Debt collection resources empower those who owe

Every year, millions of people must deal with the consequences of delinquent debt. To help these consumers understand their rights during the debt collection process—from initial contact by a collector through potential lawsuit and judgment—several years ago Consumer Action published the first editions of “Debtors’ Rights: Protecting yourself from debt collection lawsuits” and “The Fair Debt Collection Practices Act: How it restricts collectors and protects consumers.” Recently, we updated both guides and created a PowerPoint presentation and companion lesson plan with class exercises to be used by consumer groups conducting education in their communities. This Debt Collection module and related train-the-trainer events are being funded by Consumer Action’s Managing Money Project, which is supported by court awards.

The San Francisco Bay Area, home to Consumer Action's headquarters, was the setting for the first train-the-trainer session, during which Consumer Action staff and allies instructed participants from community-based organizations on how to best educate their clients on the issues surrounding debt collection. Training participants were treated to a day at the park—more precisely, Preservation Park, a neighborhood of restored and transformed Victorian homes in a park-like setting in Oakland, California.

The free event "sold out" quickly. One of the big draws, besides the high incidence of debt collection problems around the country, was the participation of guest speaker Joseph Jaramillo, a senior attorney with the California non-profit Housing and Economic Rights Advocates (HERA). HERA’s mission is to help vulnerable Californians build a safe and sound financial future, free of discrimination and economic abuses.

Jaramillo discussed California’s strong laws surrounding debt collection—created through the Rosenthal Fair Debt Collection Practices Act (RFDCPA) and the state’s Fair Debt Buying Practices Act (FDBPA), landmark legislation that became effective in 2014. (Debt buyers are companies that purchase charged-off debts from other firms, often for pennies on the dollar, and attempt to collect them from consumers.) The California FDBPA goes beyond the federal Fair Debt Collection Practices Act, which prohibits abusive, unfair or deceptive practices. The state law prevents debt buyers from collecting if they can’t document their right to collect the debt. Debt buyers must be able to provide to consumers the original balance owed, a breakout of fees and interest and the names of other entities that previously owned or purchased the debt. Also, if a debt is “time barred”—past the statute of limitations—debt buyers must provide notification to the consumer that they cannot be sued on such debts, and if the debt is too old to report to credit bureaus—in most cases seven to ten years old—the debt buyer also must inform the consumer of that.

Consumer Action's Linda Williams and Nelson Santiago presented the Debt Collection module, educating consumers about their rights when a debt collector contacts them. Williams' portion of the training covered consumer rights under the FDCPA, including dos and don'ts for debt collectors. Williams also highlighted some of the signs that indicate that a debt collection call is a scam, including calls from “collectors” who are unable to provide a consumer's name, address or last four digits of their Social Security number; who request sensitive personal information; who refuse to provide information about the collection agency or debt in question; or who claim to be from a government agency, such as the IRS (before demanding money over the phone). Williams also discussed the ways in which consumers can dispute debts (due to identity theft, incorrect or inflated debt amounts, etc.).

Santiago’s portion of the Debt Collection module presentation covered the many ways to avoid being sued by a debt collector, with a particular emphasis on how to negotiate with creditors. One key online resource Santiago recommended participants bookmark was the legal website Nolo's page on debt settlement and negotiating with creditors, which links to several articles that help prepare consumers to discuss their repayment options with creditors and debt collectors. Santiago also gave participants an overview of consumer bankruptcy, mandatory arbitration and other legal matters as they related to debt collection. He rounded out his session by having participants compete for prizes by completing poster-sized print-outs of the "Know your rights" learning activity included in the module's lesson plan.

The complete training module is available as a free download at the Consumer Action website. While the PowerPoint and lesson plan are available only as English downloads, the two guides are published in Chinese, Korean, Spanish and Vietnamese and in print for bulk orders by community educators. The Fair Debt Collection Practices Act guide is already available in these languages, while the Debtors’ Rights guide will be available in all languages by the end of the year. (Please check our website for availability.)

A third publication (not part of the module), “When a Collector Calls: An insider’s guide to responding to debt collectors,” funded via a partnership with the Consumer Relations Consortium, is available for download (in English) on the same webpage. This concise guide to responding to a debt collection call or letter, written with input from an association of collectors, provides tips for communicating effectively with a collector, exercising and protecting your rights and avoiding debt collection scams. (In early 2017, this publication will be available in Spanish as well.)