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Debt Collection and Credit Repair 

The federal law that governs debt collection is called “the Federal Fair Debt Collection Act” (states will often have a state counterpart to the act, for example, the Texas Debt Collection Act).

Definitions: 

The Federal Fair Debt Collections Act applies to “consumer debts”, including personal, family, household, credit card and medical debts.  

A “debt collector” is generally a third party who collects the debts of another, including attorneys.   

A creditor collecting it’s own debts under a name that is different from the company name is also considered a “debt collector” for purposes of the Act.

An original creditor collecting it’s own debts, under it’s own name, is not subject to all of the restrictions in this Act, but still may not break other laws, such as threatening bodily harm or slandering you.  

Restrictions: 

Under the Federal law, a creditor may not contact you before 8 AM or after 9 PM, or at work if your employer does not allow it. (unless you give permission).

A collector is not allowed to threaten to do something that they are not allowed to do by law.  They cannot say they are going to take an action when they have no intention of taking it.  They cannot use abusive language or threaten to send you to prison. (There is no debtor’s prison, although a person found guilty of criminal fraud can be jailed for the fraud!)  

The debt collector is also forbidden from engaging in deception.  For instance, pretending to be an attorney or officer of the law, when they are not or representing paperwork as a legal document when it is not.  

The restrictions are set out in more detail in the Act.

What the consumer can do:

- Dispute the debt in writing, within 30 days of receiving written notice.

- Send a “cease and desist” letter, telling the debt collector to stop further collection efforts.  Under Section 805 of the Fair Debt Collections Practices Act, the debt collector must then cease any further communication with you except to advise you that the debt collector's further efforts are being terminated; or to provide notification that they may invoke certain legal remedies (example; filing a lawsuit). 

-         If a creditor violates the state or federal law, the consumer may sue or file a complaint with the state attorney general or with the Federal Trade Commission.  

Statute of Limitations

If a creditor wants to sue, they must do so within the time periods allowed by law. This time period varies from state to state.  However, even if this time period has run, a consumer may “reactivate” the debt by taking certain actions regarding it. (including but not limited to: promising to pay, corresponding about it, requesting documentation and so forth).  

“Cleaning up” a credit report 

You can also request a copy of your credit report. You should do this periodically and review it for accuracy.  If you find inaccurate or misleading  information, you should write a letter to the credit agency requesting that the agency investigate and correct the information.  

Equifax, TransUnion and Experian are the three main credit reporting agencies and current contact information for these companies can be found on the internet.   

You can also ask for removal of  “old” information.  This includes credit inquiries older than 2 years, adverse information older than 7 years, and bankruptcy information older than 10 years.  

You should also check for accuracy of identifying information.  (For instance, there may be addresses listed for you that were never yours).  

You are entitled to one free credit report per year from each agency.  

In order to be sure that the most accurate information is on record, you should contact all three agencies and review what each agency has to say about you.  

Note: there are a lot of companies and individuals that offer to clean up credit reports for a fee. Some of these are reputable, some are not.  Be sure to check out any individual or company thoroughly before paying money and releasing personal information!

This article is intended for informational purposes only and is not intended to provide legal advice in any particular situation.   Each situation is different and all of the facts and circumstances must be evaluated in order to determine the best course of action to take. The reader is advised to consult an attorney for legal advice.  

About the Author:  Laura Kalish is a partner in the Kalish Law Firm and can be reached at kalishlawlaura@aol.com.   The firm’s website can be found at www.kalishlawtexas.com.