A consumer having difficulty paying a debt can contact the creditor before the bill goes to a collector. Sometimes the creditor will refinance or otherwise modify the agreement rather than pay a debt collector. If not, the debtor has certain rights. Debt collectors must treat you fairly. Of course, the law does not erase any legitimate debt you owe. Sometimes consumers confuse third-party collectors (collection agencies) with the in-house collection department of a creditor. Professional debt collection services are third-parties to the transaction that created the debt and are collecting for the creditor. Third party debt collectors are regulated by the federal Fair Debt Collection Practices Act and the Texas Debt Collection Practices Act.
What should I do if contacted by a collection agency? It is important that you respond as soon as possible. If you don’t, the collection agency will keep trying to contact you to collect what they believe is a valid debt. If you legally owe the debt, you should make payment arrangements.
Must the debt collector identify him or herself and inform me of the nature of the communication? Yes. Debt collectors must provide a meaningful disclosure of their identity and the purpose of the call. In Texas, debt collectors may use their true name or a professional name (alias) while collecting debts. If a professional name is used, the debt collector must maintain a list of the professional names used. The debt collector must also inform you that the purpose of the communication is to collect a debt.
How do I find out what the bill is for? Either in the first contact with you regarding the debt or in writing within five days after the initial contact, the collection agency MUST provide the following information: (a) the amount owed, (b) the name of the creditor, and (c) the process to follow to dispute the bill or receive verification of the debt. This is referred to as the "validation of debt" notice.
Will I have to pay extra because the debt is with a collection agency? A third party debt collector cannot attempt to collect more than the amount owed. Interest and fees or other charges must be authorized by the agreement creating the debt or permitted by law. You should review the agreement you have with the creditor to determine if interest charges, late fees or attorney fees are included in the agreement
What if I dispute the accuracy of the bill? What can I do? You should send the collection agency a written notice that you dispute the bill. If you notify the debt collector of your dispute or request verification of debt within 30 days of receiving the validation of debt notice described above, the collection agency must stop all communications with you upon receiving your timely written notice, but may resume contact with you once the verification of the debt is obtained and mailed to you. The debt collector must notify anyone who has already received a report containing the incorrect item.
What if the bill has been paid, I don't owe the debt, or I'm not the person the collection agency is looking for? If you do not owe the bill, or if the bill has already been paid, send the agency a written explanation along with copies of receipts, cancelled checks and any other information to back up your claim. If you are questioning only a part of the debt, you must make arrangements to pay the rest of the debt.
If you are not the person the agency is looking for, write and explain the mistake. If you are unsure about your legal responsibility for a debt, consult with an attorney.
In these situations, it is important to dispute the debt in writing within 30 days after receiving the validation of debt notice. (See question #4). Upon receipt of a timely written dispute, the debt collector must cease collection efforts until verification of debt is mailed to you. In some cases, the collection agency may be unable to obtain verification that you owe the debt and will return your account to the creditor and stop further collection efforts. The agency is not required to notify you if the account is returned.
When can a collection agency call me? A collection agency may presume that it is convenient to call you between 8 a.m. and 9 p.m., local time at your location. If these times are inconvenient, you should ask the agency to contact you at other times. There is no law that specifically limits the number of calls an agency may make to you, but repeated calls over a short period, which may be annoying or harassing, are prohibited.
Can a collection agency contact other people and discuss my bill? A collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. He or she may not discuss your account or debt status with a third party. He or she must give his or her name, but not the name of the collection agency unless they are specifically asked for it. If you have an attorney, the debt collector must contact the attorney, rather than you or a third party.
Can a collection agency call me at work? Yes, unless the debt collector knows or has reason to know that your employer prohibits you from receiving such communication. If you are prohibited from being contacted at work, inform the debt collector and provide an alternate telephone number where you may be contacted to discuss the account.
How can I stop a collection agency from contacting me? If you want to stop all contact from the collection agency you should request in writing that they do not contact you again; to cease and desist collection activity. Although not required, your letter should be sent by certified mail, "return receipt requested" so you have proof of delivery. Once the agency receives your letter, its collectors can only contact you one final time to advise collection efforts are being terminated, explain what remedies are ordinarily invoked by the creditor, or explain the remedies they plan to seek. After that, collection efforts by that third party debt collector must stop. Remember that if you request no further contact in any way, you may leave the agency with no choice but to have a civil lawsuit against you.
