Bankruptcy and the Fair Debt Collection Practices Act: Understanding Your Consumer Rights

What if you filed bankruptcy to stop debt collector harassment, but you continue to receive letters or phone calls after you filed? What do you do now?

Once you file for bankruptcy, all collector harassment must cease IMMEDIATELY! After filing, a debt collector that contacts you by phone or mail is violating federal bankruptcy law and federal consumer protection law known as the Fair Debt Collection Practices Act (“FDCPA”). Even a simple letter after you file for bankruptcy could entitle you to statutory damages of up to $1,000. Our firm understands the financial difficulty you are experiencing and will offer you a free consultation. We may even file your case for free! Debt collectors that violate the FDCPA must pay your attorney fees and costs. The FDCPA also requires debt collectors to pay for any emotional distress they have caused you.

As an example, suppose you filed for a Chapter 7 bankruptcy. You list the telephone company as a creditor on your bankruptcy schedules. You obtained a discharge of your debts, including the debt owed to the telephone company. After receiving your discharge, you receive a letter in the mail from a debt collector seeking payment of your old phone bill. Didn’t you file bankruptcy to stop debt collection letters? You should not be receiving a collection letter. The debt collector has violated the FDCPA by trying to collect a discharged debt.

You should contact us for a free consultation in order to evaluate your potential cause of action and determine whether to seek statutory and/or actual damages. Even if the debt collector was not aware of the bankruptcy, the FDCPA is a strict liability statute and the debt collector’s knowledge or intent is irrelevant. By sending the collection notice to collect on an uncollectible debt, the debt collector mis-stated the character and legal status of the debt, and violated the FDCPA, specifically 15 U.S.C. § 1692e(2). Upon filing of a lawsuit, the debt collector will likely attempt to prove it had procedures in place to avoid the error at issue. A good defense by the debt collector might show that the debt collector conducted a PACER search for possible bankruptcies prior to sending collection notices. If you received a collection letter post-discharge it is likely the debt collector did not have proper procedures in place. Upon bringing a successful lawsuit, you could recover up to $1,000 in statutory damages and have your attorney fees and costs paid for by the debt collector. If you lose, our firm doesn’t charge you anything. We fight for your rights and don’t win unless you do.

Congress enacted the FDCPA in 1978 to curb abusive and unconscionable debt collection practices. The FDCPA is a very broad law that prohibits debt collectors from using unfair, harassing, abusive, invasive or deceptive collection practices. As a federal law, the FDCPA applies to you regardless of the state in which you live. Many states, including Florida, have enacted laws substantially similar to the FDCPA. The Florida Consumer Collection Practices Act (“FCCPA”), contains many provisions similar to the FDCPA, however the FDCPA is more extensive than the FCCPA.

The FDCPA creates a private right of action, meaning individual consumers may file a lawsuit to enforce the provisions of the FDCPA. Persons victimized by debt collection abuse often do not possess the financial resources to pay an attorney to protect their rights. Likely recognizing this fact, the FDCPA provides that a debt collector that violates the FDCPA must pay the Plaintiff’s attorney fees, costs, as well as any actual damages. Emotional distress and related medical bills would be a common example of actual damages.

There are four basic requirements necessary to determine if you have a cause of action under the FDCPA.

(1) You must be a consumer.

(2) The debt must be a consumer debt.

(3) The communication must be from a debt collector.

(4) There must be a violation of the FDCPA.

First, to qualify as a consumer you must be an individual, not a corporation.  If your company is being harassed by debt collectors, you cannot seek relief under the FDCPA.

Second, the debt must be for a consumer debt. That means the debt must relate to funds used for family or household use. If you borrowed money or used a credit card for your small business or sole proprietorship, any efforts to collect that debt are not be regulated by the FDCPA. In the event you used a credit card for both personal and business purposes, as long as the majority of the debt resulted from family, household or personal use, the FDCPA applies. As an example, if you have a debt collector seeking to collect on a credit card debt of $1,000, and $501 of the debt stems from household use then the FDCPA applies. The relevant transaction date may also affect the analysis of what constitutes a consumer debt. What if the consumer purchases a home and later moves out and converts the property to business use as a rental? The Seventh Circuit reviewed these facts and determined the debt was a consumer debt as the transaction was originally for personal use.

Third, the communication must be from a debt collector. The FDCPA does not apply to the original creditor. For instance, if you obtained a mortgage and defaulted on the mortgage, any communication from the original mortgage lender attempting to collect a debt would not be covered by the FDCPA, even if the mortgage lender’s communication is abusive. The situation changes in the event you default on your mortgage and servicing transfers while in default. The FDCPA may apply to a servicer that obtains a loan in default. A law firm may also qualify as a debt collector under the FDCPA . Many debt collectors may be readily identified as such by going to the website of the Florida Office of Financial Regulation. If a debt collector is not registered and is actively collecting debt in the State of Florida, the debt collector is likely violating both the FDCPA and the FCCPA.

Fourth and finally and somewhat intuitively, there must be a violation of the FDCPA. Obvious violations include harassment by a debt collector who constantly contacts you at home and work, verbally abuse, improper threats or behavior that otherwise causes you emotional distress. Such actions would likely entitle you to receive actual damages in order to compensate you for emotional pain and suffering. Even in the absence of actual damages such as emotional distress, a debt collector is liable under the FDCPA for merely a technical violation. In this regard, the FDCPA is considered a strict liability statute. The debt collector must provide certain information to the consumer, including the name of the creditor, the consumer’s right to dispute the debt, and the identity of the debt collector as such. Failure to include the required information would constitute a technical violation of the FDCPA, making the debt collector liable to the consumer for statutory damages, attorney fees, and costs of bringing a successful action. If you are contacted by a debt collector via phone or mail, you should contact an attorney to assess your situation.

The FDCPA is extremely broad so as to cover a number of potential violations. The FDCPA prohibits any false or misleading communication from a debt collector. For instance, threatening to file a law suit to collect a debt of $20.00 likely violates 15 U.S.C. § 1692e(5) because the debt collector is threatening to take an action it has no intention of taking. A debt collector cannot use letterhead or symbols that imply the notice is from a government agency. The FDCPA also prohibits threats of imprisonment or garnishment of wages. The express violations are not exclusive, meaning certain actions don’t have to be specifically listed to be violations. For example, the FDCPA prohibits any “unfair” attempts to collect a debt, which could cover a multitude of actions.

Once the four requirements have been established, the debt collector may raise the bona fide error defense. This defense is only available in cases concerning unintentional violations. To succeed in the defense, the debt collector must prove that it had procedures in place reasonably adapted to avoid the error at issue. The bona fide error defense is mainly a factual question determined by looking at the specific policies and procedures put in place by a debt collector.

Since the FDCPA was passed, debt collection abuse has been substantially reduced; however the FDCPA remains a very demanding statutory scheme for debt collectors and provides significant safeguards to consumers even with respect to collection of valid debts. Each situation is different and if you are being contacted by a debt collector you should seek a free consultation with a consumer rights attorney.

Legal Disclaimer: The above article is for informational purposes only. Do not construe the information contained in this article as legal advice. Consult with an attorney before filing bankruptcy or taking other legal action.  Should you require legal advice regarding bankruptcy or consumer rights, contact Mickler & Mickler by calling (904) 725-0822 or sending an email to