Significance

• The most important rule to keep in mind is that debt collectors are not allowed to threaten or harass people with vulgar or aggressive language. In addition, if the person being targeted by the collection agencies has a lawyer, then they are obligated to send all communications to the legal representative. They are forbidden by the Federal Trade Commission under the Fair Debt Collections Act from making repetitive phone calls or from publishing a list publicly of delinquent debtors.
  
  

Function

• Debtors who believe that they do not actually owe a particular debt can dispute the validity of a claim made against them. Once such a request for clarification has been filed, the collection agency must cease its attempts at collection until it validates that they are legally allowed to attempt to collect the debt on behalf of the creditor and that all amounts listed are accurate and that the debtor in question actually owes the money.
  
  

Features

• Collection agencies are required by law to provide all communications in writing if requested. If they make a settlement offer, it must be in writing or it has no legal standing. They are required to allow a debtor to make payments through a third party such as an attorney if they wish to. They are prohibited from making false statements like saying that they are from the government or acting on behalf of any government entity. The FTC disallows collection agencies from sending notices via postcard as well.
  
  

Considerations

• Some debt collection agencies purchase debts from creditors for pennies on the dollar to attempt to collect on the full amount. Others are merely authorized to collect on behalf of the original creditor, and as such do not have to be paid directly. They are required by regulations to state whether they have just been assigned the debt or if they own it. If the debt has been assigned, the borrower has the choice of dealing directly with the original creditor instead.
  
  

Effects

• Many collection agencies ignore the laws restricting them because many debtors are either unaware of the regulations that apply to the industry or are paralyzed by anxiety surrounding the entire process. Contacting a lawyer can make the process easier and less stressful, but it is not necessarily the best solution for all households. Direct negotiation and regular communication about debts over the mail along with self-education about applicable regulations can keep collection agencies in check, and result in getting a suitable settlement for debts without requiring any lawsuits.