The collection agency wants me to write postdated checks. Do I have to do this?
You are not required to give postdated checks to a collection agency. However, the agency may request postdated checks as a method of structuring the repayment plan. Writing or accepting such checks is not illegal so long as you plan to cover them when they are cashed. If a check is dated more than five days in advance, the agency must notify you in writing at least three business days prior to the deposit of the postdated check.
What if I can’t keep the payment arrangements I agreed to? If possible, contact the agency before you miss a payment or send a partial payment and explain the problem and what you plan to do to solve it and catch up on your payments. Many agencies will work with you, especially if you have already made several payments on time.
The debt collector obtained my credit report. Is this allowed? Yes. Under the federal Fair Credit Report Act, a credit bureau may furnish a credit report on a consumer in connection with the collection of an account.
What happens to my credit report when I don't pay a debt? Your creditor may report information about your account to a national credit bureau. Information about late payments, missed payments, or other defaults on your account may be reflected in your credit report. This information is reported by credit reporting agencies for seven years from the date of delinquency. If at a later date the debt is paid, partial or in full, your credit report will be updated to reflect the payment. It should be noted that paying in full will not result in the credit item being deleted.
For a 3 free copies of your credit report visit: www.annualcreditreport.com.
What types of debt collection practices are prohibited?
Prohibited behaviors include harassment, false statements, and other unfair practices.
Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, debt collectors may not:
· use threats of violence or harm
· use profane or obscene language
· publish a list of consumers who refuse to pay their debts (except to a credit bureau)
· repeatedly use the telephone to annoy someone
Debt collectors may not use any false or misleading statements when collecting a debt. For example, debt collectors may not:
· falsely imply that they are attorneys or government representatives
· falsely imply that you have committed a crime
· misrepresent the amount of your debt
· indicate that papers being sent to you are legal forms when they are not
· indicate that papers being sent to you are NOT legal forms when they are
Debt collectors also may not state that:
·You will be arrested if you do not pay your debt
·They will seize, garnish, attach, or sell your property or wages, unless it is legal to do so or unless the collection agency or creditor intends to do so.
·Actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action
Further, debt collectors may not:
·Give false credit information about you to anyone, including a credit bureau
·Send you anything that looks like an official document from a court or government agency when it is not
·Use a false name except they may use a professional name (alias) while collecting debts. If a professional name is used, the collector must maintain a list of the professional names used.
Debt collectors may not engage in unfair practices when they try to collect a debt. For example, collectors may not:
·Deposit a post-dated check prematurely
·Use deception to make you accept collect calls or pay for telegrams
·Take or threaten to take your property unless this can be done legally
·Contact you by postcard
·Use unfair or unconscionable means to collect or attempt to collect a debt
Your Home and Wages are Protected
Some collectors will threaten to foreclose on homesteads or to garnish wages. A registered homestead is protected and cannot be foreclosed upon to pay a debt, except if the first or second mortgage or a home equity loan is in default. You should consult an attorney to be certain if your home is in jeopardy of foreclosure action. Wages may be garnished to pay court-ordered child support, back taxes, and defaulted student loans.
Violators can be penalized
Violators of the Texas Debt Collection Act are subject to criminal and civil penalties. Consumers who think they have been harassed or deceived may seek injunctions and damages against debt collectors.
These actions are also violations of the Texas Deceptive Trade Practices/Consumer Protection Act which gives the Attorney General the authority to take action in the public interest.
Contacting the Office of the Attorney General
Office of the Attorney General
PO Box 12548
Austin, TX 78711-2548
Office of the Attorney General
300 W. 15th Street
Austin, TX 78701
Public Information & Assistance (800) 252-8011 or (512) 475-4413, Austin
Consumer Protection Hotline (800) 621-0508
Contacting the Office of Consumer Credit Commissioner
Mailing Address and Consumer Helpline:
Office of Consumer Credit Commissioner Consumer Helpline: 800-538-1579
File a complaint against an in-house collection department of a lender online at www.occc.state.tx.us consumer education, debt collections or in writing to OCCC, 2601 N. Lamar Blvd, Austin, TX 78705