Know your debt collection rights


When the pandemic halted travel in March 2020, Lew Moore waived the lease on his Nashville, Tennessee, apartment he had rented as Airbnb since his marriage a few years earlier. Moore, 51, messaged through the building’s secure portal and said he would lose his deposit and that would be the end of it. But a few months later, a debt collector called, saying he owed $3,000 even though his $1,400 apartment was rented on a month-to-month basis. “There were all these fees, and none of this was in the lease,” he recalls.

Moore contacted a consumer law firm, Sue the Collector, who successfully sued the collection agency for violating his rights. The debt was canceled and he received a check for $1,000 for damages. “They were trying to collect a debt inappropriately. They were trying to collect a debt that wasn’t due,” Moore said. “There were several strikes against them.”

In the aftermath of the pandemic, a wave of bad debts and associated illegal collection practices is growing. “Debt collection lawsuits are skyrocketing right now,” says Jarred Dean Johnson, founder of Franklin, Tennessee-based Sue the Collector. “In the next two years, we are going to be overwhelmed.” Marc Dann, a Cleveland-based consumer attorney and former Ohio attorney general, is preparing for the onslaught by training consumer attorneys across the country. “The chaos that will follow the COVID experience is going to require an army of consumer protection lawyers,” Dann says.

Debt buyers buy old debt from the companies consumers originally did business with, often for pennies on the dollar, and actively seek repayment. In 2020, the Federal Trade Commission recorded 82,700 consumer complaints about debt collection, up 10% from the previous year.

Federal law dictates what collectors can and cannot do in pursuit of a debt, lines that some collection agencies cross. For example, under the Fair Debt Collection Practices Act, they cannot harass, threaten or lie to you, and they cannot spread false credit information about you or engage in other unfair practices. If a violation of the law is proven in court, individuals can collect up to $1,000, as well as compensation for their attorney’s fees and actual damages.

Know your rights

Even if you owe money, debt collectors should let you know and provide you with information about the debt and your rights to dispute it. If you do not recognize the debt or think the amount is wrong, you have 30 days to dispute the claim after a collection agency notifies you. always do it in writing by registered mailsays April Kuehnhoff, an attorney at the National Consumer Law Center. The Consumer Financial Protection Bureau lists sample letters to debt collectors that you can use. “The worst practices we hear about are people collecting what we call phantom debt, accounts that don’t exist. They say, ‘If you don’t pay me, the police will come to your door or the immigration will show up at your doorstep,” says Kuehnhoff. “It’s a real red flag that you’re dealing with someone who is a scam actor and maybe not even a real account.”

Collectors cannot call before 8 a.m. or after 9 p.m., misrepresent themselves, or use abusive language. They cannot send a recorded message to your cell phone without your permission or automatically call your landline if you are on the do not call list. If you ask them in writing to stop contacting you about a debt, they must comply. Unless debt collectors don’t know how to reach you, they can’t contact a third party, such as an employer or family member. Collection agencies cannot tell a third party that you have a debt, send you a postcard or post letters in a marked envelope to indicate collection of the debt. Any single violation of these restrictions may entitle you to statutory damages up to this $1,000 limit.

A growing problem is collectors pursuing debts that are barred from collection due to state statutes of limitations, which can vary from 3 to 10 years. If you make a partial payment on a debt that is too old to collect, you risk restarting the clock. Collectors may entice you to do this by offering to “settle” an old debt. “The word ‘settle’ is closely related to lawsuits. It carries with it the idea that you can be sued,” says Kuehnhoff, who adds, “All of this can be very misleading for consumers.”

Beware of calls and emails from collectors, says Dann. “Ask for verification of that debt before you even consider paying something that was overdue,” he says.

A consumer attorney in your state can advise you on the statute of limitations or possible violations of federal law and will take cases in an emergency. You can find someone through the National Association of Consumer Advocates and learn more from the National Consumer Law Center.

The most important: Don’t ignore anything from a court regarding a debt, because if you don’t respond or show up as required, you risk a default judgment against you.. In April, Michigan prosecutors charged three attorneys with fraud for allegedly falsifying documents to show that bailiffs had contacted debtors, when in fact they had not been told of upcoming court dates. . Before these bad actors were charged, they won judgments worth more than $1 million against 1,000 people, prosecutors say. “Debt collection companies have found that it’s much easier to collect on a debtor who doesn’t show up in court; they can garnish your wages, have a sheriff seize your car,” Johnson says.

death and debt

Heirs and executors should also be wary of anyone seeking to recover the losses of a deceased family member who is in debt. “The debt collectors routinely call the spouse and say you have to pay all of this,” Johnson says. Chances are that’s not true. “Collectors lie. They love collecting debts, no matter who owes them.”

Collectors can prey on your sense of obligation to a deceased family member, says Dave Philipps, an attorney based in Palos Hills, Illinois. debts,” says Philipps. People shouldn’t feel that way, he says. “There is no moral component to debt. It’s dollars and cents.”

If your spouse dies, a joint checking account becomes your property, and joint and several debts become your obligation. But loans, credit cards and other debt securities held solely in the name of the deceased are another story. “The only time the widow has an obligation to pay the debt is if she is co-responsible for the debt,” he says. “You can tell them to file a claim on the estate.”

If you are the executor of a family member’s estate, you are responsible for administering all claims against the estate, including old debts. Your family member may have accrued large medical bills or other end-of-life expenses, and these creditors rightfully have a claim against the estate assets. However, once these assets are exhausted, you are unlikely to be personally liable for these obligations unless you co-signed the original loan.

One exception is the doctrine of necessities, a legal principle that holds someone responsible for essential living expenses incurred by a spouse. “There may also be different rules in community ownership states,” Kuehnhoff says. Enforcers should be skeptical and ask lots of questions if approached by anyone about it, she says, although the claims “can be difficult to understand”.

Assets that are not part of the estate, such as irrevocable trusts and qualified retirement accounts with a named beneficiary, for example, are generally barred from creditors. “Life insurance is not available to creditors for the payment of debts of deceased persons,” Dann said. “If your house has a right of transfer on death, it automatically reverts to the heir’s name. It’s not available to pay debts unless there’s already a judgment lien on the house. “

Never make payment arrangements over the phone, no matter how official or threatening someone seems or what pressure tactics they use. Keep a good record of phone conversations, consult with experts, and most importantly, make reimbursement decisions when you’re in the right frame of mind. “There are a surprising number of very powerful consumer protection laws that are available to everyone in the country,” Dann says. “You’re not just at the mercy of someone trying to squeeze money out of you.”

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