Debt Consolidation > Fair Debt Collection Act

 

Fair debt collection act protects the rights of both the creditor and the debtor. A debt collection law prohibits collection agencies from abusive practices. Collection refers to the pursuit of debt payments to individuals or companies. The debt collector can be either an individual or a collection agency. A collection agency acts as an agent of the creditor. The collection agencies collect debts on a percentage of the total money owed.

A debt collection agency acts on behalf of creditor. Countries that have collection agencies have laws governing them. The laws prohibit the agency from abusive practices. Some of the collection agencies are subsidiaries of the companies that own the original debt and therefore are referred to as “the first party agencies. They are part of the first party to the agreement, i.e., the creditors. The second party this case refers to the debtor. Third agencies are generally not part of the original contract.

In the United States, for example, are thirty party debt collection agencies subject to the Fair Debt Collection Practices Act of 1977. This is a fair debt collection act that prohibits the communication of a debt to third parties. It also limits the hours during which an agency allows a debtor. The law also prohibits false and misleading statements. Agencies are also prohibited from making any threat of action against a debtor.

The United Kingdom has no decision on the recovery, but for third agency to operate, should a consumer credit license as per the Consumer Credit Act 1974. Also there are third party collection agency to maintain its license, it must operate within the framework of fair debt collection guidance was described in 2003.

You are a debtor when you owe money to a person or company for any reason. As a debtor is back in the agreed payments, the lender takes measures to try to recover the outstanding debt. The “lender” is the person or institution you owe money. A person hired by the lender to collect the debt is owed by the debtor is a “debt collector,” and there are rules set in the Fair Debt Collection Act that a debt collector must respect.

For example, a debt collector may NOT:

  • Imply that they are attorneys or that they represent the government.
  • Imply that by not paying a debt that you have committed a crime.
  • Falsely tell you that not all papers or legal forms.

There are other rules about what a debt collector may or may not do if he or she tries to collect a debt. A debt collector may NOT:

  • Tell you that you will be arrested if you do not pay the debt.
  • Tell you that your wages can be garnished or your property seized, unless the lender the legal right to do it.
  • Tell you that you are called, unless the lender does, in fact, intend for that action.

There are many other provisions laid down in the Fair Debt Collection Act and you would do well to know exactly what this law states that if you are chased by debt collectors.