In our practice of representing debtors in their claims of improper debt collection practices under the
Fair Debt Collection Practices Act by collection agencies and attorneys, we have come across quite a few misconceptions about how the law works. Here are 5 common ones and the truths behind them:
1. If I demand in writing that the collector validate my debt, then they have to do it or I don’t have to
pay:
That is only true in limited circumstances. A debt collector does not have to validate a debt any time a consumer demands it. In the first communication, or within 5 days of the first communication if the original communication has not done so, the collector must notify you in writing regarding the debt: how much you owe, to whom it is owed, and that you have the right to dispute the debt and seek validation. See 15 U.S.C. §1692g(a). You must, within 30 days of receiving that letter, make the demand for validation in writing. If you do, then the collector must provide you the validation, and must cease collection efforts until they have done so. Outside of this window, there is no obligation whatsoever of a debt collector to provide validation of a debt under the Fair Debt Collection Practices Act. If there was no offer of validation, that may be another issue altogether. But once that notice is given and 30 days passes, the obligation to validate a debt is gone.
2. If my account is closed, my balance cannot go up. This is untrue in most circumstances. There are several different types of debt. Most of them carry with them an interest expense. In nearly every credit card agreement or auto loan there is a provision that provides that interest may continue to accrue on any unpaid balance. Thus, just because the account is closed, if a balance remains interest may continue to accrue. Even if the debt is sold to another creditor, that new creditor often buys the account and all rights that go along with it – such as the right to collect interest.
3. If there is no signed agreement between me and the collector contacting me, I don’t have to pay them. Debts are often not collected by the original creditor. Many times a creditor will assign a debt to a collection agency for collection, and many times the debt is sold to another creditor or debt collector. A collector does not have to have a signed agreement with you in order to collect the debt. What they must be able to do, however, is prove a chain of title of ownership in a court of law should that collector elect to sue as a way of collecting a debt.
4. I can go to jail if I don’t pay the debt. Untrue. There is no such thing as a debtors’ prison. Though many collectors of payday loans tend to make this threat and scare people with telling them they have committed check fraud, the collector has no power or authority to have someone arrested for non-payment. Some states have even taken steps to modify laws to assure that people are not being sent to jail because of unpaid debt. Still we have heard many stories of debtors that have been sued for a debt and found themselves being taken to jail. There is some great confusion here, because while the debtor may think they are being taken to jail for not paying a debt, that is not at all the reason why. A debtor can find themselves in jail is for ignoring a court order to come to court. After the lawsuit is filed, and assuming the creditor wins and gets a judgment, the creditor can use some post-judgment tools to find out how to collect the judgment. One tool is a citation to discover assets. That is, they bring the debtor into court to testify under oath about what assets they have that can help pay toward the judgment. If one ignores the request to come to court for that particular hearing, or refuses to attend, they are held in contempt of court and a body attachment (like an arrest warrant) can be placed on them. Thus, it is not the failure to pay the debt that causes the arrest, its ignoring a court’s request to be present. You may not have any assets at all and may walk out of that hearing having had to pay nothing at all, but failing to show altogether can get you in trouble.
5. If I tell the collector I want to cease and desist all calls, then they have to stop calling me. Untrue. Telling the collector to stop calling you will get you nowhere. You may tell them that the time is inconvenient or the number they are calling is a bad one to call, and they have to heed those warnings. However, a cease and desist request must be in writing. There is much more to the topic of the proper way to request that a collector cease calls. For more insight read our blog on the cease and desist letter.
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