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Hounded by Creditors? You have Rights under Federal Law

If you have fallen behind on paying your bills, in this economy you’re not alone. Like many in this position, you may start receiving calls from collection agencies regarding your debts. Although you may actually owe the debts, you have certain protections against creditor harassment under federal law.

The Fair Debt Collection Practices Act (FDCPA) is a federal law that protects you from abusive and misleading debt collection tactics. This law applies to all personal, household and family debts, such as credit cards, medical bills and other consumer-related bills. However, the act does not apply to debts that are incurred in the course of running a business.

The FDCPA applies whether or not the debtor had filed for bankruptcy. However, if the debtor files bankruptcy, he or she receives even more protection under the automatic stay.

What the FDCPA prohibits

The primary purpose of the FDCPA is to protect consumers against certain debt collection practices such as:

  • Calling debtors at times that are inconvenient (before 8 a.m. or after 9 p.m.) without the debtor’s permission
  • Intending to harass or annoy the debtor by calling them excessively
  • Contacting the debtor knowing that he or she is represented by an attorney
  • Using threats of imprisonment, violence or harm or obscene language when attempting to collect the debt
  • Making false or misleading statements
  • Threatening to attach, seize or sell the debtor’s property when there is no intention or legal basis to do so

Penalties for noncompliance

The FDCPA provides rather steep penalties for debt collectors that violate the law. Under the act, the debtor is entitled to file a lawsuit to recover any damages that he or she suffered as a result of the violations. In addition, the debtor can be awarded up to $1,000 for each violation of the act, even if there is no proof that he or she was damaged by the violations. Finally, the violator can be held liable for the debtor’s attorneys’ fees and court costs incurred because of the lawsuit.

Despite the act’s penalties, many debt collectors believe that the public is ignorant of their legal rights, leading them to think that they can get away with unlawful tactics. If you are being harassed by creditors, contact an experienced bankruptcy attorney to stop the harassing phone calls. In addition to addressing the issue of creditor harassment, an attorney can consider your debt situation and recommend a remedy that would be best for your circumstances.

Common Myths about Bankruptcy

There are two primary chapters of bankruptcy which individuals file; 7 & 13. Most people who file bankruptcy, file a Chapter 7. The goal in the Chapter 7 is to discharge your debts or relieve yourself of the obligation to pay those debts which are allowed to be discharged.

A lot of people, when considering bankruptcy, ask various questions about the process. Unfortunately the people they ask are often friends, family, co-workers, etc…

As a result, the answers they get to the questions which are posed are often wrong. So, I’m going to try to address some of the myths which surround bankruptcy.

  1. You’ll lose all of your property if you file bankruptcy. This is not true. Roughly 98% of the people who file a Chapter 7 bankruptcy can keep all of the property they own.
  2. If I own a house, I can’t file a Chapter 7. Again, not true. Most people who own a house have a mortgage on that property. Unfortunately, in this economy real estate has lost a significant amount of value so that there is little to no equity in most properties. Because of that, the vast majority of people who own a home can still file a Chapter 7 and keep their house if they choose. They’ll just have to continue making their mortgage payments.
  3. If I file bankruptcy, I’ll never be able to get credit again. This is also false. Different creditors have different policies with regard to how they lend money. The only thing which is certain is that the fact you filed bankruptcy will be on your credit report for 7 – 10 years. How creditors treat that information varies from lender to lender but as a general rule, most people can get another credit card six months from the date of their discharge. This is also the same for people looking to get a car loan.

Our office has even represented clients in the purchase of a home within 3 years of representing them in a bankruptcy.

Not all of these scenarios will apply to everyone but the point is that if you’re thinking about filing bankruptcy, contact an experienced attorney who will review your situation and provide you with accurate answers. We offer free initial consultations and would be happy to help you during a difficult time.