request it. Under the Fair Debt Collections Practices Act, all of this must be in writing.
A collection agency may contact you and tell you this information verbally, but it does not absolve them of the responsibility to provide your rights in writing. Of course, if they do not have your current address they will not be able to send you the information. In this situation, they are only required to send notice to your last known (to them) address.
What are some of my protections?
The Fair Debt Collections Practices Act also stops debt collectors from using unfair, abusive, or deceptive practices to collect overdue bills. Some of these practices include:
- Telling a third party about your debt. They may ask someone else if they know how to get in contact with you, but they are not allowed to discuss your debt with that person.
- Inappropriate communications with the debtor, such as contacting you at work when you have told them not to contact you there. It is best to notify the collection agency in writing rather than verbally. Keep a copy of all correspondence you send or receive.
- Harassment or abuse such as threatening bodily harm or using profane language.
- Making false or misleading statements such as threatening criminal action when it is not a possibility. For example, some people have been told that they can face jail time for failing to pay their debts. We do not have a debtor’s prison in the United States. With the exception of a few debts, such as child support or taxes, the chances you will be put in jail for not paying your debts is very, very small.
How Do I Report a Fair Debt Collection Practices Act Violation?
First, when you communicate with a collection agency, try to keep track of the date, time, and name of the person you were talking with. Also, make a note of what occurred during the call. Try to write down exactly what the collector said.
Report violations of the Fair Debt Collections Practices Act to the Federal Trade Commission and the Attorney General’s office in your state. You will want to provide them with as much information as possible. Include your notes and any proof you may have, such as documents they sent you, tape recordings (if legal in your area), and contact information for any witnesses who may have overheard your conversations.
What can I do about my debts?
If you are having trouble making your debt payments, there are options that may help you. Take some time to tour our website and learn about the ways you may be able to take control of your finances. In addition, contact a certified credit counselor at American Financial Solutions. They can help you evaluate ways to reduce your debt and your stress level. You can contact them by clicking the Get Started Now button or calling the number at the top of your screen.