Before September 20, 1977, many debt collection agencies used deceptive and overly aggressive debt collection tactics to convince consumers to pay off outstanding credit card and personal loan accounts.
After years of hearing the outcry from constituents, the United States Congress passed the Fair Debt Collection Practices Act (FDCPA). Considered the most powerful federal consumer protection law, the FDCPA outlaws dozens of previously legal debt collection tactics.
The landmark consumer protection law makes it illegal for debt collection agencies to intimidate consumers by issuing threats of any kind. A company such as Direct Recovery Associates cannot threaten to seize your property to liquidate into cash for covering the amount owed on a credit card or a personal loan balance.
The company is also not allowed to contact a third party regarding your debt. Some third party debt collectors ignore the third party provision of the FDCPA by reaching out to friends, neighbors, family members, and/or professional colleagues.
The FDCPA Makes a Few Exceptions to the Third Party Rule
After September 20, 1977, numerous court decisions have ruled on the meaning of virtually every provision written into the FDCPA. The third party provision has received considerable legal scrutiny that has led to a few exceptions to the “Do not contact a third party” edict.
As perhaps the most frequently cited exception to the third party provision of the FDCPA, a bill collector is well within the law to contact a third party who co-signed a credit agreement with you.
Co-signees are required for credit agreements because the primary borrower has not established the type of credit history that meets the minimum standards established by lenders. Another reason for including a co-signee on a credit card or a personal loan application is to increase the amount of collateral needed to get the credit application approved.
Whatever the reason for the need for a co-signee, a debt collection agency has the right to contact the co-signee because he or she is legally liable for paying off the debt. This means a third party debt collector like Direct Recovery Associates can contact a third party, which typically is a friend or a family member, that co-signed a credit application that has your name on it.
When Contacting a Third Party Violated the FDCPA
A bill collector cannot contact someone you know to discuss any element of your outstanding consumer debt. The company cannot refer to the amount of money that you owe, as well as inquire about your ability to pay off the delinquent debt. Under the FDCPA, discussing your debt with a third party can also involve questions that pertain to your bank account and/or the value of your home.
Because the third party provision has a few exceptions that allow debt collection agencies to contact a third party regarding your debt, it is a good idea to work with a state licensed FDCPA attorney to prevent additional violations of the federal consumer protection law.
Never permit a third party debt collector to shame and embarrass you into paying off an outstanding credit card or personal loan balance. Schedule a free initial consultation with an experienced FDCPA lawyer.
*Disclaimer: The content of this article serves only to provide information and should not be construed as legal advice. If you file a claim against Direct Recovery Associates, or any other third-party collection agency, you may not be entitled to compensation.