Debt Collection Rights

Living with debt has become as American as apple pie. According to a recent estimate by the Federal Reserve Board, over forty-five percent of American families carried a balance on at least one credit card from month to month, and the average balance carried was $5,100. Whether it be from credit cards, personal loans, a home mortgage or medical bills; an increasing debt load can become overwhelming. Once the debt load becomes too burdensome, debtors can expect to receive calls from collectors demanding payment. If you have been contacted by a debt collector, stay calm and know your rights. Federal, State and City law protect consumers from unfair and abusive collection practices.

There are two types of debt collectors: debt collection agencies that collect debts owed to a creditor (often referred to as third-party debt collectors) and the creditor themselves (people and companies to whom you owe money directly). The Federal Fair Debt Collection Act regulates third-party debt collectors while New York State's Debt Collection Procedures Law applies to both creditors and third-party collectors.

Under the federal Act, 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. The law prohibits collectors from contacting consumers who, within thirty days after receiving the required written notice, send the collector a letter challenging the validity of the debt. Stopping a debt collector from contacting you, however, will not relieve you of the debt; a collector can renew collection activities upon sending proof of the debt to the consumer, such as a copy of a bill for the amount owed, and you could still be sued by the debt collector or the original creditor.

The federal Act prohibits a number of abusive or misleading practices. For example, a collector cannot make threats of violence or use obscene or profane language, or repeated annoying telephone calls. They cannot make false or misleading statements about the amount owed or whom they represent. The law also prevents collectors from giving false credit information about you to anyone.

Under the New York State Debt Collection Procedures Law, creditors and third-party collectors are prohibited from:

  • communicating in a manner that simulates a judicial process or gives the appearance of being authorized or issued by a governmental entity;

  • threatening to collect a fee over and above the debt owed by the debtor; disclosing or threatening to disclose false information affecting the debtor's reputation for credit worthiness;

  • communicating the nature of a debt with the debtor's employer prior to obtaining a judgment against the debtor;

  • disclosing or threatening to disclose information concerning a disputed debt without disclosing the fact that the such debt is disputed;

  • contacting a debtor or debtor's family member with such frequency or at such unusual hours as can be reasonably considered to be abusive or oppressive; and

  • threatening to take an action that it cannot or would not normally undertake.

New York City law requires all debt collection agencies that seek to collect debts from City residents to be licensed by the Department of Consumer Affairs. New York City rules regulate how creditors and third-party collectors may communicate with debtors, prohibit certain threatening, deceptive and unfair collection practices, and allow debtors to obtain validation of disputed debts.

New York State Assembly
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