What should I know about debt collection?

Contents

• What is debt collection?

• What are my rights in debt collection?

• What are my responsibilities?

• What are the debt collector's rights in debt collection?

• What are the debt collector's responsibilities?

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What is debt collection?

When you borrow money and then cannot or do not make a payment on a loan, you are in default. When you are in default, the creditor has a legal right to collect the money owed. After all, in a credit contract, you take on a duty to repay the debt, which can be enforced by courts.

 

Sometimes the person or company that loaned you the money (the creditor) will try to collect the money themselves. Other times, they will sell your debt to a debt collection agency.

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What are my rights in debt collection?

You have the right to not be harassed by debt collectors. The creditor-or an agency hired to collect on the debt-can try to persuade the debtor to make the payment. This action is legal unless it becomes harassment. Federal law protects consumers from unscrupulous debt collectors. Federal law does not cover creditors, unless while collecting, they use false names or any other name than his own. For example: 

 

• It limits how many times and for what reasons the creditor can call the debtor

• It limits who else the creditor can call. 

• It also limits what the creditor can do if the debtor says that the debt is not going to be repaid.

 

Under the act, collectors cannot abuse a person by threats of violence or illegal actions. They cannot say a person will be imprisoned for not paying debts, for example. It is also illegal to misrepresent facts. A debt collector cannot imply that he or she represents the federal or state government.

 

Sometimes, a creditor might seize a possession, like a car, to sell to pay your debt. You have the right, under Georgia law, to be notified of the time and place of the sale. This notice gives you a chance to be at the sale. By then, you may have the money to bid on your possession, or you can encourage others to bid so that the final sale price will cover the debt. 

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What are my responsibilities?

You are responsible for paying your debt. If you cannot pay your debt, you should contact the creditor to discuss options for repayment.

 

If you are harassed by a creditor or debt collector, you are responsible for sending a letter to ask them to stop. 

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What are the debt collector’s rights in debt collection?

When a debtor is in default, the creditor has a legal right to collect the money owed. The creditor-or an agency hired to collect on the debt-can try to persuade the debtor to make the payment. This action is legal unless it becomes harassment. If a creditor appears to be that aggressive, you should consult a bankruptcy lawyer.

 

Can a creditor take my possessions?

A creditor may take collateral, sell it, and use the money from the sale to pay the debt due. Repossession is usually carried out by the creditor without help from the courts or any state authority. Although this "self-help" repossession is legal in Georgia, the creditor must be sure that no law is being broken. A creditor may not break down a garage door to reclaim an automobile pledged as collateral for a loan. However, a creditor may take the car from the debtor if the debtor leaves the car parked on a public street. (The law does not regard taking the car as stealing if the creditor already has the right to repossess the car.)

 

Many people mistakenly believe that if a car is bought with credit and the debt is not repaid, the worst that can happen is that the car will be repossessed. Yet, even though the creditor can legally collect only the amount owed plus the cost of credit, there are several ways to recover debt.

 

Suppose the creditor is a bank in Georgia. A debtor defaults on a bank loan, but the debtor has money on deposit in the bank. The law allows the bank to take this money to pay off the amount owed. This action is called setoff. 
 

Can a creditor take me to court for not paying my debt?

Yes, but before you fall to far too far behind on the debt, you should contact a credit counseling agency. The agency can often negotiate with the creditor to lower the debt and for a more lenient repayment plan. If all else fails a creditor can take a debtor to court for default. As in any court proceeding, the defendant (that is, the debtor) must be notified in advance. The defendant can present his or her case at the hearing. If you are sued, you should immediately consult with an attorney because there may be legal defenses that you are unaware of.

 

If the court rules that the debtor must repay the creditor, various debt-collecting measures are possible. 

• The creditor may have the debtor's wages garnished. This means that the creditor may demand that the debtor's employer pay a portion of the debtor's wages to the creditor. This arrangement would continue until the debt is paid off. 

• Attachment can be used to collect a debt only if the debtor lives, of their property, is outside the state that issues the order of attachment. Alternatively, attachment can be used if the debtor cannot be found after the required official attempts.

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What are the creditor or debt collector’s responsibilities?

If your debt is sold to a debt collector, the debt collector has the right to try to collect payment. However, the Fair Debt Collection Practices Act limits the ways they can do that. The debt collector must:

• Tell you the name of the creditor, the amount owed and how to repay the debt,

• Give you evidence of the unpaid bill,

• Tell you in writing that you have 30 days to dispute the validity of the debt, or the debt will be assumed to be valid.

 

The debt collector cannot:

• Call you between 9pm and 8am,

• Call you at your workplace if you are not allowed to take calls there,

• Call you repeatedly or continuously to annoy or harass you,

• Use abusive language or threaten violence or arrest,

• Talk to anyone about your finances, unless you allow it,

• Publish lists of people who have not paid debts

• Lie to collect a debt,

• Say they are someone they are not,

• Garnish wages without a court order,

• Threaten legal action, or

• Send mail that looks like it’s from a court or government agency.

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Contents

• What can I do if a collection agency is contacting me about a debt?

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What can I do if a collection agency is contacting me about a debt?

You can write a letter to the collection agency within 30 days of receiving the first notice. This letter can be used to ask collection agencies to provide you with information about the debt ("verification of the debt"). Collection agencies typically purchase debts from other companies (usually at a discount). The collection agencies go after the debtors to try to get them to pay what they owe on the debt, plus interest, attorney fees and any late fees or penalties. You may also use this letter to ask collection agencies to stop contacting you, your family or neighbors.

 

This letter only applies to collection agencies, NOT to creditors- the people who directly sold you goods or gave you credit or loaned you money. While the collection agency must stop contacting you, they can still file a lawsuit against you based on the debt. 

 

Often on small or disputed debts, the collection agency will not take further action.

 

After the letter, the collection agency should then stop contacting you. They may only contact you to provide information about their basis for claiming that you owe a debt. If they continue to contact you, contact Atlanta Legal Aid Society or Georgia Legal Services Program nearest you. You may also make an online complaint to the Federal Trade Commission.

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