September 21, 2012

Prohibited threats from collection agencies

A collection agency may not make these threats against you:

To use physical force or violence, or any other criminal means to harm you, your property, or your reputation.
To accuse you of committing a criminal offense if you don't pay, when the accusation would be false.
To assign the debt to a third person and to represent that this would cut off a defense, or to garnish your wages, seize your property or arrest you, unless they can legally and intend to do it.
To communicate to anyone, information (other than nonpayment of the debt) that will defame you.
To take any other action that cannot legally be taken or that is prohibited by law, or to threaten any action they do not actually intend to take.
To take possession of your property by nonjudicial action unless they actually intend to do it. (Of course, they may also not make such a threat if there is no enforceable security interest or if the property is, by law, exempt from such taking.)
To communicate credit information about you that they know, or should know, is false.

Contact with your employer

The law restricts a collection agency's contact with your employer. First, the agency may contact your employer only as many times as are "necessary" to collect the debt. However, any contact may be made to locate you or verify your employment, to garnish your wages, or, if the debt is a medical one, to determine if you have or had medical insurance. The communications to your employer must be in writing except for the one to verify employment, or unless your employer does not respond within 15 days. (A health care provider or agent may make oral contact, though, to discover the existence of medical insurance.)

All communications to your employer must, of course, contain only language that would be proper if the communication were addressed to you.

Contact with your family members

If the collection agency wants to contact family members, they may contact your spouse. But if they want to locate you or if your attorney has consented to the communication in writing, they may contact any family member. If you're a minor, they may also contact parents or guardians with whom you live. Otherwise, they may not communicate information about the debt to any family member before they have obtained a judgment against you.

In most cases, if you or someone in your family has notified the agency, in writing, that you or they would like them to stop communicating or that you do not owe or refuse to pay the debt, the protection against further contact is extended to your family. Then, again, you should hear from them only to let you know that they will not make further attempt to collect, or that they may or intend to invoke specified remedies. Again, any permitted communications to family members must be at the same times as are convenient, or presumed convenient, for you.

Contact with third persons

A collection agency may not communicate with a third person in connection with collecting a debt you owe except to locate you (and this is permitted only subject to stringent limitations), in cases where you've previously given your consent, where they've been authorized by a court of law, or when they've obtained a court judgment and such contact is reasonably necessary to carry out a judicial remedy (for example, to garnishing your wages).

Even when they're allowed to contact a third person, there are still further requirements and restrictions. They have to identify themselves and say that they are confirming or correcting information about your location, but they may not state that you owe a debt or generally contact the person more than once unless they believe the earlier response was in error and that the person now has correct or complete location information.

Again, postcards to third parties are out, as are language or symbols on the envelope or in the contents of any mailed communication or telegram to indicate that they are a collection agency or that the communication relates to collecting a debt.

Once a collection agency knows you are represented by an attorney with regard to the debt in question, they may only contact a third person again if your attorney does not respond to communications within a reasonable time.

Of course, the agency may not disclose to anyone the fact that you have engaged in conduct (other than failure to pay a debt) that would defame you.

In spite of the limitations on communications to third parties, the agency may communicate information relating to you or your debt to a credit reporting agency or to anyone else they reasonably believe has a legitimate business need for the information. But, if you dispute the debt, they are required to inform the credit reporting agency that the debt is disputed, and they may not communicate to anyone information they know (or should know) to be false.

More prohibited practices

Other practices prohibited by collection agencies are these:

Collecting a debt by using physical force, violence, or any criminal means to cause harm to the reputation or property of you or anyone else, or to you or anyone else personally.
Collecting or attempting to collect the expenses, or anything such as interest or other expenses incidental to the main debt, unless authorized by your agreement with the original creditor or otherwise permitted by law.
Publishing a list of debtors that discloses the existence or nature of a debt or advertising a debt for sale by naming you.
Publishing (except to a credit reporting agency or to someone else that the law allows) a list of persons who allegedly refuse to pay debts.
Obtaining from you an affirmation of a debt discharged in bankruptcy if you have been adjudicated a bankrupt, unless they tell you, in writing, before they seek it, that you are not legally obligated to make it.
Demanding money from you unless your debt has actually been assigned to them.
Collecting a debt by means of judicial proceedings if they know that service of process was not legally made.

Attempting to collect a consumer debt, other than one reduced to judgment, by means of judicial proceedings in some county other than where you incurred the debt, or where you resided when the proceedings were filed, or where you resided when you incurred the debt.
Accepting a check postdated by more than five days, unless they notify you (or the person giving the check), sometime between three and ten business days before they deposit it, that they intend to deposit it. Otherwise they may not deposit it (or any other instrument) before the date on it. (They also may not solicit your postdated check or other instrument for the purpose of threatening or institution criminal prosecution.)
Advertising the sale of your debt to coerce payment. If you owe more than one debt, (for example, where you had an open account and had made several purchases on it), the agency has to apply any payment you make to the debt you specify. They may not, however, apply it to a disputed debt.

Finally, a collection agency generally may not use any unfair or unconscionable means to collect or attempt to collect a debt.

Your remedies if the collection agency violates the law

Should a collection agency violate California law (the California Debt Collection Practices Act) in collecting a debt from you, you may file an action for actual damages you sustained because of their violation. In some cases, the court may assess a penalty of between $100 and $1,000. If you prevail in the action, you are also entitled to reasonable attorney's fees. (Conversely, if the creditor prevails and the court finds that your prosecution or defense of the action was not in good faith, they are entitled to attorney's fees from you.)

Should a collection agency fail to comply with any requirement of the federal Debt Collection Practices Act, they are liable for actual damages you sustained plus, in an individual action, a penalty of up to $1,000. A prevailing plaintiff may be awarded reasonable attorney's fees, while a finding of bad faith in bringing the action on the part of the plaintiff may result in an award of attorney's fees to the prevailing defendant.

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