The Fair Debt Collection Practices Act

It is time again to review the Fair Debt Collections Practices Act (FDCPA), Title 15 U.S. §1692.  This is a federal law designed to protect consumer debtors from "unscrupulous" collection activities.  It defines the practices, the people who are protected, and the people who are restricted.

The most damaging part of the act is the definition of "collector" (as only collectors are covered), and attorneys are included in the definition.

The FDCPA requires collectors to send a demand letter thirty (30) days prior to commencing suit.  The letters must contain information including:

      1.   The principal amount remaining on the debt;

     2.   The name of the creditor to whom the debt is owed; and

3.      The specific language that follows:

Unless you, within thirty days after you have received this notice, dispute the validity of this debt, or any portion thereof, I will assume the debt to be valid.

If you notify me, in writing, within thirty days after you have received this notice, that the debt or any portion thereof, is disputed, I will obtain verification of the debt and mail you a copy of that verification to you.

Upon your written request within thirty days after you have received this notice, I will provide you with the name and address of the original creditor, if different from the current creditor.

The FDCPA further restricts the jurisdictions in which suit can be brought to the city or county in which the debtor resides.  In certain circumstances, the matter can be sued upon where the debt was incurred.  To eliminate the ambiguity, one idea that I always suggest is that creditors stamp ("this document executed in [name of city or county], Virginia") adjacent to the original signatures of the executed documents, prior to their execution.

The jurisdiction restriction of the FDCPA can be the most costly provision for the creditor, as attorneys, attempting to pass on the economies of consolidating cases, may be unable to do so.  Additional trips to court result in additional costs which will, in one way or another (higher percentage fees), be passed on to the creditor.  Hence, a wise creditor should invest in an appropriately worded stamp for each site executing such documents.