Before Opting For Debt Relief Or Settlement Know The FDCPA And TSR Laws
The fact that you are rightfully at fault for not paying off your debt or not being able to keep up with your repayment schedule does not mean you will lose all your rights. There are several federal as well as state laws designed to protect your rights as a consumer whether you have a huge credit card debt or a medial debt to repay.
It is better to know about this debt relief or debt settlement laws so that you do not allow the debt settlement companies or even the debt collection agencies to take advantage of your dire financial situation and misuse their powers. These laws will prevent further worsening of the situation and keep you protected from any malpractices.
To start with and be very clear, understand that these laws are specifically aimed to prevent any malpractices by the debt settlement companies and certainly not aimed at relieving your from your debt responsibilities. In the end, you will have to repay whatever you owe to your creditor in the form of principal and interest on principal or face severe consequences, legal as well as in your credit report.
Much opposed to the common belief, the creditor has all the right to call and even sue the debtor if need arises and payment is not received.
Objectives of the law
The primary objective of the FTC or Federal Trade Commission laws is to prevent malpractices that are most of the times abusive, threatening and emotionally taxiing for the debtors. The federal government thereby felt the need to design and implement a series of protective laws that the collection agencies as well as the creditors must abide by. These laws keep all of them in line and within limits when they start asking the debtors and force them to pay up.
There are several different laws and provisions made by the Federal Trade Commission that you may find on their website. It is highly recommended that you read through these along with the debt settlement reviews to have a clear idea of what you are getting into and your rights.
Ideally, there are two specific laws that you need to know as these are very important for all those debtors who find them deep in debt and seek for debt relief. These are FDCPA and TSR.
Features Of FDCPA
To know about the FDCPA you must start with knowing that it is the short form of Fair Debt Collection Practices Act. It is designed to protect you from being harassed by your creditors and the collection agency but the law does not condone or condemn the collection process. The strict rules are imposed to prevent this collection process from turning abusive. Here are a few important facts and feature for you to know about the coverage of the FDCPA:
- The collection agency must inform who they are, the creditor they represent, why they are calling and the total amount you still owe on their first contact
- Not call early in the morning or late at night
- They must leave proper contact details so that you can get in touch with them
- Provide a written correspondence of everything within 5 days after the first phone call
As for you:
- You have the right to be treated respectfully and fairly by the creditors during the collection process
- Tell the collection agency when and how they can get in touch with you next time
- Request them to call you only at home and not anyone else
- Tell them to stop calling you.
The creditors can only send you a notice of consent or any action they may take if you do not take up their call such as filing a lawsuit.
You may also:
- Provide a proof in case you file a complaint for abusive practices to the FTC
- Put every correspondence in writing
- Ask for reference number of the call being made to you
- Have a recording of the call pulled out
- Send a letter with details of requests made
- Pay for return receipt request
- Ask in writing for the negotiated amount for settlement
- Ask to confirm the creditor what you have written during settlement
- Not pay anything that you are not sure of
- Send a letter for any wrong debtor information and
- Request for a breakdown of interest rates and fees.
However, you should not ignore a collector completely or even tolerate profane language, abuses or threats. For making any complaints to the FTC get in touch with the Consumer Finance Protection Bureau.
Features of TSR
This is another law you need to be well aware of when you are looking to settle your debt or for relief. TSR is the short of Telemarketing Sales Rule and protects your interest for-profit debt settlement and relief companies preventing them to take advantage of the situation. This rule protects the major areas of concern such as upfront payment.
It is considered illegal to collect any upfront payment before the service is fulfilled. The fulfillment of service is also explained in the rule and can be as the following:
- Successful re-negotiation
- Debt settlement
- Reduction of the debt amount
- Alterations made in payment terms for at least one debt
- Submission of a written debt management plan
- Designing a settlement agreement or any other between the creditor and you and
- Proof of initial payment made to the creditor depending on the settlement agreement reached after negotiation helped by the company.
It is also stated in the TSR rule that there must be an escrow account created so that you can deposit the service fee of the company. However, it is clearly mentioned in TSR rule that such payments can only be collected if you are satisfied with the services or when you reach a pre-agreed milestone at the least. This rule even applies for re-negotiations for a reduced monthly payment or for full payment alike.
To achieve full financial freedom you will need to do more research on other laws apart from these two. It is legitimate and prudent to sit with a financial expert.