US DEBTORS' LEGAL RIGHTS

Debtors' rights are those rights that are guaranteed by law for those who borrow money, whether it is for buying a home, a car, or personal use. These rights protect debtors from being treated unfairly by creditors. Different rights are available for different situations.

Where debtors (borrowers) get into trouble is in overextending their finances - spending not only beyond their means today, but beyond the means they’ll have months and even years from now. Over time, balances add up, the interest adds up and, before they know it, they’re over their head in debt-falling behind with payments, watching their credit rating tumble and avoiding the phone when it rings.

While you can’t exactly hide from your debt, even consumers with past-due accounts have rights. Debt collectors must abide by the Fair Debt Collection Practices Act. Under the law, debt collectors may not harass, oppress, or abuse any person. If a creditor violates the Fair Debt Collection Practices Act, the debtor has the right to sue.

FAIR DEBT COLLECTION PRACTICES ACT

The federal Fair Debt Collection Practices Act, or FDCPA, prohibits certain debt collectors from engaging in abusive behavior. It covers debt collectors that work for collection agencies. It does not cover debt collectors that are employed by the original creditor (the business or person who first extended you credit or loaned you money). If a debt collector that works for a collection agency breaks the law, you can take steps to make sure it doesn't happen again.

ILLEGAL BILL COLLECTION PRACTICES

• Contacting third parties, other than an attorney or a credit bureau, except to locate you
• Calling you repeatedly or contact you before at an unreasonable time (before 8 am or after 9 pm is defined as unreasonable)
• Contacting you at work if your employer prohibits it
• Using or threatening to use violence
• Using obscene or profane language
• Placing telephone calls to you without identifying themselves as bill collectors
• Claiming you owe more than you do
• Claiming to be attorneys
• Claiming that you'll be imprisoned or your property will be seized
• Sending you a paper that resembles a legal document
• Adding unauthorized interest, fees or charges

What can you do if a debt collector engages in illegal activity?

Tell Them to Stop

Under the FDCPA, you have the right to tell a collection agency employee to stop contacting you. Simply send a letter stating that you want the collection agency to cease all communications with you. All agency employees are then prohibited from contacting you, except to tell you that collection efforts have ended or that the collection agency or original creditor may sue you. You can do this even if the collector is not breaking the law.

Document Illegal Behavior

If a debt collector breaks the law, document the violation as soon as it happens. Start a log -- and write down what happened, when it happened and who witnessed it. Then, try to have another person present (or on the phone) during all future communications with the collector. In some states, you can record phone conversations without the debt collector's knowledge.

But beware, in a few states this is illegal unless you get permission from the collector or warn him that you are recording the call. Check with your state consumer protection agency to find out if you live in one of these states.

File a Complaint

File an official complaint with the Federal Trade Commission (FTC), the federal agency that oversees collection agencies. Ask the FTC to send you a complaint form, or just write a letter. Include the collection agency's name and address, the name of the collector, the dates and times of the conversations, and the names of any witnesses. Attach copies of all offending materials you received and a copy of any tape you made.

Send a copy of your complaint to the state agency that regulates collection agencies for the state where the agency is located. To find the agency, call information in that state's capital city. Also send a copy to the original creditor and the collection agency. The original creditor may be concerned about its own liability and offer to cancel the debt.

Once your complaint is filed, don't expect immediate results. The FTC may take steps to sanction the agency if it has other complaints on record. The state agency may move more quickly to sue the collection agency or shut it down for egregious violations. Your best hope is that the creditor will offer to cancel the debt.

Sue the Debt Collector

If you've been subject to repeated abusive behavior, consider suing the collection agency. But don't bother if the illegal behavior was annoying but nothing more. For example, if the collector called three times in one day but never again, you probably don't have a case.

GARNISHMENTS

Garnishment means that a creditor is taking a certain amount of money out of a debtor's wages, bank accounts, or other monies payable. A creditor cannot use a garnishment against a debtor unless the creditor has won a judgment in court against the debtor.

Some types of money cannot be garnished, including:

• Government benefits (Social Security, Worker's Compensation)
• Child support

The only way to end a garnishment is to either pay the debt or file a garnishment exemption claim form with the court that issued the judgment against you. This form is fairly complicated, and you should probably seek the advice of a lawyer before filing one.

LEVIES & ATTACHMENTS

A levy, or attachment, is the taking and selling of a debtor's property to pay off his debt to a creditor. A creditor can only get a levy against a debtor if the court has issued a judgment in the creditor's favor.

The levying process starts when the sheriff or deputy comes to your home and itemizes all the property that can be sold to satisfy the creditors' judgment. Some property is exempt from levies, including:

• Up to $5000 in household goods and up to $1000 in clothing
• Prescription drugs & medical aids
• Up to $10,000 worth of tools and equipment used for work or school purposes
• Some amount of equity in the debtor's home and car as determined by the state

COLLECTIONS

A debtor is protected from aggressive collection tactics by the Fair Debt Collection Practices Act (FDCPA). This act protects the legal rights of a debtor. For more on the FDCPA see Credit Collections.

REPOSSESSIONS

Repossession is the taking of property by a creditor where the creditor has an interest in that property. For example, if an individual takes out a car loan and does not make his payments on time, the creditor may repossess the car. Debtors' have a number of rights that prevent creditors from treating them unfairly when repossessing property.

Dealing with debt can be complex and frustrating. If you misunderstand you rights you could find yourself further in debt by paying a debt you aren't obligated to pay. An experienced lawyer knows about debtor's rights in your state, and can help you avoid further liability. An attorney might also help stop a collection practice being made against you.