If someone owes you money, you have a legal right to collect the debt, right?  Well, it is not always that simple.  What happens when the debtor borrowed the money (or bought services on credit) in good faith, but later experienced financial hardships that harmed their ability to repay the debt?  The law protects the rights of creditors and of debtors in debt-related disputes.  Debtors must pay debts if it is possible for them to do so, but debtors must refrain from pursuing them in an intrusive way, and most debts must be written off after the statute of limitations has expired or if the debtor has declared bankruptcy.  If your company needs to collect a debt from a client, avoid the shady world of third-party collection agencies.  Instead, contact an Alabama creditors’ rights lawyer.

How the FDCPA Applies to First Party Creditors

The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects borrowers from abusive debt collection practices by debt collectors.  The original purpose of the current version of the law was to protect borrowers from harassment by third-party collection agencies.  Some provisions of the law also apply to first-party collectors, in other words, to the collection departments of the bank or company from which the money was borrowed.  Many first party borrowers refer the debts owed to them to third party debt collectors after a certain time period; even if your company does this, it is important to follow the rules regarding interactions with debtors during the period when your company is handling the debt collection process.

Unfair Practices to Avoid

The law protects borrowers from unfair, deceptive, or abusive acts and practices (UDAAPs), whether from first party debt collectors or third-party collection agencies.  The more you engage in UDAAPs, the less likely a court is to support your efforts to collect the money owed to you.  The following are UDAAPs of which first-party creditors should beware:

  • Expensive late fees that increase as more time passes since the original due date
  • Untrue or misleading information or ambiguous statements in correspondence sent to the borrower, especially if those statements are meant to intimidate the borrower
  • Disclosing the borrower’s debt to the borrower’s employer or coworkers

What First Party Creditors Can Do to Collect a Debt

You should communicate directly and politely with the borrower, preferably through written correspondence.  You should notify the borrower if you plan to file a lawsuit, but do not make empty threats.  Talk to a creditors’ rights attorney about your options for suing for payment of the debt.  You may be able to petition the court to garnish the borrower’s paychecks or bank account.

Let Us Help You Today

A creditors’ rights lawyer can help you collect debts owed to you within the limits of the law.  Cloud Willis Ellis represents creditors attempting to collect debts, including in cases where the borrower has filed for bankruptcy or has already filed for bankruptcy.  Contact an Alabama creditors’ rights attorney at Cloud Willis & Ellis for a consultation.