Debt collector ordered to halt deceptive practices

Many Atlanta residents believe that once they owe a debt, they will owe on it forever, and that the company collecting the debt can do anything to make them pay. However, that is largely untrue. Debt collectors must follow federal rules and regulations regarding statutes of limitations for payments, notification to debtors, and appropriate documentation.

In fact, one major debt collection agency was recently penalized by the Federal Trade Commission for failing to do these things, which is a major signal from the government that it is going to be harder on debt collectors.

The major issue that led to the FTC penalty was the lack of documentation in debt collection cases. Often, uncollected debt is sold to collection agencies with virtually no records attached, other than the person’s name, Social Security number and amount of debt owed. When agencies try to bring debtors to court to collect the debt, neither the debtors nor the courts have any way of knowing whether the debt is legitimate.

Another common problem in debt collections is debtors’ lack of awareness of the laws that exist to protect them. For example, debt collectors must comply with the state statute of limitations that dictate when a debt is no longer collectible. In Georgia, the limitations period is generally between four and six years, depending on the type of debt. Also, most debtors are unaware that the statute of limitations restarts if they make even a small payment on the debt.

Under the settlement between the FTC and debt collector Asset Acceptance, the agency must now provide sufficient documentation of debts before attempting to collect on them. In addition, it must not try to collect debt that is time-barred by a statute of limitations and do a better job of informing debtors of their rights.

Source: The Washington Post, “Have old debts? Read up on your rights,” Michelle Singletary, Jan. 31, 2012