Why The Fair Debt Collection Practices Act Is Very Important To Your Business
The Fair Debt Collection Practices Act was enacted to address and reduce the problems associated with harassing debt collectors. It does, however, offer benefits to collection agencies as well. Through these laws and regulations, the Fair Debt Collection Practices Act encourages collection agencies to act in a professional manner when attempting to collect a debt.
Those that are in the business of extending credit have a reasonable expectation of being paid back. Whether a product is delivered with the agreement to pay upon receipt or an individual is issued tens of thousands of dollars in unsecured credit card cash advances, the lender is entitled to being paid back.
Clearly, there are instances when the lender is not receiving the payments they are due. There can be several reasons for this. Sometimes, the borrower may be experiencing financial difficulties and needs more time to pay their debt. However, at other times, they may simply be irresponsible about paying their debt and they default. Whatever the reason, the lender is fully within their rights to seek and expect payment.
This is where collections agencies come into play. Their goal is to acquire the payment due their clients. However, they may not take a Wild West style approach and do anything they wish to do in order to recoup a debt. This is where the Fair Debt Collection Practices Act comes into play.
The Fair Debt Collection Practices Act was enacted in 1978. There have been added amendments and modifications to the Act that have altered it in some ways. For example, a new clause to The Fair Debt Collection Practices Act states that a debtor in collections can request the collection agency to cease further contact with him/her, and the collections rep must comply with this request.
Consider though, that this does not prevent the collection agency from pursuing a valid debt. Collection agencies are still within their rights to inform the debtor of their intention to pursue the debt via other legal channels, namely through an attorney.
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This will only occur if the debtor informs the collection rep in writing. If the communication has stopped because of the inability to reach the delinquent payer, then it is legal to pursue third parties in a courteous, non-threatening manner. Additionally, the collection rep will not be allowed to disclose the call is over debt issues so as not to invade the privacy of the delinquent payer. Do these rules seem somewhat skewed to help out the delinquent payer? To a degree, yes; however, they also help the collection agencies stay out of trouble by engaging in unprofessional conduct.
As these rules and laws clearly demonstrate, the purpose of the Fair Debt Collection Practices Act is to eliminate unprofessional and abusive behavior on the part of some collection agencies. Such behavior undermines the credibility of the business and also makes it difficult to collect revenues. After all, who wants to deal with collection agencies that are abusive?
Collection agencies found to be in violation of The Fair Debt Collection Practices Act and Your Rights. can be penalized in a number of ways, to include legal actions. They can also have their license revoked. Most common are fines levied against offending agencies. However, collection agencies are within their rights to appeal these fines.
The Fair Debt Collection Practices Act is both lengthy, and can be somewhat complex. Thankfully, it is posted in its entirety on the Federal Trade Commission’s website. We will be really happy if you just say hello and share your views with us.