Consumer protection and your rights
It’s never fun to go through financial hardships in life; this is worsened when you’re being troubled by creditors and collection agencies. Many of these companies use aggressive, and sometimes illegal, methods of collecting a debt. Consumer protection and enforcement of your rights is of the utmost importance to us here at CFF. To understand the nature of this business, it’s important to understand the difference between the types of debt.
Secured Debt vs. Unsecured Debt
A car loan is an example of secured debt. The credit extended to you is secured by the vehicle you purchased. If the borrower defaults on their auto loan, the creditor can repossess it to recoup their loss. From a lender’s standpoint, this is a far safer investment as there is physical property to garnish if the consumer proves unreliable.
Unsecured debt is significantly more risky for the lenders, hence the higher interest rates on credit cards and personal loans. The lender has extended you credit, and is charging you for it in the form of interest. If the lender doesn’t receive their money back in the form of payments, there is no collateral to recover. In these cases, creditors will resort to aggressive tactics to recover this unsecured debt in an effort to reduce their loss.
Once the original creditor gives up trying to recover the debt, they are likely to send the account to collections. The collection agencies purchase these accounts at drastically reduced rates, which lessens the loss for the original creditor. From there they begin a second round of aggressive recovery tactics to now recoup their own cost of the debt.
This is where the aggressive recovery tactics begin
You are most likely fed up with the cold calling, mailers, and harassment and wondering if there’s a way to curb their unscrupulous acts. Yes, there are laws under the Fair Debt Collection Practices Act, FDCPA, that help to control the excessive communication tactics of these collection agencies.
Therefore, whether it’s a credit card loan, a student loan, or any other kind of loan, you have rights as a consumer against the entities collecting. Knowing your rights will help you know how to best handle the incoming calls, and even the threats.
Consumer protection and rights against collection agencies
- The Right to Negotiate: You can negotiate with debt collectors on when they can call you; when and where they can visit you; and to request that they stop contacting you. If you simply request a collector stop contacting you, by law they must. Now, don’t mistake this for forgiven debt… the debt still exists, they just can’t contact you regarding it.
- The Right to Use Legal Help: Sometimes, collection agencies may sue you; therefore, you have the opportunity to use an attorney to defend yourself. You may also seek legal help prior to a judgment being placed against you.
- Right to Deny a Loan and Defend it: If you think you are accused of owing a loan that you are not responsible for, you are at liberty to contest the debt.
- Right to Sue a Loan Collector: Perhaps a collection agency breaks some of the rules which they are bound to, you may sue them, and they may even be charged for damages.
Despite how it may seem, there are rules in the collections industry
Besides the fact that you have consumer protection and rights against these collection agencies, there are also specific things they can or can’t do in accordance with the FDCPA. Some of the can and can’t dos of collection companies:
- A collector cannot call you before 8am in the morning and after 9pm at night
- They can still contact you over a time-barred debt, although you may decide to pay, or not, during this period
- An agency may attempt to garnish your wages to recover a debt, but they can only do so by suing you and obtaining a court order
- Collection agencies can’t threaten you in anyway; otherwise, you may sue them
- They can’t lie about you owing them if you are actually not owing them
- Andy, they can’t impersonate entities so as to manipulate you and get the money you owe them.
Here at Consumer First Financial we hear horror stories about collection agencies all the time. We know how aggressive and threatening they can be. This is why our debt consultants personally coach you through the proper handling of these calls. As a consumer, knowing your rights empowers YOU to stay protected, but don’t forget, we’re always here to help.
Your partner in debt relief,
Consumer First Financial