It can be challenging to figure out who owes money. Moreover, financial institutions like banks and credit card companies have a habit of selling and reselling debt to other creditors. This is pretty common with debt past the due date. However, there is a significant difference between a creditor and a third party collection agency.
Third-party debt collector
According to the Federal Trade Commission (FTC), debt collection agencies are those that collect debts owed to others. The original company you owe the debt to is called a creditor. However, there are specific laws offering consumer protections when it comes to collecting debts.
There have been many unfair practices, especially by a third party debt collection agency in the past. This led to the Fair Debt Collection Practices Act (FDCPA). Moreover, it places restrictions on what a third party collector can do in order to get paid.
Classified creditors
Basically, creditors may be individuals or companies with whom you initially have the debt. Meanwhile, if you’re on debt and are not in collections, the debt gets sold to another company. In this case, the new company is considered a creditor.
When a consumer falls behind on payments owed and the debt goes into a third party collection agency, then the debt gets sold. However, you must keep in mind that a third-party debt collector is classified as a creditor at no time.
Third party debt collection rules
Debt collection agencies must follow many rules before contacting a debtor. Also, many laws apply to phone calls that debtors can receive.
Calling rules
A collector may not
- Call before 8 a.m. or after 9 p.m.
- Call the employer to verify identity
- Contact you at work if you told them not to contact
- Call continuously
- Use abusive language
- Threaten violence
- Call at inconvenient times
- Lie or deceive about the debt
The third party debt collection agency has five days after they contact a consumer. They need to send out a written notice confirming the debt. The information must include these five things according to the FDCPA
- The amount of the debt
- The name of the creditor to whom the debt is owed
- A statement affirming the validity of the debt unless the consumer disputes the debt
- Verification of the debt when requested within the 30 days
- The name and address of the original creditor if the consumer sent a written request
Collectors may not ask
- Pay more than you owe
- Pay interest or fees that weren’t in the original agreement
There are third party collection rules for debt collectors. Businesses need to stick to the latest collection training.
Final Wrap
It’s essential that collection needs to be seamless. One of the critical things to keep in mind is the statute of limitations on your debts. Also, depending on which state you live in matters. Whether you are in debt or not, make sure to keep all correspondence from debt collectors. It is equally significant to take notes of who and when you speak with someone regarding the debt.
