Creditors’ rights, consumer protection, credit reporting, and collection practices are addressed by laws of creditor rights, consumer protection, and consumer debt recovery. Using credit cards, taking out a personal loan, or making mortgage payments puts you in “debtors.” Credit card debt, vehicle loans, school loans, and mortgage loans are the most frequent forms of debt. All fall under the category of debt collection law.
What Does Debt Collection Law Mean?
Debt collectors are limited in what they may do under the Fair Debt Collection Practices Act (FDCPA), a federal statute.
There are laws to safeguard you as a creditor’s debtor at each stage of the process. For example, the “Truth in Lending Act” ensures that the lender properly reveals all the transaction terms when you engage in a credit arrangement.
Consumers who have a billing dispute with a creditor can get help from laws like the Fair Credit Billing Act.
Creditors and debt collectors have a variety of options available to them if borrowers are unable to pay your obligations. It’s possible that they’ll be able to seize your property, bank account, earnings, or automobile if borrowers fail to pay them back in the timeframe specified in the court order.
What a debt collector can and can’t do while seeking to collect a debt is regulated by the Fair Debt Collection Practices Act (FDCPA). Lawmakers in the United States passed the Fair Debt Collection Practices Act in an effort to regulate the debt collection industry and safeguard consumers from unfair practices.
The FDCPA does this by levying heavy fines on debt collectors who break the Act. In addition to the FDCPA, there are other federal and state laws that say creditors and debt collectors can’t use harassment or threats to get debtors to pay.
Some of the toughest protections against unfair and abusive debt collection methods in the country were put in place by the New York Department of Financial Services in March 2015.
A creditor may mistakenly believe that a debt you owe belongs to someone else.This is a common occurrence when someone is the victim of identity theft.
Using someone else’s name, social security number, or other personal identifying information to create credit accounts, utilize your current credit accounts, or receive other advantages is known as identity theft, and it is a serious felony. Then you need to do what you need to do to clear your name and get your credit rating back.
How Debt Collection Law Helps Creditors
Debt collection is a complicated process, and businesses have a variety of options at their disposal when a consumer refuses to pay their bills (as “debtor”). Self-help remedies (also known as “non-judicial” remedies) and judicial remedies (sometimes known as “judicial” remedies) are among these options.
Famous Debt Collection Cases In NYC
Below, you will see some of the famous debt collection case that might not happen if a debt collection lawyer was in there to help!
John Doherty Case
If you ask John Doherty why he didn’t read the loan paperwork before signing, he said, “I was desperate to obtain the money. I didn’t care about it.” He stepped into the lower Manhattan offices of the Chesterkirk Company in February 1910, when he was twenty-three years old, as a railroad clerk. He was in need of a financial boost.
When it came to repaying the loan, Doherty had nothing except his future earnings potential and what he called his “reputation.” In the course of a short credit check, Doherty was accepted for a loan.
Doherty signed where the office manager had crossed out a long form with a cross in lead pencil. In return for his agreement to pay back the loan principle plus fees and interest totaling $10.15 within three months, he got $34.85 in cash. The 6% annual interest rate permitted by New York State was much exceeded by the interest levied. Doherty’s savvy
Over the course of a year, the annualized interest rate, including expenses, exceeded 100%.
In the early 20th century, “salary loans,” which were small loans backed by the borrower’s future pay, were a common way for working-class people in cities to get credit.
Labor Loan Cases
New York City had at least 30 recognized wage lenders operating at the time of the 1908 investigation, as well as possibly many more who were not publicly advertised. Anecdotal information suggests that a large number of employees rely on salary lenders, at least in certain industries. One employee of a transportation firm in
At least 90% of his employees in New York City had taken out wage loans, according to the city’s estimates. Payday loan companies, of course, are not the only option available to consumers.
In New York City, there were both pawnbrokers and chattel lenders. Pawnbrokers have been giving credit to people in need for generations. Chattel lenders gave loans by putting a lien on the borrower’s property.
Therrien Case – 2017
Many people in the United States are being harassed by debt collectors for money they do not owe, which is known as “phantom debt.” The idea dates back centuries: As early as 1800, inmates of a New York debtors’ jail issued a journal called Forlorn Hope in which they made light of the situation.
Only a few years ago, organized attempts to collect on bogus debts began to emerge. Personal information, such as previous loan applications, long-expired commitments, and data from compromised accounts, may be easily obtained online and rearranged to seem like a list of debts.
In order to collect on the fake debts, they enter into agreements with dishonest debt collectors. Most of their borrowers aren’t well-off, and they’re likely to be bombarded by calls offering additional loans. Some people believe that since the collectors know so much about the debt, it must be genuine.
