FDCPA and Consumer’s Questions

[Note: Some of the contents here are taken from the Federal Trade Commission’s website as contents of general nature and for wider circulation. The writer does not claim this article to be his own creation exclusively.]

FDCPA is enforced by the Federal Trade Commission (FTC). FDCPA prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.

Who is a debt collector?

Under the FDCPA, a debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.

Following is some of the highlight of consumer areas in debt collection and their rights under the FDCPA.

What types of debts are covered?

The Act covers personal, family, and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage. The FDCPA doesn’t cover debts you incurred to run a business.

Can a debt collector contact me any time or any place?

No. A debt collector may not contact you at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless you agree to it. And collectors may not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls there.

How can I stop a debt collector from contacting me?

If a collector contacts you about a debt, you may want to talk to them at least once to see if you can resolve the matter – even if you don’t think you owe the debt, can’t repay it immediately, or think that the collector is contacting you by mistake. If you decide after contacting the debt collector that you don’t want the collector to contact you again, tell the collector – in writing – to stop contacting you. Here’s how to do that:

Make a copy of your letter. Send the original by certified mail, and pay for a “return receipt” so you’ll be able to document what the collector received. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact or to let you know that they or the creditor intend to take a specific action, like filing a lawsuit. Sending such a letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact. The creditor or the debt collector still can sue you to collect the debt.

Can a debt collector contact anyone else about my debt?

If an attorney is representing you about the debt, the debt collector must contact the attorney, rather than you. If you don’t have an attorney, a collector may contact other people – but only to find out your address, your home phone number, and where you work. Collectors usually are prohibited from contacting third parties more than once. Other than to obtain this location information about you, a debt collector generally is not permitted to discuss your debt with anyone other than you, your spouse, or your attorney.

What does the debt collector have to tell me about the debt?

Every collector must send you a written “validation notice” telling you how much money you owe within five days after they first contact you. This notice also must include the name of the creditor to whom you owe the money, and how to proceed if you don’t think you owe the money.

Can a debt collector keep contacting me if I don’t think I owe any money?

If you send the debt collector a letter stating that you don’t owe any or all of the money, or asking for verification of the debt, that collector must stop contacting you. You have to send that letter within 30 days after you receive the validation notice. But a collector can begin contacting you again if it sends you written verification of the debt, like a copy of a bill for the amount you owe.

What practices are off limits for debt collectors?

  1.  Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:
  • use threats of violence or harm;
  • publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
  • use obscene or profane language; or
  • repeatedly use the phone to annoy someone.

False statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:

  • falsely claim that they are attorneys or government representatives;
  • falsely claim that you have committed a crime;
  • falsely represent that they operate or work for a credit reporting company;
  • misrepresent the amount you owe;
  • indicate that papers they send you are legal forms if they aren’t; or
  • indicate that papers they send to you aren’t legal forms if they are.

Debt collectors also are prohibited from saying that:

  • you will be arrested if you don’t pay your debt;
  • they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or
  • legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.

Debt collectors may not:

  • give false credit information about you to anyone, including a credit reporting company;
  • send you anything that looks like an official document from a court or government agency if it isn’t; or
  • use a false company name.

Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:

  • try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge;
  • deposit a post-dated check early;
  • take or threaten to take your property unless it can be done legally; or
  • contact you by postcard.

Can I control which debts my payments apply to?

Yes. If a debt collector is trying to collect more than one debt from you, the collector must apply any payment you make to the debt you select. Equally important, a debt collector may not apply a payment to a debt you don’t think you owe.

Can a debt collector garnish my bank account or my wages?

If you don’t pay a debt, a creditor or its debt collector generally can sue you to collect. If they win, the court will enter a judgment against you. The judgment states the amount of money you owe, and allows the creditor or collector to get a garnishment order against you, directing a third party, like your bank, to turn over funds from your account to pay the debt.

Wage garnishment happens when your employer withholds part of your compensation to pay your debts. Your wages usually can be garnished only as the result of a court order. Don’t ignore a lawsuit summons. If you do, you lose the opportunity to fight a wage garnishment.

Can federal benefits be garnished?

Many federal benefits are exempt from garnishment, including:

  • Social Security Benefits
  • Supplemental Security Income (SSI) Benefits
  • Veterans’ Benefits
  • Civil Service and Federal Retirement and Disability Benefits
  • Military Annuities and Survivors’ Benefits
  • Federal Emergency Management Agency Federal Disaster Assistance

Federal benefits may be garnished under certain circumstances, including to pay delinquent taxes, alimony, child support, or student loans.

