Laws To Protect Debtors From Being Harassed By Money Lenders And Collectors
You may need to take a loan from a money lender and after getting it you may have failed to make a couple of payments on time. Both these situations are natural and are highly likely to happen in anyone’s life and business. The money lenders even know that such situations may rise inevitably. It is also true that when you fail to may payments for your loan the creditor may give your account to a collection agency to recover the amount due from you.
The banks and financial institutions have two available options to recover their loans. One is using debt collection agencies and the other is taking help of a debt collection attorney. However, an attorney will have more legal resources to utilize.
Given so many facts and scopes, the creditor still does not have the right to harass their customers even if they have failed to pay. There are specific laws and guidelines laid down by the government which every bank and financial institution must abide by strictly.
The banks and financial institutions may even hire the service of an attorney in extreme cases but all time the rights of the debtors must be protected. They may talk with delinquent consumers regarding the debts outstanding to find out an easy solution.
The protection provided to debtors
As a debtor, you must know that all banks and financial organizations have to work in compliance with the Consumer Financial Protection Bureau’s mandate. They must also comply with the federal Fair Debt Collection Practices Act.
- In most cases, the banks and other money lenders do not want to go into the legal process with the delinquent customers as that will have a negative impact on the reputation and business in the future.
- The net gain or loss of the banks and the financial institution is the prime factor irrespective of its undertones.
- Though legal processes are a part of the finance industry banks usually have to consider escaping the spotlight litigation that may result eventually in a loss of thousands of dollars.
Therefore, banks and financial institutions must be selective with their loan recovery process with the delinquent consumers.
Deal with creditor harassments
Taking out a loan from a bank or from https://www.libertylending.com/does not mean you have to give in to their practices of recovery of loans in whatsoever way.
- Creditor harassment can be avoided by taking legal action which is permissible under the law.
- The consumer protection laws convey a strong message to the creditors that harassing you will not help them in getting paid and it will even jeopardize the prospects and prolong matters.
- The laws specify your rights and ensure that you follow it when you fall behind your repayment schedule on your mortgage, credit card, auto loan or any other loans.
Therefore, whether you are a victim of predatory lending or debt consolidation scam, misleading information by the lenders or for any other reason, you cannot be harassed by the creditors.
Different options available
The consumer protection laws will help you in several different ways.
- You can use the ‘automatic stay’concept filing bankruptcy against the banks or any other creditor. This will ensure that efforts by the collectors such as untimely phone calls, frequent letters, threats, threatening emails, possibilities of wage garnishments, accounting levies, and creditor lawsuits will be annulled.
- You can wipe your debt off if you file Chapter 7 bankruptcy as that will virtually discharge all your debts except those on your property that you want to keep.
- You can also avail Chapter 13 bankruptcy to help you modify your loan payments by making easy and affordable repayment plans. This will prevent your home from foreclosure in case of a mortgage loan.
All these bits of help will be provided to you in accordance with the Fair Debt Collection Practices Act or FDCPA.
Types of harassments prohibited
According to the law, the creditors or debt collector can make phone calls which is the most common process, but that should not be made in odd hours. Apart from that, there are several other restrictions laid by the law against the creditors and debt collectors to prevent unfair debt collection practices. These are:
- Calls must be made to inform or to discuss the matter but surely not to annoy and abuse or threat you with dire consequences.
- No obscene language, threatening for harm or violence or publishing your name in the delinquent list is allowed.
- There must be no misrepresentation of facts, names, and figures as well.
- Debt collectors or creditors must mention who they are and can never pose as a lawyer, law enforcement or any other person who they are not. If they do you have the legal right to sue the debt collector for violating the guidelines of the FDCPA.
- Misleading or deceptive information regarding the amount owed, threats of arrests or wrongdoing are also prohibited as per the law.
Be wise when you deal with collectors
Always keep your cool when you take collection calls. Do not strike back but listen to what they have to say. Keep good records of all communications that you have with the debt collector, file all letters sent to you, keep copies of letters you sent, note down the dates and times of conversations and topic of discussion to lay the foundation of any legal process or to report to the credit bureau.
You may visit different websites to gather more information such as that of the Consumer Financial Protection Bureau and Federal Trade Commission or the attorney general in your state.
When you know the prohibited actions, you will be able to identify unscrupulous debt collectors.
Get in touch with the creditor
Always visit reliable sources to take a loan if you want to manage it properly. Reliable sources will never resort to unfair means and will even cooperate with you when you come to them for help and guidance to deal with your debt.
They will help you in budgeting, formulating a better debt management plan and let know about other options to clear your debt.