There is nothing complicated about this issue, yet there is no way to solve it either. When a contact center in India made 8 million calls in eight months to collect bogus invoices, it was shut down in 2012. Since then, the FTC has busted at least 13 more schemes of a similar kind.
Because the data files had been traded and repackaged so many times, authorities were unable to identify the original culprits in most instances. Victims have no choice but to accept the abuse.
Consumers Fail to Pay Debt Nationwide
Often, customers don’t reply to these cases either because they don’t know about them or because they lack the financial means to oppose them. According to a 2017 Consumer Financial Protection Bureau study, nearly 15% of Americans have been sued by a debt collector.
Only 26% of them showed up for their court date. There were over 70% of cases that ended in default judgment for the debt collection companies that were examined by the Pew Research Center, indicating that many individuals do not reply when sued.
As Erika Rickard, head of the civil legal system modernization project at Pew, points out, the cost for consumers to hire an attorney and pay court costs is sometimes more than $5,000, while the typical debt is less than $5,000. The percentage of customers who hired a lawyer to defend them in debt collection actions fell to less than 10% between 2010 and 2019.
It is more probable that individuals who do reply and engage an attorney will succeed in their case. At least, they can come to an agreement on the resolution of their outstanding obligations with the other party.
According to a study by the National Center for State Courts, of the 300,000 debt cases filed in Virginia between April 2015 and May 2016, lawsuits were more likely to be dropped if consumers had counsel. In a comparable report focused on Utah courts, 53% of customers who had a lawyer won debt collection actions against them, compared to the 19% who did not have one.
Debt collectors rely on a default judgment since very few people show up to court proceedings. This gives them the power to garnish paychecks, impose liens on property, and freeze bank accounts. Debt collectors may either cooperate with the debtor to come to an agreement, or they can go to court and seek a judge to overturn the default sentence.
Why BBLaw Is The Debt Collection Law Firm In NYC You Need
Attorneys for debt collection may be useful if you are involved in a legal dispute. Debt collectors and creditors may try to take advantage of you if you don’t have a lawyer on your side.
A debt collection lawyer may help you recover money owed if you have successfully sued someone but haven’t been paid. For further information on how to protect yourself as a consumer and how to go about collecting on a debt, consult with an attorney who specializes in this area of law.
Most of the time, BBlaw lawyers work with a percentage reward of the debt and only be paid if you get your money from debtors.
A wide range of legal issues, from conflicts between company partners to multimillion dollar commercial torts, are handled by our firm.
Because of our extensive expertise and experience, we will be able to appropriately examine your situation at any level of a dispute with an eye toward achieving your objective.
In spite of our size, we have never shied away from a challenge and will actively defend your rights in and out of court, no matter how large or small your organization may be. We work tirelessly to ensure that your interests are safeguarded via well-planned and tailored methods.
We’ve devised a tenacious, cost-effective strategy for collecting business debt. As a secured creditor, your interests are best served by ensuring that your rights under the Uniform Commercial Code are upheld and enforced.
In order to protect your rights in debt collection law, all of the lawyers at our company have extensive expertise in the collection of a broad range of corporate debts. Using a tailored strategy, Berkovitch & Bouskila’s attorneys help business clients optimize their recovery alternatives. There is no one-size-fits-all solution for a client’s needs.
Post Judgment Proceeding
QWinning a lawsuit does not guarantee that the money awarded in that lawsuit will be paid to the plaintiff. When a defendant refuses to pay a judgment, the only choice is to seek enforcement of the decision. In order to enhance the likelihood of recovering from such a decision, our company follows different New York legal procedures.
A post-judgment process is a big facet of debt collection law, and may be instituted if required in order to discover the debtor’s resources and/or the information associated with them. Additionally, we hire independent firms to do asset and other searches that help in the execution of a judgment.
With a help of debt collection law, you can back up creditor’s security interest by anything, from equipment and inventory to accounts receivable, investment property, instruments, intangible property, and fixtures.
Clients also get advice from our firm addressing occurrences particular to secured transactions, such as changes in the debtor’s name or location, assignments and transfers of collateral, as well as purchase money liens on after-acquired property interests.
For the legal problems that most often affect our corporate customers, we provide basic company and compliance assistance.
We assist firms to reduce operational and regulatory risks and provide them with ongoing, up-to-the-minute guidance in an ever-changing field.
Clients can rely on us to assist them navigate the ever-changing landscape of regulations and best practices that affect their day-to-day operations.
We Help You Like No Other!
We have extensive experience in complicated transactions and can help our customers find the best terms and structures for their financial transactions. Merchant Cash Advance, Lines of Credit, Factoring, Hard Money Loans, and other kinds of receivable and asset-based financing are all areas of expertise for us.
Some of our customers are industry pioneers and leaders, and we help them choose which transaction type is most appropriate for their particular situation.