Fair Debt Collection Practices ActLegal Compliance Resource
July 19, 2013 — 968 views
Debt collectors are a necessity in money lending organizations because many a time debtors try to delay paying back debts. There are various reasons behind this. It may be that they have not earned the money back yet, or simply because they feel they can make even more money if they delay the date of paying their debts.
Debt collectors sometimes have to get their hands dirty for the very same reasons. However, it is important that they comply with the Fair Debt Collection Practices Act, otherwise they are liable to legal punishment. In this case they may not even be able to retrieve their money. Reading about and following the rules mentioned in the FDCPA should be a must for debt collectors.
Steps to Comply with the FDCPA
Instead of having to resort to violent measures, you should know that if you delay or fail to pay back a legal case, the debtor is made to pay back the interest in real property. Bringing the case to a legal entity like a judicial district provides you a clean and effective way of getting your loan back through the right legal measures required.
Ensure that your documentation is flawless. You require a contract signed and agreed upon by both parties, upon the breach of which you can seek legal help. In the contract, mention clauses regarding the measures you are allowed to take. Also, before giving out a loan, note how exactly your money is going to be used as an investment and not simply for the sake of consumption.
The FDCPA also states that wrongful drafting, which is not in compliance with the Act, is a civil liability. The debt collector is then liable to legal punishment and not the outstanding debtor. To avoid such penalization it is advisable to thoroughly double check your contract and compare it to the ethics mentioned in the Fair Debt Collection Practices Act.
The Fair Credit Reporting Act
The Fair Credit Reporting Act is a federal law in the United States of America that is designed to regulate and manage the processes of debt collection. These processes include the collection, use of information, use of consumer credit information, as well as dissemination of a debt.
All these clauses must be present in the contract that is drafted between a money lender and a client. Failing to adhere to the FCRA implies that you are practicing money lending illegally and that you will be liable to the U.S. Federal Government. The US Federal Trade Commission as well as private litigants are expected to follow the guidelines provided by the Act. This law was originally passed in the year 1970.
Follow the Guidelines
All in all it is vital to follow the guidelines incorporated in the FDCPA and the FCRA before drafting a contract for money lending. Both the money lender and the client should be aware of the legal implications behind the failure to comply with these laws.