Debt Collectors Breaking the Law
Imagine this – instead of being afraid of debt collectors… sue them!
The Fair Debt Collection Practices Act (FDCPA) outlines what debt collection practices are not legal, and allows the person being pursued for the debt to sue the debt collector! It is a novel concept.
You can do the same thing.
When a debt collector, Portfolio Recovery Associates, tried to get money from a woman who did not owe the debt, she sued under the FDCPA and got $251,000 in damages for specific violations of the FDCPA for suing a woman over a $1,130.14 credit card debt. The jury next awarded the woman $82.99 million in punitive damages.
Like many debt collectors, Portfolio lacked the proper documentation for the debt that it purchased, but ruthlessly pursued the claim anyway.
Another woman got $1.26 million from the Law Offices of Farrell & Sandlin, a debt collection law firm, after they tried to garnish her wages for a debt she did not owe. Twice.
If the debt collectors break the law, they should be sued.
When Do Debt Collectors Give Up?
- Charge-offs: When a debt is charged off by a creditor, it means the creditor doesn’t expect that money to come back. Your debt hasn’t been forgiven yet, however. It’s still owed and considered collectible.
- Statutes of limitations: The debt also doesn’t go away after the statute of limitations in your state passes. The only difference is that creditors can’t take you to court. Creditors can request the money over the phone or in writing, but they can’t sue for it.
- Debt forgiveness: When a debt is forgiven (this is sometimes part of a settlement process), the creditor will send a 1099-C cancellation of debt tax form to the debtor and the IRS. The IRS requires that when a debt of more than $600 is forgiven, the amount forgiven should be considered income to the debtor.
- Credit reporting: None of the above makes a difference on your credit report. Whether your debt is charged off, forgiven or beyond the statute of limitations, it still gets reported and affects your credit score for 7 years. Your creditors may forgive, but the bureaus don’t forget.
You may wait a long time for them to stop calling.
Your Rights Against Debt Collectors
Knowing your rights against the debt collectors is so important.
- Know the statute of limitations in your state. A statute of limitations states how long after a debt you can be sued. If the statute of limitation in your state for debt collection is two years, and you defaulted on the debt five years ago, a court case cannot be brought against you because over two years have passed.
- Seven years after the debt default, the information on uncollected debts is taken off your credit report. The debt can be re-reported, but if you are persistent, it will be removed.
- Is this really your debt? Is the amount they are asking really the amount you owe? Important information to have when talking to debt collectors.
- Debt collectors often lie to people by telling them that they could go to jail for not paying the debt. That only happens for money owed to the government, and child support.
- Debt collectors are not allowed to phone or write to your friends, family or workplace. At all.
- Debt collectors are not supposed to call you before 8 AM and after 9 PM.
These are a good start. There’s probably more ammunition out there, so do your research!
If you need debt relief, want to discuss debt settlement, are having problems with a foreclosure mediation, phone Axsmith Law LLC at (202) 285-5415.