Credit and Debt Collection Laws That Protect You

There are three federal laws that you should be aware of regarding your rights regarding credit and debt collection:

Fair Credit Reporting Act:

This is a federal law that regulates the activity of the credit reporting agencies, also called the "credit bureaus." It provides a way for you to remove inaccurate, false, or outdated information from your credit report.

If you find that some of your information is incorrect, you may write to the credit bureaus, which then have to verify the accuracy of the information within a specific period of time. If they can't verify it, it must be removed from your credit report.

The law also states that any information more than seven years old must be removed, with the exception of certain bankruptcy information, which can be reported for ten years.

Because the burden of proof is on the credit reporting agencies and not you, the consumer, this law is very powerful.

Fair Debt Collection Practices Act:

This law regulates collections agencies, and what they and your creditors can and cannot do when trying to collect a debt from you. Under this law, creditors and debt collectors must work with you in a professional and reasonable manner. This means that they cannot harass you; call before 8 a.m. or after 9 p.m.; call you at work if you don't want them to; or use profane language, threats of imprisonment, seizure of property or violence.

Congress passed this law to prevent harassment and abuse, by making creditors and collection agencies accountable for their actions when attempting to collect debts. If you're being contacted by creditors and debt collectors and feel that they're dealing with you in an unprofessional and disrespectful way, tell them to stop by using this exact phrase:

"Pursuant to the Fair Debt Collections Practices Act..." and finishing the sentence by saying they cannot continue the behavior that you find uncomfortable and harassing. If it doesn't stop, you may report the creditor or debt collector to the Federal Trade Commission.

Regardless of the behavior of the creditor or debt collector, if you just want the letters and phone calls to stop, you can write a "cease and desist" letter. Your attorney can give you a sample copy.

Remember: While a "cease and desist" letter will stop a creditor or debt collector from contacting you in the future, it won't stop them from taking legal action against you for your unpaid debt.

Fair Credit Billing Act:

This law is designed to help consumers challenge information on their credit card bills. Under this law, if you notice a mistake in your credit card bill, you can contact the company who made the charge, in writing and within sixty days of receiving the bill. Be sure to include your name, address, account number, and any details of the mistake in the letter.

The company then has thirty days to respond and investigate the issue. If an error is found, the company is required by law to tell you how they're fixing the mistake and remove any fees or charges associated with it. If an error isn't found, they're still required by law to inform you.