There are few financial situations more stressful than having collections agencies calling to get you to pay your debt. Once a creditor has sold or assigned your debt to a collector, you may feel more overwhelmed than ever. Fortunately, California state law, together with federal law, offers you protections against such agencies.
Outlined most comprehensively in California’s Federal Debt Collection Practices Act (FDCPA) and in the federal FDCPA, you have a wide range of rights to protect yourself against unfair collections procedures. Understanding these rights is important so that handling your financial situation is not more difficult than it has to be.
So, what exactly are “collections”? In general, collections procedures are the actions utilized by collections agencies to try to get you to pay. They may include contact by phone, contact by mail, in-person visits, negotiations, pleas, or warnings about viable future options.
The following are legal considerations for some of the scenarios surrounding collections procedures about which you may be concerned:
Statutes of Limitations: You only are legally obligated to pay your debt if the statute of limitations has not yet run out on it. This is the period of time specified from the date of your last payment during which you may be sued for payment. In California, the statute of limitations is four years on written agreements and two years on oral agreements.
Harassment: Collectors may not use any obscene or profane language in their contacts with you. They also may not threaten to take any further actions that they cannot legally do or that they do not intend to do. For example, collectors cannot tell you that they will report to the credit agencies unless they actually are customers and plan to do so.
You only may be contacted by phone between the hours of 8am and 9pm, unless you specify that another time would be more convenient for you. While there is no specific limit on the number of calls that you can receive, a large number in a short period of time that you find harassing could be considered as such.
Collectors must be clear with you about their identity, and that their purpose is to collect your debt. You do not have to accept any correspondence that will cost you money – for example, you do not have to accept a collect call.
Contacting your Collector: If you need to contact your collector for nearly any reason, then you should do so in writing. Keep all original documents and send copies. It is very wise to send mail certified and with a receipt so that there is an official record of your contact. Should you face legal action, records of interactions will be very important to have in your possession.
Your Account: You have the right to know exactly why you are being contacted by a collections agency. Most creditors do not have to inform you if they sell or assign your debt to a collections agency, so a phone call or letter from a collector could be your first clue of the situation.
Either upon a collector’s first contact with you, or within five days of the first contact, the following information must be provided to you: (1) the total amount that you owe on your debt, (2) the name of the creditor with which your debt originally was incurred, and (3) the process that you may take if you choose to dispute your debt.
Your account and privacy must be protected throughout collections proceedings. While a collector may contact people close to you to find out your whereabouts, revealing any information about your finances is prohibited. Similarly, all mail must ensure your privacy by being void of any agency information on the envelope.
Contact at Work: A collector may contact you at work unless you expressly state that you no longer want to be contacted there. You may receive either calls or mail, both of which must protect your financial information and privacy from others. A collector may not reveal to others the nature of the call, and all mail must be marked “personal and confidential”.
Additionally, collectors may contact your employer for one of the following reasons: to verify your employment, to verify your employment location, to inquire about medical insurance if your debt is medical, or to arrange for wage garnishment if a court order has been obtained.
Stopping Contact: If you do not want a collections agency to contact you, then do not just ignore their attempts. If you do, then they simply will keep on trying and legally may do so.
Instead, if you want a collections agency to cease all of attempts, then you should state this in writing. After an agency has been informed, it may contact you only once more to let you know what actions it plans to take.
While ridding yourself of collectors’ calls and letters completely might sound great, you should consider what will happen after they honor your request. If they can no longer try to get you to pay willingly, they may very well take legal action against you. Collections agencies may sue you in either Municipal or Superior Court.
Paying the Debt: If you intend to pay the collections agency but would have difficulty paying your debt in-full, then you should ask for a payment plan in writing. They may be more willing to negotiate than you might think.
Your collector legally can charge interest on your account, so you will want to come up with a payment option as soon as possible. You should consult an attorney if you doubt the validity of the interest being charged.
Already Paid Debt? If a collector contacts you about a debt that you believe you have paid, or if you believe that the amount of the debt is incorrect, then you should send copies of documents to verify this. The collections agency may not attempt to collect from you unless they can provide their own proof of the validity of your debt.
Debt that isn’t yours? If you are contacted about paying a debt that you do not recognize, then you should write to the collections agency to tell them this. They may ask for verification of your identity.
Violations of the Law: If you feel that your rights have been violated, then you should file with a complaint with the state Attorney General’s Public Inquiry Unit. In addition, you may want to file a complaint with the Federal Trade Commission -- the agency that enforces the federal Fair Debt Collection Practices Act.