Last updated: June 2011
Fair Debt Collection Practices Act
Who Is Covered
What Transactions Are Covered
Validation of Debt Notice
If Debt if Disputed
Prohibited Contacts with the Consumer
Prohibited Contacts with Other Persons
Prohibited Harassment or Abuse
Prohibited False or Misleading Statements
Prohibited Unfair Practices
The Consumer’s Options and Remedies
What the Consumer Should Do
Remedies in Court
Judgments as Liens On Real Estate
Citations to Discover Assets
Wage Deductions in General
Non-Wage Garnishment in General
Fair Debt Collection Practices Act (FDCPA), 15 USC § 1692 et seq.
Illinois Collection Agencies Act, 225 ILCS 425/1 et seq.
Exemption of Personal Property, 735 ILCS 5/12 - 1001 et seq.
Maximum Wages Subject to Collection, 735 ILCS 5/12 - 803 et seq.
Lien of Judgment,735 ILCS 5/12 – 101 et seq.
Exemption of Homestead, 735 ILCS 5/12 – 901 et seq.
Supplementary Proceedings, 735 ILCS 5/12 – 1402 et seq.
Wage Deductions, 735 ILCS 5/12 – 801 et seq.
Non-Wages Garnishments, 735 ILCS 5/12 – 701 et seq.
The Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., regulates the actions of both collection agencies and collection attorneys.
The FDCPA does not govern the conduct of individuals, businesses, or services that are engaged in collecting their own debts. 15 U.S.C. § 1692a(6).
One exception: creditors who use a name other than their own in collecting a debt (e.g., Acme Hardware uses the name “Jim’s Collection Agency” to collect its own debts) are covered by the FDCPA. 15 U.S.C. § 1692a(6).
Otherwise, if the creditor is attempting to collect its own debt, the consumer may have to resort to a claim against the creditor in tort, e.g., intentional infliction of emotional distress, abuse of process, or for an unfair practice under the Illinois Consumer Fraud Act, 815 ILCS 505/2.
Collection agencies and collection lawyers are strictly regulated by the FDCPA. The definition of a collector includes attorneys who regularly collect or attempt to collect consumer debts for clients. Heintz v. Jenkins, 514 U.S. 291 (1995). It also includes businesses that operate to collect debts of other businesses, or who purchase defaulted debts from other businesses. Schlosser v. Fairbanks Capital Corp., 323 F.3d 534 (7th Cir. 2003).
The FDCPA covers debts arising out of transactions that are primarily for personal, family or household purposes, whether or not they have been reduced to judgment. 15 U.S.C. § 1692a(5). Business or commercial debts do not fall within the protections of the FDCPA.
Medical bills are covered. Bingham v. Collection Bureau, Inc., 505 F. Supp. 864 (D. N.D. 1981).
Rental debt is covered. Emanuel v. American Credit Exchange, 870 F.2d 805 (2d Cir. 1989).
Student loans are covered, Juras v. Aman Collection Service, Inc., 829 F.2d 739 (9th Cir. 1987).
Credit card debt is covered, Challen v. Town & Country Charge, 545 F. Supp. 1014 (N.D. Ill. 1982).
Insurance bills are covered, Hamilton v. United Healthcare of Louisiana, Inc., 310 F.3d 385 (5th Cir. 2002).
Utility bills are covered, Piper v. Portnoff Law Assoc., 262 F. Supp. 2d 520 (E.D. Pa. 2003).
On the other hand, car accident debts, taxes (Mortland v. I.R.S., 2003 WL 21791249 (W.D. Tex. 2003)) and child support debt (Mabe v. G.C. Services Limited Partnership, 32 F.3d 86 (4th Cir. 1994)) may not fall under the FDCPA definition of “debt.” See FTC Official Staff Commentary §803(5) and Paskowitz, FTC Informal Staff Letter (July 18, 1990).
