I’ve been living with dealing with debt since 1990 and began professionally helping people with debt problems in 1994. There are just fewer issues that come along these days that surprise me and teach this old dog something new. But once in a while one does.
This one has to do with a incorrect assumption that myself and many others have that the Fair Debt Collection Practices Act (FDCPA) exempts all owners of debt from it’s communication rules as a creditor.
I was under the impression that the owner or original creditor was exempt from the cease and desist letter and had a broader range of communication options about a debt.
It now appears that assumption was incorrect and in talking with other experts in the consumer debt field, it looks like I’m not the only one that had this misperception of debt owner exemptions under FDCPA.
The FDCPA defines creditors as, “The term “creditor” means any person who offers or extends credit creating a debt or to whom a debt is owed, but such term does not include any person to the extent that he receives an assignment or transfer of a debt in default solely for the purpose of facilitating collection of such debt for another.”
Since a debt buyer, who may now “own” the debt does not extend credit and instead receives an assignment or transfer of debt to collect on it then a debt buyer appears to not be defined as a creditor.
The important information in the FDCPA regarding communications with consumers is contained in Section 805. In that section it lays out that a debt collector can’t “communicate with a consumer in connection with the collection of any debt –
- at any unusual time or place or a time or place known or which should be known to be inconvenient to the consumer. In the absence of knowledge of circumstanc- es to the contrary, a debt collector shall assume that the convenient time for communicating with a consumer is after 8 o’clock antimeridian and before 9 o’clock postmeridian, local time at the consumer’s location;
- if the debt collector knows the consumer is represented by an attorney with respect to such debt and has knowledge of, or can readily ascertain, such attorney’s name and address, unless the attorney fails to respond within a reasonable period of time to a communication from the debt collector or unless the attorney consents to direct communication with the consumer; or
- at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.” – Source
In the grand scheme of things this information is more academically interesting than practical for consumers because for most people, sending the cease communications letter and enforcing it simply is a quicker way to get sued.
Maintaining open communications and trying to work out an amicable solution to a bad debt problem is almost always the best approach if it makes sense for the consumer.