If you suffer a financial setback like the loss of a job or unexpected medical expenses, you may not be able to make your payments on time. If this happens to you, act quickly by contacting the creditor, explaining the circumstances, and offering to work out a payment plan. Sometimes a creditor will agree to refinance the loan or otherwise modify your agreement to allow you to catch up on your payments.
If you still cannot pay your debts, there are laws that offer some protection. For instance, the Fair Debt Collection Practices Act (FDCPA) is a federal law enforced by the Federal Trade Commission that protects the rights of consumers by prohibiting certain methods of debt collection.
The FDCPA applies to the practices of debt collectors and attorneys. It does not apply to creditors who are trying to recover their own debts. A debt collector is defined as any person who regularly collects or attempts to collect, consumer debts for another person or institution, or uses some name other than the debt collector’s own name when collecting its own consumer debts.
The FDCPA does not apply to all debts. For instance, it does not apply to the collection of business or corporate debts. It only applies to the collection of debts an individual consumer incurred primarily for personal, family, or household purposes.
Under the FDCPA, a debt collector must follow certain procedures when contacting a consumer. Debt collectors must identify themselves, state their purpose for contacting the consumer, provide the name and address of the original creditor, the amount due, and notify the consumer of the right to dispute the debt.
The FDCPA requires a debt collector to respect your right to privacy and your right to be free from harassment and abuse. They must also provide you with honest and accurate information.
Legal Editors: C. Jaye Berger and Richard Klass, September 2015 (updated October 2018)
Changes may occur in this area of law. The information provided is brought to you as a public service with the help and assistance of volunteer legal editors, and is intended to help you better understand the law in general. It is not intended to be legal advice regarding your particular problem or to substitute for the advice of a lawyer.