The collector must send to the consumer in writing, a certain notice, within 5 days of its first contact with the consumer. This notice must provide the following information (“validation notice”):
The validation notice must be conspicuous and cannot be overshadowed by the content of the dunning letter. In Swanson v. Southern Oregon Credit Service, 869 F.2d 1222 (9th Cir. 1988), the Court ruled a validation notice that was written in print much smaller than the text of the dunning letter did not effectively convey the rights of the debtor under the FDCPA.
If, within the 30 day period specified in the validation notice, the consumer disputes the debt in writing, or any part of it, or requests the name and address of the original creditor, then the collector must stop collection of the debt, or any disputed portion of it. It cannot resume collection until it obtains verification of the debt or a copy of a court judgment and mails those things and/or mail the name and address to the consumer. The failure of the debtor to dispute the debt within this 30 day period may not be construed as an admission of liability. 15 U.S.C. § 1692g(c).
In the initial written communication with the consumer and, in addition, if the initial communication with the consumer is oral, in that initial oral communication with the consumer, the debt collector must include the following statement:
"This is an attempt to collect a debt and any information obtained will be used for that purpose."
This statement often appears at the bottom of the document. If it is not included, the collector is breaking the law. However, this warning is not required to be included in formal pleading made in connection with a legal action.
Unless the consumer or a court has given permission, the debt collector cannot contact or communicate with the consumer (or the consumer’s spouse, parent or guardian), as follows:
Note: If the consumer writes such a letter, the creditor can use other methods to collect the debt, such as filing a lawsuit. Also, the collector can tell the consumer what the creditor intends to do in order to collect. The collector is permitted to continue communications with the debtor's attorney. Tinsely v. Integrity Financial Partners, Inc. 634 F.3d 416 (7th Cir. 2011).
Unless the consumer or a court has given permission, a collector cannot contact or communicate with anyone about the consumer or the debt, as follows:
Note: In Hartman v. Meridian Financial Services, Inc., 191 F. Supp. 2d 1031 (W.D. Wis. 2002) the court ruled unlawful the collector’s communications with the debtor after the collector was notified that an attorney represented the debtor. In West v. Costen, 558 F. Supp. 564 (D.C. Va. 1983) the court ruled a collector who had discussed a debt with the uncle of a debtor had violated the FDCPA. However, the collector is permitted to continue communications with the debtor's attorney. Tinsely v. Integrity Financial Partners, Inc. 634 F.3d 416 (7th Cir. 2011).
A collector cannot harass or abuse the consumer. Some examples of harassment or abuse which are forbidden include the following:
Note: In Bingham v. Collection Bureau, Inc., 505 F. Supp. 864 (D.C.N.D. 1981), the court ruled a statement that a debtor “shouldn’t have children if she couldn’t afford them” to be abusive.
Debt Collectors are forbidden to make false or misleading statements in any oral or written communication with the debtor. Examples of statements which may be false or misleading include:
Note: Where a collection letter goes out under the letterhead of an attorney, it may violate the FDCPA if the attorney had little involvement with collecting the debt and the prime mover was a collection agency. Avila v. Rubin, 84 F.3d 222 (7th Cir. 1996); Nielsen v. Dickerson, 307 F.3d 623 (7th Cir. 2002).
Unfair practices by debt collectors are prohibited. These include:
Note: In Patzka v. Viterbo College, 917 F. Supp. 654 (W.D. Wis. 1996) the court held the debt collector violated the FDCPA by adding a collection fee and interest to a debt when such items were not permitted by state law. However, an assignee of the debt is permitted to add interest at the same rate as the original creditor, if authorized by the contract with the debtor. PRA III, LLC v. Hund, 364 Ill.App.3d 378 (7th Cir. 2006).
Consumers that are being subjected to unfair or unlawful practices by a debt collector should consider doing the following:
Any lawsuit for violation of the above laws must be brought in federal or state court against the debt collector, and not against the creditor for whom the debt is being collected. There is a one-year statute of limitations. 15 U.S.C. § 1692k(d). Remedies allowed by the law at 15 U.S.C. § 1692k include:
In class actions the damages are capped at the lesser of $500,000 or one per cent of the defendant’s net worth.
Note: Injunctive relief is not provided for under the FDCPA.
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