As the global economic crisis deepens, we can be certain of one thing: an increase in credit delinquencies. If you deal with consumers, you should be mindful of the debt collection laws in force in the jurisdictions where your customers are located. Adapted from the National Foundation for Credit Counseling (NFCC)press release of January 2009, here are some universal rules to follow when collecting from delinquent accounts:
- When to call? - A debt collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact a debtor at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless he/she agrees to such times.
- Can you call the debtor at work? - You may not contact a debtor at work if you know that the debtor’s employer disapproves of such contacts.
- What constitutes debtor harassment? – A collector may not use threats of violence or harm, use obscene or profane language, or repeatedly use the telephone to annoy a debtor. Further, they may not imply that the debtor has committed a crime or will be arrested if he/she does not pay the debt, or pretend that you are an attorney or are a government representative if you are not.
- Is there any way to get collection efforts to stop? - The consumer can stop all contact from the collector by writing a letter to the collector telling them to stop. Once the collector receives the letter, they may not contact the debtor again except to say there will be no further contact, or to notify them that you or the creditor (your client) intends to take some specific action.
- Can you tell others about the debt? - A debt collector may contact other people, but only to find out where a debtor lives, what his/her phone number is, and where the debtor works. Typically, a collector may only contact a third party once, and in most cases, the collector may not tell anyone other than the debtor and his/her attorney that he/she owes the debt.
- What if the debtor does not think he/she owes the debt? – The debtor is entitled to a verification of the debt within five days of initial contact. This confirmation must be sent to the debtor in writing and must include the amount of money he/she owes, the name of the creditor to whom the debt is owed, and provide options to take if the debtor does not owe the money.
- Can you continue to contact the debtor after he/she disputes the debt? – Collection efforts may not continue if, within 30 days after the debtor receives the written notice, and sends the collection agency a letter stating he/she does not owe the money. However, a collector can renew collection activities by providing the debtor with proof of the debt.