Tuesday, November 13, 2012

FTC has FAQ page on dealing with debt collectors, and the FDCPA


I thought I would share a Federal Trade Commission FAQ page on debt collection practices and the rights of consumers (according to the Fair Dent Collection Practices Act, or FDCPA), link here

The list of questions is long.  But some of the answers are surprising and important.

Yes, sometimes, a debt collection company can sue consumers, and get a court judgment resulting in wage garnishment.  That is generally the case(only)  when the debt collection company has actually bought the debt (which is a boutique business model in the debt collection industry).  Most federal benefits are exempt from garnishment, and that includes Social Security and veterans benefits.  I don’t see mention of IRS refunds in the exemption list.

A debt collector must stop contacting you if you send a letter disputing the bill (as with an identity theft situation), but can resume if the collector can produce evidence of the bill.

If you have multiple debts, you can direct how payments are applied among debts. 
  
Debt collectors will normally apply a convenience fee on payment by phone, and companies tend to discourage collections employees from waiving it.

The video below shows how collectors are trained about legal (FDCPA) violations:

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