Do I have any recourse if I think a debt collector has violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, the judge can require the collector to pay you for any damages you can prove you suffered because of the illegal collection practices, like lost wages and medical bills. The judge can require the debt collector to pay you up to $1,000, even if you can’t prove that you suffered actual damages. You also can be reimbursed for your attorney’s fees and court costs. A group of people also may sue a debt collector as part of a class action lawsuit and recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever amount is lower. Even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if you owe it.

What should I do if a debt collector sues me?

If a debt collector files a lawsuit against you to collect a debt, respond to the lawsuit, either personally or through your lawyer, by the date specified in the court papers to preserve your rights.

Where do I report a debt collector for an alleged violation?

Report any problems you have with a debt collector to your state Attorney General’s office, the Federal Trade Commission, and the Consumer Financial Protection Bureau. Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act. Your Attorney General’s office can help you determine your rights under your state’s law.

What to do if your property is attached or wages garnished in Nevada?

The noose is tightening against you as the judge had passed judgment against you, and the Plaintiffs are going to execute judgment against you. They have already found your assets, your place of employment, possibly your bank account. Now, you can sleep if you want, but the invading forces had surrounded you completely. Well, if you still think rationally, no need to be despondent. Here, are the steps you can ponder.

First few definitions so that you know the process fully well.
A court has determined that you owe money to the person or company (the “judgment creditor”) listed on the Writ of Execution included with this Notice of Execution. The judgment creditor has begun the procedure to collect that money by garnishing your wages, bank account and other personal property held by third persons or by taking money or other property in your possession.

Certain benefits and property owned by you may be exempt from execution and may not be taken from you. The following is a partial list of exemptions:

1) Payments received pursuant to the federal Social Security Act, including, without limitation, retirement and survivors’ benefits, supplemental security income benefits and disability insurance benefits.

2) Payments for benefits or the return of contributions under the Public Employees’ Retirement System.

(3) Payments for public assistance granted through the Division of Welfare and Supportive Services of the Department of Health and Human Services or a local governmental entity.

(4) Proceeds from a policy of life insurance.

(5) Payments of benefits under a program of industrial insurance.

(6) Payments received as disability, illness, or unemployment benefits.

(7) Payments received as unemployment compensation.

(8) Veteran’s benefits.

(9) A homestead in a dwelling or a mobile home, not to exceed $550,000, unless:

(a) The judgment is for a medical bill, in which case all of the primary dwelling, including a mobile or manufactured home, may be exempt.
(b) Allodial title has been established and not relinquished for the dwelling or mobile home, in which case all of the dwelling or mobile home and its appurtenances are exempt, including the land on which they are located, unless a valid waiver executed pursuant to NRS 115.010 is applicable to the judgment.

(10) All money reasonably deposited with a landlord by you to secure an agreement to rent or lease a dwelling that is used by you as your primary residence, except that such money is not exempt with respect to a landlord or his successor in interest who seeks to enforce the terms of the agreement to rent or lease the dwelling.
(11) A vehicle, if your equity in the vehicle is less than $15,000.

(12) Seventy–five percent of the take-home pay for any workweek, unless the weekly take-home pay is less than 50 times the federal minimum hourly wage, in which case the entire amount may be exempt.

(13) Money, not to exceed $500,000 in present value, held in:
(a) An individual retirement arrangement which conforms with the applicable limitations and requirements of section 408 or 408A of the Internal Revenue Code, 26 U.S.C §§ 408 and 408A;
(b) A written simplified employee pension plan which conforms with the applicable limitations and requirements of section 408 of the Internal Revenue Code, 26 U.S.C § 408;
(c) A cash or deferred arrangement that is a qualified plan pursuant to the Internal Revenue Code;
(d) A trust forming part of a stock bonus, pension or profit-sharing plan that is a qualified plan pursuant to sections 401 et seq. of the Internal Revenue Code, 26 U.S.C. §§ 401 et seq.; and
(e) A trust forming part of a qualified tuition program pursuant to chapter 353B of NRS, any applicable regulations adopted pursuant to chapter 353B of NRS and section 529 of the Internal Revenue code, 26 U.S.C. § 529, unless the money is deposited after the entry of a judgment against the purchaser or account owner or the money will not be used by any beneficiary to attend a college or university.

(14) All money and other benefits paid pursuant to the order of a court of competent jurisdiction for the support, education and maintenance of a child, whether collected by the judgment debtor or the state.

(15) All money and other benefits paid pursuant to the order of a court of competent jurisdiction for the support and maintenance of a former spouse, including the amount of any arrearages in the payment of such support and maintenance to which the former spouse may be entitled.

