Illegal debt collection is often the result of poor record keeping by debt collectors. In today’s tough economic times, it comes as no surprise that many Americans are finding it difficult to make ends meet. Increasingly, Americans are falling behind on debts such as credit cards, loans, and medical bills. This has lead to an increase in attempted collection of these debts, often by debt collectors acting illegally.
In many instances, once a debt, for example a credit card debt, goes unpaid for a certain amount of time, the credit card company will sell it to a debt collection company for pennies on the dollar. The debt collection company then tries to collect as much of the debt as possible. There is nothing illegal about this arrangement. This can lead to problems, however, because the credit card company often sells the debt to the debt collection company with incomplete or inaccurate information as to the identity of debtor and/or the amount of the debt. NPR’s Diane Rehm recently discussed the consumer debt buying industry with a consumer attorney, a representative of the Federal Trade Commission (the “FTC”), and a representative of the credit card industry.
This becomes a problem first when a debt collector begins contacting you, but becomes even more of a problem if the debt collector actually files a law suit against you. Initially, when you find out that a debt collection company is attempting to collect a debt from you, you should request validation of the debt. If you request validation, under the Fair Debt Collection Practices Act (the “FDCPA”), the debt collector is required to provide it. It is also a requirement that the debt collection inform you of the right to request validation within five days of its initial communication with you. It is important that you request validation within thirty days of receiving this notice. If you do not receive the notice, you can still request validation, but, again, it is important to do so within thirty days. If you request validation before the end of the thirty day period, the debt collector must stop attempting to collect the debt from you until it has responded to your request. A letter from the FTC clarifies that is it the debt collector who must provide the validation of the debt, not the original creditor. Failure to respond to your request for validation and continuing to attempt to collect the debt before responding to your validation request are both violations of the FDCPA.
If the debt collector does eventually file a law suit against you to collect the debt, it still may not have all the information to prove that you owe the debt, the correct amount of the debt, or that they are the correct party collect the debt from you. In fact, several state attorneys general are currently investigating this problem this problem at JPMorgan Chase. Debt collectors rely on the fact that when they sue to collect debts, most people do not come to court to fight them. This way, they are able to move their cases through the system, often without having to prove that they are suing the correct person for the correct amount with all the correct paperwork, and get their judgment. If you are sued for a debt, it is very important that you appear in court or hire an attorney to appear for you to question the documentation submitted by the debt collector. You can fight the case and, if the debt collector cannot show the necessary documentation, you could win and prevent a judgment against you. You may even be awarded money damages and the debt collector could have to pay your attorney’s fees.
Visit Parker and DuFresne, PA’s consumer protection page for more information about your rights.