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Why It Pays To Know Who You Are Paying
OK, so you owe a debt, but who is trying to get you to pay up
? There are two kinds of people who might call you looking to collect money that you owe to a creditor. The creditor themselves (think Visa), or a third party collection agency that Visa may hire to collect their debts for them. The Fair Debt Collection Practice Act (FDCPA) was created in the 1970s and provides a wealth of protections for debtors. These are strict regulations and rules that a debt collector must follow, and if any of these rules are broken, there is a great possibility that take the agency that violated the FDCPA to court. But what about that deadbeat friend of yours who owes you five bucks? Are you required to grant them thirty days to refute your claim? Clearly, as both you and your friend's wallet know, you don't.My point is that the FDCPA is a very special set of guidelines meant specifically for a very special set of people: third party debt collectors. Browse through Morency v. Evanston Northwestern Healthcare Corp. This was a district court case in Illinois from 1999. In this court case, a hospital issued and sent out pre-collection notices in an attempt to collect debt. For third party debt collectors, this is a definite no-no according to the FDCPA. What could have happened? Well, anyone that got the letter might have been off the hook for their debt. But after looking at the situation, the court held that the hospital was a creditor, because the money was going directly to it, and not a third party collection agency, so the FDCPA did not apply.
This case hasn't been the first of its kind, and courts will consider many factors in order to determine if the creditor should also be deemed debt collector. In a lot of these cases they ask the following questions: Does it say on the letters that get mailed out if the debtor doesn't pay up the debt will be sent out to collection? Did the creditor hire a collection agency only to send letters, not for commission? Is the collection agency itself simply a mailing service?
Here's another example: if a person in debt fails to reply to a letter mailed out by a collection agency, and said collection agency has no further contact with this person, it probably will not be held to third party debt collection agency standards. If a collection agency doesn't receive the files or information on the debtors, then it probably won't be considered a debt collection agency either.
And that finishes our lesson on the differences between third party bill collection companies and creditors trying to collect, and why it pays to know who you are paying. Good luck trying to get that five bucks back from your buddy!
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