When you’re burdened by debt and unable to make the minimum payments on your student loans and credit cards you’re probably going to hear from a credit collector or a third-party debt collector. Although dealing with both types can seem like the same frustrating experience to you, the truth is that the law has different standards regarding each one. 

The Fair Debt Collection Practices Act, or FDCPA, was enacted to protect consumers from unethical debt collection practices, but it only applies to third-party debt collectors and not to original creditors. Understanding the difference between the two will make it easier to understand your rights and take appropriate steps to protect yourself. 

Debt collectors 

Under the FDCPA, a debt collector is a third party that makes a business out of collecting debts owed to original creditors. They include collection agencies, debt buyers, and debt collection law offices. They do NOT, however, include people or entities seeking to collect a business or corporate debt (the FDCPA only covers debts acquired for personal or household expenses) or government employees acting in an official capacity. 

Third-party debt collectors are prohibited from using harassing, unfair, and deceptive means of collecting a debt from you. They may not use abusive language, call you outside of certain hours, discuss your debt with your friends and family, and employ other strategies intended to stress you into paying. 

Original creditors

The FDCPA defines an original creditor as the party who extended you credit, such as your bank or credit card issuer. These lenders are not normally governed by the FDCPA when they try to collect from you unless they carry out collections under an assumed name designed to make it look as if a third-party collector is contacting you.

Restrictions on creditor collections 

Does this mean that creditors get a free pass that allows them to disrupt your life? Not quite. While the FDCPA does not typically apply to their communications with you, they are still governed by the New York State Debt Collection Procedures Law. This means that they (and their agents) are prohibited from doing the following to compel you to pay what you owe them, 

  • Threatening legal action it has no intention of taking. For example, warning you that a lawsuit has been filed when it hasn’t. 
  • Revealing the debt to your employer before a judgment has been obtained against you. Examples include calling your payroll department and warning them that your paycheck will soon have to be garnished. 
  • Threatening to add extra fees to the debt if you don’t pay immediately. 
  • Contacting you at inconvenient hours and with such frequency that any reasonable person would feel harassed. 
  • Presenting themselves as attorneys or government agents online and in print when they are not. 

When debt overwhelms you and debt collectors or original creditors (or both) start calling, Chapter 7 bankruptcy can provide relief and set you back on the path to financial solvency. Meeting with an experienced New York bankruptcy attorney can help you decide on the best option for your situation. Jayson Lutzky is a Bronx attorney who may be able to help you obtain a fresh financial start with bankruptcy. If you are in debt that you cannot repay, then bankruptcy may be a good option to move on with your finances and your life. Call 718-514-6619 to schedule your free in-person consultation with Mr. Lutzky. He has over 35 years of legal experience and has helped thousands of highly satisfied clients over the years. Read more about bankruptcy from our blog here.