In September of 1977, the United States Congress enacted a law that punished debt collectors for using abusive and threatening tactics to collect debts. Known as the Fair Debt Collection Practices Act (FDCPA), the landmark legislation has stood the test of legal time for more than 40 years.
Overview of the FDCPA
The FDCPA falls under the legal enforcement powers of the Federal Trade Commission (FTC), which prohibits the use of unfair, abusive, and deceptive practices for collecting personal debt. The definition of personal debt includes family, personal, and household debts, such as mortgage loans and medical bills. A debt collector can contact you only during specified periods and the FDCPA allows consumers to forbid debt collectors from contacting them at work.
How a Debt Collector Affects Your Credit Score
When a debt collector initiates collection action against you, your credit score can drop substantially. The amount of the credit score decrease depends mostly on the level of the credit score at the time when a debt collector reports the collection action to the three primary credit reporting bureaus (Equifax, Experian, TransUnion). Live by this rule: the higher your credit score, the more points you can lose because of a debt collector’s report to the three major credit reporting agencies.
How Much You Owe Matters
The damage to your credit score because of the initiation of debt collection also depends on the amount of money you owe for a debt. For example, if a debt collector comes after you for a debt that is less than $100, the action shows up on your credit report, but the action has a minimal, if any negative impact on your credit score. However, once a collection action begins for a personal debt exceeding $1,000, you can expect your credit score to take a hit.
How to Handle Debt Collection
The FDCPA prevents debt collectors from harassing consumers, but the powerful consumer protection law does not prohibit debt collectors from attempting to collect debts. When a debt collector contacts you to collect a debt and you confirm the debt is accurate, you can try to negotiate a settlement with the third party debt collector. During negotiations, make sure to stay current with the other types of debts you owe, from auto loans to revolving credit cards. If you dispute a debt, you should clearly communicate to the debt collector why you disagree with the debt collection attempt.
If a debt collector violates one or more of the consumer protection statutes written into the FDCPA, you have the right to seek statutory and actual damages. The FDCPA limits statutory damages to no more than $1,000. However, actual damages do not have a monetary ceiling. Actual wages include lost wages because of physical ailments that developed from the initiation of a debt collection action. You can also seek actual damages for wage garnishment and emotional distress.
If you feel a debt collector has violated the FDCPA, contact an attorney immediately for legal advice. Fill out our Free Evaluation Form to receive the legal protection you deserve and connect with an FDCPA attorney in your area.