As a consumer, you have a multitude of rights under the law, as it pertains to your debt. Some rights are based on recent legislation; other rights stem from laws that are decades old. Let’s start with newly-passed initiatives you need to know.
In September 2008, the U.S. House of Representatives passed the Credit Cardholders’ Bill of Rights Act. This pro-consumer bill was designed to end what consumers and critics say are abusive and unfair credit card practices by the banking industry. For instance, under the Credit Cardholders’ Bill, banks would have to give you 45-days’ notice before they increase your interest rate – as opposed to the current 15 days’ notice. The bill would also put an end to questionable late fees, require better disclosure of credit card terms and conditions, and prevent banks from arbitrarily hiking your credit card interest rate just because your credit score drops. As of this writing, the bill was being considered by the U.S. Senate.
No matter what happens with the above-mentioned bill, perhaps the strongest measure of all you need to know is the Fair Debt Collection Practices Act, also known as Public Law 95-109. Passed in 1977, this law protects consumers from harassment, abuse or unfair actions by collection agencies.
When your account goes so far past due that your creditor doesn’t think it’s likely that you’ll pay up, that creditor will often write your debt off as un-collectable. To get some money, however, the creditor can sell your debt to a third party collection agency, or hire that collection agency to work on a commission basis to try to recover some of the money you owe.
By the time a debt collector enters the picture, as you may know, your credit has already taken a hit. But here’s where it can get really nasty. Debt collection firms have been known to use every tactic under the sun – including legal and illegal means – to force consumers to pay their bills. If a collection agency comes after you, you may be subjected to any or all of the following things:
- coercion
- fear
- threats
- blackmail
- lies/deception
- harassment
- intimidation
- constant phone calls
It may or may not surprise you to learn that all of these tactics are ILLEGAL. For example, creditors can’t claim that you will be arrested, curse at or verbally threaten you, or call you at all hours (such as before 8 a.m. and after 9 p.m. your local time) – even though such ploys are common, according to John Bowe, a former collection agent from Hempstead, New York.
“If the debt collector realizes that they debtor is ignorant of the law, he’ll try to skirt the law,” says Bowe, who’s seen it all.
Next – Day 9: Educate Yourself About Your Legal Rights (Part 2)
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Lynnette is a personal finance expert, author and speaker.