(16) Regardless of whether a trust contains a spendthrift provision:
(a) A present or future interest in the income or principal of a trust if the interest has not been distributed from the trust;
(b) A present or future interest in the income or principal of a trust for which discretionary power is held by a trustee to determine whether to make a distribution from the trust, if the interest has not been distributed from the trust;
(c) The power to direct dispositions of property in the trust, other than such a power held by a trustee to distribute property to a beneficiary of the trust;
(d) Certain powers held by a trust protector or certain other persons; and
(e) Any power held by the person who created the trust.

(17) If a trust contains a spendthrift provision:
(a) A present or future interest in the income or principal of a trust that is a mandatory interest in which the trustee does not have discretion concerning whether to make the distribution from the trust, if the interest has not been distributed from the trust; and
(b) A present or future interest in the income or principal of a trust that is a support interest in the trust in which the standard for distribution may be interpreted by the trustee or a court, if the interest has not been distributed from the trust.

(18) A vehicle for use by you or your dependent which is specially equipped or modified to provide mobility for a person with a permanent disability.

(19) A prosthesis or any equipment prescribed by a physician or dentist for you our your dependent.

(20) Payments, in an amount not to exceed $16,150, received as compensation for personal injury, not including compensation for pain and suffering or actual pecuniary loss, by the judgment debtor or by a person upon whom the judgment debtor is dependent at the time the payment is received.

(21) Payments received as compensation for the wrongful death of a person upon whom the judgment debtor was dependent at the time of the wrongful death, to the extent reasonably necessary for the support of the judgment debtor and any dependent of the judgment debtor.

(22) Payments received as compensation for the loss of future earnings of the judgment debtor or of a person upon whom the judgment debtor is dependent at the time the payment is received, to the extent reasonably necessary for the support of the judgment debtor and any dependent of the judgment debtor.

(23) Payments received as restitution for a criminal act.

(24) Personal property, not to exceed $1,000 in total value, if the property is not otherwise exempt from execution.

(25) A tax refund received from the earned income credit provided by federal law or a similar state law.

(26) Stock of a corporation described in subsection 2 of NRS 78.746 except as set forth in that section.
These exemptions may not apply in certain cases such as a proceeding to enforce a judgment for support of a person or a judgment of foreclosure of a mechanic’s lien. You should consult an attorney immediately to assist you in determining whether your property or money is exempt from execution.

Which Reaffirmation Are Binding?

We had discussed the definition of ‘surrender’ and ‘reaffirmation’. In this post, we would only discuss reaffirmation. Some time creditors lure the debtors to sign reaffirmation with various tactics like lowering the interest rate, shortening time period etc. The Code does not completely bar reaffirmation, it however, restricts them significantly. Section 524(c) and (k) sets forth a number of requirements that must be followed before a reaffirmation is binding. First, there must be an agreement between the debtor and the creditor which is enforceable under applicable nonbankruptcy law. that agreement in most cases is essentially a contract to reaffirm. Simply speaking,without any agreement there can be no reaffirmation. As you know, the reaffirmation agreement alters the original agreement. Any reaffirmation has to pass through a series of filtration process and must be approved by the judge and the parties.

1. The reaffirmation agreement must be made prior to the discharge.
2. The attorney has informed his parties not to enter into any reaffirmation.
3. Once the discharge is entered, no reaffirmation is possible
4. The reaffirmation agreement must contain the disclosures described in section 524(k).
5. The disclosure must be clear and conspicuous.

Part B of the of the agreement must include a brief description of the credit agreement, a task that may not be easy in light of the complicated agreements utilized by consumer creditors. The agreement must be filed by the court. If an attorney ahs negotiated the reaffirmation, the agreement filed with the court must be accompanied by the attorney’s affidavit.

Student Loan Dischargeability-Hardship Test?

Student loan is one of the exceptions to discharge under our Bankruptcy Code. The term qualified education loan is defined in section 221(d) (1) of the Internal Revenue Code to mean any indebtedness incurred y the taxpayer solely to pay qualified higher education expense. The IRS code also provides that the qualified higher education expenses must be incurred on behalf of the taxpayer, the taxpayer’s spouse, or any dependant of the taxpayer and must be paid or incurred within a reasonable period of time before or after the indebtedness is incurred or attributable to education furnished during a period when the recipient was an eligible student.

What is Undue Hardship Test
The sole exception to the nondischargeability of students loans is available when excepting the debt from discharge would cause the debtor or the debtor’s dependents undue hardship. It is tough and courts struggled to define what is undue hardship found in section 523(a)(8). Here, undue means more than a garden variety hardship that arises from the expense of future payments, each judge seems to bring unique set of values to the process of defining and implementing the applicable standard.
Several circuit courts of appeals have adopted a definition of undue hardship that employs a three-part test, known as the Brunner test.
1. The debtor cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and the debtor’s dependants if forced to repay the loans.
2. Additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
3. The debtor had made good faith efforts to repay the loan.
In general, low income debtors are most likely to obtain a discharge under this test. Generally speaking, debtors with incomes lower than $25,000 (or more for large families) are to be at a minimal standard of living.

