Collection Account

Congress has investigated collection practices and has found abundant evidence of the use of abusive deceptive and unfair collection practices.

A collection account arises when a 'creditor' offers credit creating a debt and then assigns that debt to a person solely for the purpose of collection of the debt. The person then becomes a "debt collector" by means of using interstate commerce or mail or regularly collects or attempts to collect debt.

Debt collectors engaged in attempts to collect debts owed are governed by the Fair Debt Collections Practices Act and by other Federal and state law:

Debt collectors communicating with any person other than the consumer for the purpose of locating the consumer must identify himself and if asked identify his employer. A debt collector must not state that such a consumer owes any debt and must not communicate with any such person more than once unless asked or if believes that the earlier response was incomplete or wrong and that the person can correct it.

Debt collector's communication with a consumer must not be at an unusual place or time or known to be an inconvenient place. Unless otherwise know a debt collector should assume a convenient time is after 8am and before 9:00pm and a debt collector should not communicate with a consumer if the debt collector knows that the employer prohibits the consumer from receiving such communication.

Once a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or the consumer wishes the debt collector to cease further communication with the consumer the debt collector must cease communication except to notify the consumer of additional remedies the debt collector intends to pursue based on normal business practices or to advise the consumer the debt collector is no longer pursuing the debt.

A debt collector is not allowed to collecting any amount (including any interest fee charge or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debtor permitted by law.

Within 5 days after initial communication with a consumer in connection of any collection account a debt collector must send the consumer written notice containing the amount of the debt the name of the creditor a statement that the consumer must within 30 days from receipt of the notice dispute the validity of the debt they will assume the debt to be valid. And a statement that if the consumer notifies the debt collector within the 30 day period that the debt is disputed the debt collector will obtain verification of the debt and mail it to the consumer. And a statement that upon the consumer's written request within the thirty-day period the debt collector will provide the consumer with the name and address of the original creditor.

Being familiar with what a debt collector can and can't do is important when dealing with a collection account. All collection accounts should be scrutinized. And debt collectors should be held accountable. For example, when you receive communication from a debt collector make sure they are not posing as something or someone they are not. Or, making threats that they do not intend to pursue. For example, the debt collector might reference legal action or their intent to get an attorney involved to pursue the collection. If in fact legal action is not typically initiated on the debts at issue because they are too small, then attorney involvement in the collection of the debt presumably is not likely to the extent this is true and implication to involve an attorney would be a violation of the Fair Debt Collection Practices Act a violation of your rights as the use of threats of unintended or illegal actions is strictly prohibited.

Let's take another example of a violation of the Fair Debt Collection Practices Act. In this case the debt collector references "IRS Statutory Notification Letter". Followed by a reminded of the creditor's right to forgive the debt and submit a Form 1099 to the Internal Revenue Service on all bad debts. The clear implication being if the consumer doesn't pay the collection account the collector will forgive the debt therefore creating a tax obligation for the consumer with the IRS. However the IRS doesn't require a creditor (in this case) that discharges the debt to file a Form 1099. Nor does the creditor ever file a Form 1099 even if the debt remains unpaid. In this case given the clear implication that if the consumer doesn't pay a Form 1099 will be filed with the IRS when failure to pay never results in filing a Form 1099 and there is no intent to file with the IRS the representation to the contrary is a violation of the Fair Debt Collection Practices Act

Finally violations as outlined above are not only violations by the debt collector but can in fact be violations of the creditor if the creditor "engaged or directed" a debt collector in the act. If a creditor knowingly approves of representations of a debt collector in making false representations the creditor may have engages in unfair and deceptive acts or practices and may be in violation of the Fair Debt Collection Practices Act.

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