The Federal Fair Debt Collection Practices Act was enacted to stop abusive, deceptive, and unfair debt collection practices by debt collectors. If you have been a victim of unfair practices of a debt collector, contact Creditlawyers.com for a FREE* evaluation of your debt collection issues. Under debt collection laws, you may be entitled to money damages and your attorneys' fees, if a debt collector has violated the law.
Yes, the law protects you from unfair and coercive debt collection methods. Know how the law can protect you and help you keep the debt collector in check.
JPMorgan Chase & Co.’s credit-card contracts will no longer require disputes to be settled through arbitration, a practice that lawmakers said was biased against cardholders, to help settle an antitrust lawsuit.
After a class action suit was filed by Philadelphia based law firm, Berger & Montague PC, the company stopped using arbitrators in July. Lenders including Bank of America, Citigroup Inc., Discover Financial Services and Capital One Financial Corp. secretly met or consulted for the purpose of requiring their cardholders to arbitrate all disputes.
Consumer credit laws are being created in many states that will force debt collection agencies to prove that the debt they purchased for pennies on the dollar exists and the consumer legitimately owes the money. North Carolina recently passed a law this month that requires debt buyers who file a lawsuit to provide documentation proving that they own the debt. In Indiana, there is the Indiana Deceptive Consumer Sales Act prohibits debt collectors from intentionally overstating the amount of the debt they are trying to recover.
National consumer credit laws such as the Fair Debt Collection Practices Act already prohibit collection agencies from harassing, deceptive or unfair practices such as telling neighbors or relatives about what is owed, or calling before 8 a.m. or late at night.
Since the recession started, at least a half-dozen states have adopted additional limits, like imposing statutes of limitations on collections and adding opportunities to punish abusive practices in court. Other states may soon follow suit.
It’s the “American Way”, turning opportunity into profit. It is certainly the way of the debt collector in these hard economic times with 15.1 million of the working class unemployed, 1/3 of which have been for six months or more. With people facing foreclosures, credit card delinquencies and utility shutoffs, the last thing they need is debt collectors harassing them day and night.
US News and World Report puts the average household consumer debt at $22,231, not including other debt such as student loans, which adds another $10,208, according to a May 2009 report. This debt has provided fodder for the explosive growth of debt collection agencies, which have grown in number between 4 to 6 times over the past few years to relentlessly pursue those on the lower end of the economic scale.
New York Financier J. Michael Cline had built a complex, billion dollar empire in the debt collection business, handling both sides of arbitration disputes for debt collectors through Minneapolis based NAF (National Arbitration Forum) and Axiant, LLC, a firm he acquired that handles debt collection.
In a July complaint, the Minnesota attorney general’s office alleged NAF deceived consumers and engaged in false advertising. Consumers didn’t realize NAF was financially affiliated with “one of the country’s major debt collection enterprises,” the complaint alleged. Accretive created Axiant in tandem with employees of Mann Bracken, a debt collector that represented credit-card companies in NAF arbitrations, the complaint alleged. At the same time, Accretive funds and NAF Inc. jointly own the back-office entity for NAF, called Forthright.
For more than a decade, most credit-card companies have required customers to use arbitration, rather than the courts, to resolve disputes over unpaid bills. Minneapolis-based NAF has mediated the vast majority of these claims. But both NAF and another arbitrator have stopped hearing arbitrations of consumer-debt cases, and major banks are dropping arbitration requirements.
Many may be familiar with the YouTube video posted by Ann Minch, a California woman that grew enraged after Bank of America raised her credit card’s interest rate to 30% after she had been a loyal customer for years. The Huffington Post recently covered Ann’s storing in their article Debtor’s Revolt: Woman Refuses to Pay Off Bank of America Credit Card. Unfortunately, these situations are all too common. You can see the video here:
It seems so simple. The woman is basically saying I am going to penalize you, Bank of America for raising my interest rate again. But is she really making things more difficult for Bank of America, or for herself in the long term? She knows she is going to get numerous calls from debt collectors, but does she realize there will be a permanent judgment against her if she does not pay the debt? And does she realize that although she does not have a job right now, they could garnish future wages and/or any and all bank accounts she will will have in her possession now and in the future?
Plus, if you are in default with one credit card, expect to see the interest rate rise on the others. They are within their rights to do this. What is starting out as a mild snowball could turn into an avalanche and literally ruin her credit and her finances for many, many years to come.
So what should she do?
1) Write an open letter to her State Representative and cc the executives at Bank of America. Be belligerent and persistent with the State Rep; debt collection practices this is a huge issue currently being discussed in Washington DC.
2) Take a look at the agreement with Bank of America to find out if there is an arbitration provision provided. She may be entitled to a free dispute which will require Bank of America to explain why they raised her interest rate.
3) Once she moved to the new bank with her savings, she should ask the new bank if they are willing to open a credit card for her at a lower interest rate and to transfer the entire balance over. Then, she can close the Bank of America card and avoid debt harassment permanently.
4) Once this pops up on her credit report (and it will) she needs to contact the credit reporting boards at Trans Union, Equifax and Experian regularly and report that the issue is being disputed because Bank of America raised the interest rate without cause. if it is being disputed, it cannot affect her credit.
I recognize that the woman is upset and I am not saying she does not have reason to be, but she is handling this entirely the wrong way. At CreditLaw.com, we’ve helped many consumers protect their rights, stop collection calls and address their debt using fair debt collection practices. While in the short term it may feel better to exercise one’s frustration by starting a “debtor’s revolt,” but sacrificing one’s financial future simply to make a point does not make sense. She needs to strategize and move forward.
Craig Thor Kimmel
www.creditlaw.com
1-800 NOT FAIR
