The Fair Debt Collection Practices Act was passed in 1977 to protect consumers from abusive debt collectors . Here’s a closer look at the rules a third-party debt collector must follow when collecting a debt.
Contacting a debtor.
A collector may contact you in person, by mail, telephone, telegram or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.
Contacting a third party about your debt.
If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people but only to find out where you live, what your phone number is and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.
Giving written notice.
Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe, the name of the creditor to whom you owe the money and what action to take if you believe you do not owe the money.
When a consumer doesn’t owe the money.
A collector may not contact you if within 30 days after you receive the written notice you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.
Debt collectors may not harass, oppress or abuse you or any third party they contact.
Debt collectors may not:
- Falsely imply that they are attorneys or government representatives.
- Falsely imply that you have committed a crime.
- Falsely represent that they operate or work for a credit bureau.
- Misrepresent the amount of your debt.
- Give false credit information about you to anyone, including a credit bureau.
- Send you anything that looks like an official document from a court or government agency when it is not.
Debt collectors may not state that:
- You will be arrested if you do not pay your debt.
- They will seize, garnish, attach or sell your property or wages unless the collection agency or creditor intends to do so and it is legal to do so.
- Actions, such as a lawsuit, will be taken against you when such action legally may not be taken or when they do not intend to take such action.
No unfair practices
A debt collector may not engage in unfair practices when they try to collect a debt from you.
Debt collectors may not:
- Collect any amount greater than your debt, unless your state law permits such a charge.
- Deposit a postdated check prematurely.
- Use deception to make you accept collect calls or pay for telegrams.
- Take or threaten to take your property unless this can be done legally.
A payday loan is a great service to solve your short-term financial emergencies. However, if you are stuck dealing with a shady lender, you must be armed with the knowledge of your legal rights. Before you commit to any lender, it is important to know your rights!
Payday Loan Rights
Payday loans are bound by federal and state laws. As lenders, they have their set of rights and responsibilities, and as a borrower, you are also protected by your rights. State law will outline the maximum amount that you can borrow as well as the repayment schedule. For example, Montana limits cash advance takeouts to $300, while Illinois has a higher cap at $1000. Regardless of thee state you reside in, you must know what your rights are under your state’s law.
Know the Cost of the Loan
Before committing to a cash advance, the lender must give you all the information regarding the cost of the loan. These costs include the APR and the loan finance fees. You must be allowed to fully understand what the loan will cost you. The costs should also be written in the loan agreement.
Know the Timetable of the Loan
Payday lenders must give you information on their available payment plans and schedule. The information should be readily available during the application process. You can also find this information on the company web site. Despite the various payment schedules, it is recommended that you pay back the loan as soon as possible to prevent more fees.
Immunity from Threats
Payday loans that are left unpaid may be referred to collection agencies. However, it is not within the lender’s rights threaten to you with criminal prosecution. You may be brought to a civil court where your wages might take a hit, or a lien may be implemented against your assets to pay for the loan. Some states do not allow collection of court costs.
Payday Loan State Rights
The rights given to a payday loan borrower vary by state. For example, Washington State allows you to cancel your payday loan within one day.
However, if you applied for a loan online, you might not be able to cancel your loan. Information on payday loans is available in your state’s agencies.
Before you enter into a loan transaction, you must know your rights. Research the company by looking at their website or asking for more information through relevant channels in the government. Understand their rates and payment plans, and then compare various payday loan companies before you make your choice.