American consumers are protected by a number of federal debt collection laws, regulating credit card disclosures, the practices of debt collection agencies, the privacy rights of consumers, and more. FindLaw's collection of "Debt Collection Laws" articles and resources is intended to inform consumers about their rights related to debt collection and how to enforce them. Topics covered in this section include the Credit CARD Act of 2009, the Fair Debt Collection Practices Act, how to informally deal with creditors to your advantage, and how to stop harassment by debt collection agencies.
Credit Card Rules and the CARD Act
An increase in consumer debt and the issues arising from this industry resulted in the passage of the Credit Card Accountability, Responsibility, and Disclosure Act of 2009 (the Credit CARD Act), which established rules for the protection of credit card holders and applicants. The Act prevents credit card issuers of raising APRs on existing balances within a year of an account being opened except where they disclosed they would do so when the account was opened, when the change is due to an "index" change beyond the issuer's control, when the consumer fails to abide by a "workout" arrangement with the issuer, or where the cardholder fails to make minimum payments within 60 days.
The Credit CARD Act also requires disclosures when rates are increased. Issuers must disclose the total time to pay off existing debt, due dates for payments, fees for late payments, penalty APRs, the amount of principal and interest paid, as well as the holder's right to cancel when significant changes in terms take place. The Act protects against universal defaults and provides additional protections relating to payments and late payments. Follow the links below for more detail.
How to Deal with Debt Collection Agencies
Dealing with debt collectors can be stressful. Many debtors are unsure of their rights or how far debt collectors are allowed to go to ensure that they receive payment. The federal Fair Debt Collection Practices Act (FDCPA) outlines what actions debt collectors can take and also limit certain activities to prevent them from placing undue pressure on debtors. For example, the FDCPA permits debt collectors at reasonable times, but late night or early morning phone calls are forbidden.
Debtors may refuse to speak to a debt collector. If a debtor indicates in writing that they should end all communication they must do so. The debt collector can only communicate after receiving such a request to tell the debtor that they will cease future communication or to tell the debtor that they intend to file a lawsuit. The FDCPA also bars harassing, misleading, and threatening behavior, as well as other unfair collection practices.
A debt collection agency that violates the FDCPA can be sued by the debtor for damages in state or federal court. Debtors can also file a complaint with the Federal Trade Commission (FTC) or the state agency responsible for regulating collection activities. However, it should be noted that a valid debt will remain valid even when the debt collector violates the law.