Common Violations of the Fair Debt Collection Laws

California and federal law protect you against many unfair, deceptive and abusive debt collection practices.  Creditors, professional debt collectors, and attorneys who violate the law are subject to paying actual damages, statutory penalties of $1,000 and the consumer's attorneys fees and costs.  The following is a list of common violations under the law applicable to California.

Home and friends: Except for your spouse, debt collectors generally may contact family or friends only to obtain your current "location information," which is defined as your home address, work address, and home phone number.

Work: Under California law, a debt collector or creditor may make only one phone call to your work, and only for the purpose of verifying employment.  Any other communications must be made in writing, and are limited to requesting location information.  Only if your employer fails to respond to a letter could the debt collector call again.

Bad check collections

California allows bad check collectors to add a $25 charge to the debt.  However, some collectors try for more, sometimes several hundred dollars, which they label creatively as settlement fees, civil shoplifting penalties, attorney fees, or other charges.

Most bad check collectors try to collect "treble damages" by mentioning California Civil Code § 1719.  However, such debt collectors are not entitled to treble damages until they first notify you, by certified mail, of an opportunity to pay the original bad check amount plus the $25 fee.  Bad check collection correspondence should be reviewed by a consumer attorney because the requirements are somewhat complex, and often violated.

Credit reporting

Debt collectors routinely report credit information to the major credit bureaus, but often fail to report that a debt is disputed, as required by law.  For a full explanation of other credit reporting problems, please see the credit report section of this website.

Bankruptcy discharge violations

After a debt is discharged in bankruptcy, it can no longer be legally collected.  Some debt collectors or creditors nevertheless continue collection efforts, or try to convince you to reaffirm the debt, or even repossess an automobile or other security.

Collecting on old debt

Merely requesting payment on a debt as to which the statute of limitations has passed is unseemly, but not illegal.  However, threatening a lawsuit or invoking judicial remedies concerning an expired debt is a violation of the law.  Most debt falls under a four year statute of limitations.  Remember that you may be re-starting the statute of limitations all over again if you make a voluntary payment.

Suing in distant locations

A professional debt collector may not sue you in a county other than where the contract was signed or where you currently live.  Your original creditor, as opposed to a professional debt collector, has the third choice of suing you in the county where you resided when the debt was incurred.

Repossessions

A creditor does not have to give notice prior to a repossession in California.  However, they must give a special written notice after a repossession, and grant you an opportunity to reinstate the contract.  There must be a valid default under the contract before they repossess a vehicle.  The repo company itself may not breach the peace.  For more information on repossessions, including the required notices, click here.

Debt Collector's First Communication

A professional debt collector or attorney (but not a creditor) must provide, in the first communication with you (or within five days thereof), the following "validation notice":

1. a statement that unless you dispute the validity of the debt, it will be assumed to be valid;
    

2. a statement that if you notify the debt collector in writing within 30 days, the debt collector will obtain verification of the debt; and
    

3. a statement that if you so request in writing, the debt collector will provide you with the name and address of the original creditor, if different from the current creditor.

California law requires a second notice, effective July 1, 2004.  This notice must inform you that debt collectors cannot call at unreasonable hours, may not harass you by using threats of violence or arrest, may not call you at work if it is prohibited, may not call family or friends, and other disclosures.  It is likely that many debt collectors are not in compliance with this relevantly new law.

Some collectors fail to send the notices.  Others fail to stop all contacts after you request verification the debt.  Initial letters should be reviewed by a consumer attorney for compliance, even if you don't dispute the debt.

Attorneys fees and other charges

A debt collector cannot add to the debt any charge to which it is not legally entitled.  These illegal charges are often called something plausible, like collection costs, service charges, civil penalties, damages, court fees, attorneys fees, or settlement fees.  As just one example, if your written contract with the original creditor did not provide for attorneys fees, the debt collector is not entitled to them.