What is the Fair Debt Collection Practices Act (FDCPA)?
The Fair Debt Collection Practices Act (FDCPA) is a federal law that makes it illegal for debt collectors to use abusive, unfair or deceptive tactics to collect your debt, including:
- Harassing or threatening you
- Disclosing what you owe to anyone but your attorney
- Making false statements, like lying about how much you owe or the consequences you could face for not paying
The FDCPA also requires debt collectors to give you “validation information” on request. If you request validation of a debt, they must give you details such as their name and the amount you owe, within five days.
What is a judgment?
A judgment is a court order that lets a debt collector take specific action to collect your debt. If a debt collector sues you and wins a judgment, you could face any of the following consequences:
- Wage garnishment
- Bank levy
- Property lien
If you receive a notice stating that a creditor or debt collector intends to sue you for a judgment, it’s important to respond. Ignoring the lawsuit could result in losing by default and owing even more money.
What is a “charge-off?” If my debt has been “charged-off,” can a creditor pursue collection?
When a creditor “charges-off” your debt, it means they’ve written it off as a loss. A creditor will charge-off your debt if they believe you no longer intend to pay. This usually happens once you’re behind on the payment by 90 to 180 days.
When your debt is charged-off, the creditor either transfers it to a collection department or sells it to a debt collector. Once the record of the charge-off appears on your credit reports, your credit scores are likely to take a big hit.
After the charge-off, you’re still legally obligated to pay the debt to the new account owner, but only for a set period of time determined by your state. This timeframe is also known as the statute of limitations. Before that time frame is up, the debt collector can potentially file a lawsuit against you in order to collect the debt.
My wages have been attached. What does that mean?
When your wages are attached or garnished, money is taken out of your paycheck to pay back your debt. Wage attachments usually happen as the result of a creditor suing you and winning. An attachment can also be the result of filing Chapter 13 bankruptcy, or having unpaid student loans or child support.
If you have a wage garnishment, your employer will receive an order to begin withholding part of your compensation immediately.
My car was repossessed and sold. Do I still have to pay off my auto loan?
After your car is repossessed and sold, there’s a chance you still owe money to your lender. If the sale price on the car did not cover the remaining balance on your loan (plus all fees) you will owe what’s called a “deficiency balance.”
If you owe a deficiency balance, you may be able to set up a payment plan with the lender or offer the lender a lump sum settlement. Failing to pay, however, could result in a lawsuit from the lender or a debt collector.