Debt collection agencies and aggressive creditors can be very frustrating to deal with. The long history of oppressive tactics by debt collectors have led to the enactment of many laws designed to protect businesses and consumers from certain actions taken by debt collectors. There is a small distinction between remedies available for consumers and business, each will be discussed in turn. This article will focus on remedies specifically available in North Carolina. Federal law provides robust remedies to combat over zealous debt collection as well.
One key way where the North Carolina Prohibited Acts by Debt Collectors Act differs from Federal law is that there is no protection for a party or individual attempting to collect its own debt from a consumer. This is very important for business to be aware of, because violation of this law can result in civil fines up to $4,000 per incident. Consumers are defined as a natural person incurring debt for personal/home use. Here is a list that summarizes actions that creditors may not take against consumers:
1. Threaten to accuse the debtor of fraud;
2. Representing that nonpayment may result in arrest;
3. Threatening to refer the debt to a collection agency combined with a representation that the debtor will lose a defense or be subject to harsh collection attempts;
4. Threatening to take any action not permitted by law (this can be dicey when attorney fee threats are made);
5. Threatening to take an action that the creditor does not intend to carry out;
6. Communicate with a third-party (other than spouse) about the alleged debt;
7. “Blacklisting” debtors;
8. Communicating directly with a debtor when the creditor knows the debtor to be represented by an attorney;
9. Attempting to collect debt that has expired past statute of limitations or past bankruptcy discharge;
10. Attempting to collect a debt collection fee;
11. Filing a legal action in a venue different from where debtor lives or where debt was incurred;
12. Using profane language;
13. Calling a debtor at work(unless creditor does not have an alternate number); and
14. Placing an unreasonable amount of telephone calls.
Many debtors are unaware of the rights provided by North Carolina statutes and choose to ignore the creditors. One of the most valuable tools is to consult with an attorney, because a letter from an attorney can stop all communication directly from the creditor.
These same protections apply to business, but with one important distinction. Business to business disputes are not governed by the Act. A business is not prohibited by statute from taking the acts described above, however many could be common law violations. A business does have recourse against debt collection agencies that employ some of the methods identified above. In light of the foregoing, I’ve put together a short list of suggestions on ways to deal with debt collectors:
1. Do not discuss the specifics of your account with the collector. Any statement you make can be used against you;
2. Do not admit that you owe anything;
3. Give the debt collector your preferred time to speak and telephone number;
4. Keep a log of how often the debt collector contacts you (include text messages, calls, faxes, emails and letters);
5. Notify the debt collector in writing if their communication is bothering you of if they are contacting you while you are working;
6. Record calls from debt collectors.
Tips 1-6 should help your defense of a legal action filed against you by a creditor and could provide a basis for you to sue the debt collector or creditor.