Sometimes creditors sell debt to debt collection agencies or investors for pennies on the dollar. They usually sell â€œbad debt.â€ An example of bad debt is credit card debt that is long overdue. Investors will hire agencies to collect on the debt. The Fair Debt Collection Practices Act (FDPCA) is a federal law that governs debt collection. The law includes provisions, which are not always followed as evidenced by a case reported in the New York Law Journal on December 17, 2014, regarding how debt may be sold from one entity to another.
In this case, a man defaulted on his credit card debt in 2006. Then, he disputed charges on his credit card. The collection agency was notified. They were also notified when he hired a lawyer for this debt matter. Then, the collection agency sold the debt, most likely bundled together with other peopleâ€™s outstanding bills, to an investment agency. The original collection agency informed the investment firm about the default and the manâ€™s lawyer. However, the next agency, Capital Management Services, to handle the debt did not receive this information. It is important to have this information because the agency must treat the customer and the debt differently if the customer has defaulted and is represented by legal counsel.
Capital Management Services sent the debtor a letter in 2012. There is a six-year statute of limitation that dictates how long agencies have to collect his debt. The letter did not state this, nor did it state that the six-year limitation could start all over if the man started to pay this debt again.
The man brought the investment firm to court because they did not pass along his full financial information correctly. In fact, they had omitted important details that affected debt collection methods. The firm told the court that they were not a debt collection agency as defined the FDCPA. However, the man told the court that the FDCPA covered the type of communications made by this firm. Thus, the judge agreed that this the firm broke the law because it was covered by the FDCPA just through its communications.
If you are in debt and are considering filing for bankruptcy, then call the law office of Jayson Lutzky. Mr. Lutzky is an attorney with over 31 years of legal experience in New York. He has represented thousands of satisfied clients over the years and offers free in-office consultations. To set up an appointment, call 718-514-6619. To learn more about Mr. Lutzky, visitÂ www.MyNewYorkCityLawyer.com.