Question: Must the creditor notify a consumer before turning the account over to a collection agency?
Answer: The creditor generally is not required to let you know it’s referring your account to a collection agency.
Q: Is debt collection regulated by law?
A: The collection of consumer debt by third-party agencies is among the most regulated industries in the United States, falling under the purview of federal and state regulation as well as federal and state law. This includes the newly created Consumer Financial Protection Bureau, Federal Trade Commission, Congress, the Hawaii Legislature and the Hawaii Department of Consumer Affairs.
Q: What should a consumer do if contacted by a debt collector?
A: Respond as soon as possible to determine the purpose for the contact. If you don’t respond, the collection agency will continue to try to make contact with you to collect what is believed to be a valid debt. Ignoring communication from a debt collector will not make the debt disappear.
Q: Must debt collectors identify themselves and say why they’re calling?
A: Yes, debt collectors must identify themselves. However, under the federal Fair Debt Collection Practices Act, they can only disclose details about the reason for the call to the consumer who owes the debt they are seeking.
Q: How can consumers find out what they allegedly owe?
A: Consumers should check the accuracy of their credit report at least once per year. If contacted by a debt collector, in the first contact or within five days after the initial contact, the collection agency must provide the following information, referred to as the "validation notice":
» The amount owed
» The name of the creditor
» The process to follow to dispute the bill or verify the debt
Q: Can a consumer dispute the accuracy of a bill? What is the procedure?
A: If you dispute the accuracy of a bill, send the collection agency a written notice. If you notify the debt collector of your dispute or request verification of debt within 30 days of receiving the validation notice, the collection agency must stop all communications with you upon receiving your written notice. However, they may resume contact with you once the verification of the debt is obtained and mailed to you.
Q: Will a consumer have to pay more because the debt is being collected by a collection agency?
A: By law a third-party debt collector cannot attempt to collect more than the amount owed. Interest, fees or other charges must be authorized by the agreement creating the original debt or permitted by state law. Review the credit agreement to determine if you are held accountable for interest charges, late fees or attorney fees.
Q: Can a collection agency contact other people to discuss my debt?
A: Third-party debt collectors may contact others in an attempt to locate you, but they may not discuss your account or debt status with a person other than you without your permission.
Q: Does debt have a statute of limitations?
A: Potentially, but this depends on the law of the state in which you live. However, in most states the statute of limitations only prohibits legal action or the threat of legal action. There is generally no limit on how long a creditor can attempt to collect on a debt. In Hawaii the statute of limitations for a breach of contract is six years.
Q: Where can I go for more information on debt collection?
A: You can try www.askdoctordebt.org, a free website, no registration or sharing of personal info required, or www.cfpb.gov.
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Interviewed by Alan Yonan
