Failing to pay a debt on time, as agreed, is a breach of contractual obligations. Business owners and service providers seeking payment of owed money or persons on the receiving end of harassing or inappropriate debt collection efforts will encounter legal issues relating to debt collection. So what is collections law? And how can a law firm like ours help you?
There are many laws governing debt collection practices and they vary depending on the type of debt and other circumstances. A seasoned attorney can assist you in enforcing your rights and resolving collection matters in compliance with all applicable rules.
Since many consumers and businesses fail to honor their duties and responsibilities, an entire industry has evolved to deal with the issue of collecting payments that are overdue.
The knowledgeable New York debt collection lawyers at Berkovitch & Bouskila, PLLC help creditors that are seeking to collect money that is owed by debtors.
Consumer Debt Collection – What Is Collections Law?
Debt collection practices and consumers protections are heavily regulated by law. The term “consumer debt” refers to loans that an individual or family incurs in order to meet the needs of the household.
Consumer debt is a significant issue in the U.S. At the federal level, consumer debt collection is primarily regulated by the Fair Debt Collection Practices Act; while in New York, the New York State Debt Collection Procedures Law applies.
Both statutes seek to protect consumers from abusive, unfair, or misleading practices by collection agencies. Debt collectors must take care not to violate these laws and to adequately train staff to avoid liability and resolve matters legally.
Federal and State law prohibits “unfair or unconscionable means” in debt collection, especially in discussing including:
- subject to some exceptions, it prevents debt collectors from talking to third parties about your debt
- contacting you at work place when you ask them not to do so, and
- harass, abuse, or mislead you into paying a debt.
New York law also prohibits debt collectors from seeking to collect a fee in addition to the debt owed.
Potential Legal Rights of Consumer Debtors
Under Federal and New York State law, debtors have specific legal rights. New York’s Consumer Credit Fairness Act protects consumers facing debt collection lawsuits.
What Is Collections Law In 2022?
The Consumer Credit Fairness Act requires that in pending lawsuits based on a “consumer credit transaction,” like a lawsuit to collect on overdue credit card debt, a creditor has to provide an extra notice in addition to serving the summons and complaint to the debtor. The notice must detail, among other things:
- the aftermaths of not responding to the pending lawsuit, and
- resources that are available to assist you defend against the action, such as seeking assistance from a private attorney.
The law also prevents creditors from getting a default judgment if the notice is undeliverable. The Consumer Credit Fairness Act further provides that even if you receive the notice, if service of the lawsuit is improper, you have a defense to the suit.
The plaintiff (the party that filed the suit) has to provide a similar notice if it files a motion for summary judgment.
They also have the right to receive an accurate credit report as well. This information helps ensure debts are legitimate and that debtors have an opportunity to defend themselves.
Along with these debtors are entitled to retain a collection lawyer and require the collection agency to cease contacting them and address matters to their attorney.
Potential Defenses against the Debt Collection Lawsuits
Creditors should be aware of the following potential defenses when seeking to enforce a payment obligation or collect a debt. An attorney can assist creditors or debtors to ensure the successful resolution of debt collection matters.
Under the Consumer Credit Fairness Act, most court actions concerning a consumer credit transaction have to be started within three years (typically, this means three years from when the debtor defaults on the obligation).
Debtors can dispute a debt if they believe the debt is not owed, it has been paid, or the amount is incorrect. For instance, a debt based on a contract claim may be subject to defenses of unconscionability, mistake, impossibility and other defenses.
Where debt collectors have engaged in prohibited conduct, a lawyer may also be able to bring legal action against the collector and recover damages. Consumers can also file a complaint with the Federal Trade Commission, which can sue collection agencies for violations.
Creditors and consumers should consult an attorney to evaluate their matter and determine the best course of action for eliminating or minimizing the amount owed.
What Option Do I have If a Creditor Violates Debt Collection Laws? What Is Collections Law?
If a creditor or collector violates the law, you can take one or more of the following actions.
- File a Complaint with the New York Bureau of Consumer Frauds & Protection: This office prosecutes businesses and individuals engaged in fraudulent, misleading, deceptive, or illegal trade practices.
- File a Complaint with the Consumer Financial Protection Bureau: A complaint can also be filled with the Consumer Financial Protection Bureau (CFPB) if you have an issue with a creditor or collector. After you submit a complaint, the CFPB will work to get you a response, typically within 15 days.
- Talk to an experienced legal counsel: If a creditor or collector violates federal or state debt collection laws, you might be able to file and win a lawsuit. If you prevail, you can probably get damages and attorneys’ fees. To get help initiating a lawsuit and to learn more about your options, talk to a debt relief lawyer.
Speak to a New York Debt Collection Attorney!
What is collections law? In short – it’s complicated. But we have you covered at BBLaw.
Parties in debt collection disputes should consult experienced legal counsel to assist them and ensure efficient, legal resolution to debt matters.
From sending demand letters to filing suit, obtaining judgments, examining debtors, repossessing property, and issuing garnishments, our firm can represent creditors in all facets of collection practice. We have also represented debtors in numerous workouts and foreclosure situations.