The limits of the FDCPA
I follow a number of blogs and read a large number of articles about the Fair Debt Collection Practices Act. Many of these authors tout the FDCPA as magic bullet with which a debtor can bully a collection agency. While the Act is intended to make collectors act as decent human beings, you should be aware that the Act also has the following limits:
1. The FDCPA applies only to consumer debts and not to commercial debts. A consumer debt is one that incurred for “personal, family or household use.” A commercial debt is any debt that is not a consumer debt. This definition can make the determination of a debt somewhat tricky. For example, if one uses a credit card debt to purchase items for a home, it is a consumer debt. If one uses that same credit card to purchase items for one’s office, it is arguably a commercial debt. In any event, just be aware, that the FDCPA does NOT apply to commercial debts.
2. The FDCPA does NOT apply to creditors collecting on their own debt so long as they did not acquire the debt when it was in default. For example, MBNA collecting on its own debt does not subject its collector type employees to the FDCPA. Moreover, if MBNA sells a credit card debt that is used for consumer purposes to another credit card company while the debt is NOT in default, the new credit card company is also not subject to the FDCPA. But, if MBNA sells the debt to the new credit card company while the debt is in default, the new company is subject to the FDCPA.
3. Governmental agencies are not subject to the FDCPA. Hence, neither the IRS nor your state or local governmental taxing authorities are bound by the Act’s restrictions.
If you have find yourself being pursued by a debtor, take a moment and review these restrictions before dealing with any collector. Knowing your rights and their limits will give you a decided edge in your negotiations to resolve your debt issues.