Debt Collection

This post will present the issue of debt collection from both the side of the collector and the side of the debtor. Each party has rights as well as responsibilities. There are hundreds of laws in this area from the federal Fair Credit Collection Practices Act, 15 USC 1692, (FDCPA), to Title 27 Revised Missouri Statutes “Debtor-Creditor Relations,” and case law both in state and federal courts.

To begin, let us first consider whether you are a debtor, someone who owes a collectible debt, or a creditor, someone to whom a collectible debt is owed. Note the choice of the word “collectible.” Not all debt is collectible. In Missouri, the statute of limitations for the collection of most debts is 5 years. There are many circumstances in which the 5-year rule does not apply to your specific circumstances. For example, the process of re-aging is where a person makes a payment on a debt which is close to, or older than 5 years and that payment could start the clock over. Also, in many contracts, especially those for revolving credit, such as credit cards, a choice of law and forum (location) may had been agreed to by the parties and Missouri law would not apply. You will need to review your agreements to determine whether Missouri law even applies in regards to your debt.

Other factors may weigh on whether the debt is collectible such as mistake, fraud, or duress in the initial process which cause someone to incur the debt.

DO NOT GIVE PERSONAL INFORMATION OVER THE PHONE!

If you are a debtor do not ever give a credit card, bank information, or even discuss your debt over the phone. If you are a creditor do not ask for credit card, bank information, or to discuss the debt over the phone. Identity theft is a reality. If you do not want your bank account to be emptied or your life to be ruined financially just make it a rule to not discuss these matters over the phone. As a creditor, if you do not want to be misquoted, accused of badgering, or sued under fair debt collection laws then send a letter.

Anyone serious about a debt will take the time and effort to provide the information in writing. As a debtor, after you thoroughly review your accounts to determine whether it is a valid debt then you can call the company back and try to reach an agreement, or contact a group, agency or attorney’s office for assistance.

As creditors, your best chance of getting a full settlement from the debtor is providing accurate and thoughtful documentation. Reminding a debtor of the agreement, especially specific parts that the debtor may not have remembered or understood will go a long way in front of our local judges. Judges will consider each person’s individual circumstances when making a final determination in the case.

There are specific laws regarding telephone communication in debt collection – remember though, as a debtor, cutting off communications with a creditor will likely result in them proceeding to court to get a judgment against you. Then they can, and will, begin attaching your assets for collection.

• Under the Fair Credit Collection Practices Act, 15 USC 1692, (FDCPA) debt collectors can only call between the hours of 8:00 a.m. and 9:00 p.m.
• Leaving a message on your voice mail or recorder can be a violation under 1692c, if anyone else has access to the voice mail or recorder and is not a debtor on the specific debt.
• Under 1692b they can only call your work to verify your location and must cease if you tell them that you cannot receive calls there.
• While not setting an exact number of times a collector can call 1692d(5) does state that “engaging any person in telephone conversation repeatedly or continuously with the intent to annoy, abuse or harass” would be a violations of the FDCPA.

Both the FDCPA & the Telephone Consumer Protection Act, 47 U.S.C. 227(b)(1)(A) prohibit automated debt collection calls to cellular phones where the recipient has not given express consent. Each and every violation of these provisions can result in penalty to the collector. The penalty for violations of this provision is the greater of the amount of actual monetary damages or $500 for non-willful violations or $1,500 for willful violations.

Assuming that everyone agrees that the debt is valid and the creditor is willing to enter into a payment plan if the debtor is unable to pay the full amount upfront then the matter can either be settled without the need to open a court case or a consent judgment can be entered. In cases involving payment plans, the judgment is entered and the court will stay execution of the judgment. In other words, so long as the debtor makes timely payments then the creditor will not garnish the debtor or take other actions to obtain full payment immediately.

If either party fails to perform their part of the new agreement the parties can look back to the original agreement for their rights and responsibilities, or the parties can now use the new agreement and sue as a breach of that agreement. It ultimately depends on what was agreed to in the new agreement. Therefore, while these agreements are usually beneficial, make sure that you understand what you are offering and what you are accepting. Read the fine print carefully and/or consult an attorney or financial specialist who can help you understand your rights.

Some things to look for when you are making these new agreements. Some agreements are required by law to be in writing. Some examples are agreements to purchase real property, or for goods or services above a certain value or that cannot be completed in a certain time period. These rules generally fall under a legal theory called the Statute of Frauds. In Missouri, this has been codified as 432.010 RSMo. While the courts are not supposed to make laws some of the rules applying to these agreements may also be found in cases heard before the appellate courts. Therefore consulting an attorney may be a good idea before you make a new agreement.

Judgments are debts ordered by the court. A judgment can be any writing signed by a judge (even by initials), denoted as a judgment somewhere in the document and entered into the record (filed). Under Missouri law, judgments can be collected for 10 years, unless the creditor has made reasonable attempts to collect and been unsuccessful, then the creditor can revive it for another 10 years.

If the Court has not entered a stay as mentioned previously, then collection, or execution, of a judgment can occur immediately upon entry, unless an order or bond is entered to stay execution. Execution usually comes in the form of a garnishment. Garnishments are usually against wages but can be done against bank accounts also. Writs of sequestration (order for property to be seized) can be entered against your property or a court can order a sell of property.

If a judgment is entered in Circuit Court a lien is immediately placed against any real property (land/house) owned by the debtor, which would require payment of the debt in conjunction with the sale of the property.

If the available assets of a debtor are not known by the creditor he/she can file a notice of a “Debtor’s Exam” in order to discover assets. The debtor is placed under oath to testify as to his/her assets and the information can be used to collect the debt.

This article is not intended to be a substitute for legal counsel. If you need assistance please contact an attorney with whom you are familiar with and trust for advice on your specific set of circumstances.