Fair debt collection practices act provides certain guidelines for debt collectors to follow in order to collect debts. This act gives protection to debtors from persons collecting debt using unscrupulous methods. The debt collectors are required to follow the procedures laid down in fair debt collection practices act.
Getting trapped in debts
Today in this fast moving world, people are on the look out for more comforts and luxuries. Every item is easily available in the market. There are people going for laptops or music systems or cars whereas some might buy palatial bungalows or houses. Finance is easily available and there are numerous banks as well as non-banking finance companies offering various types of loans like personal loans, car loans, housing loans and credit limit against credit cards. No doubt these loans are approved according to the personal income of each individual. Due to certain circumstances, you are unable to pay your monthly repayments. In such a situation you tend to get trapped in debts.
Debt Collectors
When you fail to repay the loan amount, there are persons who will contact you either in person or by mail or telephone. They are authorized by the creditors to collect loan outstanding and they are referred to as ‘debt collectors’. They could either be individuals or companies who are employed by creditors like banks or credit card issuers on commission basis to collect overdue loan amounts from borrowers. They have the right to collect the outstanding amounts from debtors. But there are certain norms that need to be followed by these companies or persons while collecting the outstanding.
Fair Debt Collection Practices Act
In order to avoid harassing the borrower through unscrupulous ways, the fair debt collection practices act has been introduced. This act requires that the persons collecting debts should treat borrowers fairly and also prohibits certain methods of collection. The debt collector should not be harassing or using abusive words or resorting to violence while collecting debts. He may not use false statements or use threatening statements or give false information to borrowers. Moreover, while contacting the consumer, the person collecting the debts must inform the debtor in advance. The collector must tell the borrower what his overdue amount is. He should not be collecting amount that is much higher than the loan outstanding amount. For consumers represented by an attorney, the collector must contact attorney only as per the law. The law permits to make payments by post dated cheques or through other payment methods and no interest fees or other charges can be charged.
In case a debt collector violates the fair debt collection practices act, he can be sued in the court within one year of violation and in such a case, he is liable to pay damages to you. There are different types of loans covered under this act like mortgage loans, personal loans and automobile loans. Today there are many people falling in to debt traps and fair debt collection practices act has been protecting people from abusive practices.