Student Loan and Chapter 7

We face this question many times, and still continuously if filing for bankruptcy protection will help discharge student loans. Unfortunately, there is no such provision for each discharge of student loans.

Hardship Test:
However, student loans are difficult, but not impossible, to discharge in bankruptcy. To do so, you must show that payment of the debt “will impose an undue hardship on you and your dependents.”

Brunner Test:
Courts use different tests to evaluate whether a particular borrower has shown an undue hardship. A common test is the Brunner test which requires a showing that 1) the debtor cannot maintain, based on current income and expenses, a “minimal” standard of living for the debtor and the debtor’s dependents if forced to repay the student loans; 2) additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and 3) the debtor has made good faith efforts to repay the loans. (Brunner v.New York State Higher Educ. Servs.Corp., 831 F. 2d 395 (2d Cir. 1987). Not all courts use this test. Some courts will be more flexible, some less.

Although this does not appear to be a difficult standard to meet, for the most part, most debtors are unable to get their student loans discharged. The same standards apply to both private and federal or state student loans.

Adversary Proceeding:
Additionally, in order to obtain a bankruptcy discharge of student loans, the bankrupt debtor has to file an adversary preceding (or a lawsuit)against the student loan creditor and have a court determine if the student loan debtor/borrower meets the criteria for discharge. Since the adversarial process is usually expensive and time consuming, debtors who may meet the criteria can find themselves barred from exercising their rights due to financial limitations.

Reorganization under Chapter 13:

Some student loan borrowers find that Chapter 13 reorganization is useful as it may stop future interest and penalties from accruing so long as the student loan is paid in full through the Chapter 13 plan of reorganization. To do this, debtors must have sufficient income to meet their regular monthly obligations plus have sufficient additional income to make their Chapter 13 plan payment. Each case is different and if you are interested in exploring if a Chapter 13 bankruptcy is right for your situation, please contact our office for a free bankruptcy consultation.

Notice Required for Service of Garnishment

NRS 31.045 Notice of execution on writ of attachment: Service required; form; contents.

1. Execution on the writ of attachment by attaching property of the defendant may occur only if:

(a) The judgment creditor serves the defendant with notice of the execution when the notice of the hearing is served pursuant to NRS 31.013; or

(b) Pursuant to an ex parte hearing, the sheriff serves upon the judgment debtor notice of the execution and a copy of the writ at the same time and in the same manner as set forth in NRS 21.076.

If the attachment occurs pursuant to an ex parte hearing, the clerk of the court shall attach the notice to the writ of attachment at the time the writ is issued.

2. The notice required pursuant to subsection 1 must be substantially in the following form:

Can the Court do attachment without notice and hearing in Nevada?

NRS 31.017 Issuance of writ of attachment without notice and hearing. The court may order the writ of attachment issued without notice to the defendant only in the following cases:

1. In an action by a resident of this State against a defendant not residing in this State. For purposes of this subsection only, domestic corporations and foreign corporations who are doing business in this State and who have qualified to do business in this State as required in chapter 80 of NRS shall be deemed residents of this State. Alien corporations and foreign corporations who have not qualified to do business shall be deemed nonresidents.

2. In an action upon a foreign judgment for the direct payment of money.

3. In an action for the recovery of the value of personal property, where such personal property is owned by the plaintiff and has been taken or converted by the defendant without the consent of the plaintiff.

4. In an action by a resident of this State, where the defendant is about to remove the defendant’s money or property, or any part thereof, from this State, and the defendant’s property which may remain within this State, if any, will be insufficient to satisfy plaintiff’s claim. For purposes of this subsection only, a foreign corporation qualified to do business in this State as provided in chapter 80 of NRS shall be deemed a resident of this State.

5. Where the defendant is about to give, assign, hypothecate, pledge, dispose of or conceal the defendant’s money or property or any part thereof and the defendant’s money or property remaining in this State or that remaining unconcealed will be insufficient to satisfy the plaintiff’s claim.

6. In an action for the recovery of money or property, or the proceeds thereof, obtained from the plaintiff by the defendant through embezzlement, forgery, larceny or extortion.

7. In an action brought under chapter 112 of NRS.

8. In an action by the State, or a political subdivision thereof, brought under chapter 130 of NRS.

9. In an action where jurisdiction in this State can only be obtained by the attachment of the defendant’s property.