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Power Advocacy Center
OVERVIEW OF THE FAIR DEBT COLLECTIONS PRACTICES ACT
The Act does not apply to the original makers of a loan. The Act applies to third-party debt collectors. Third-party debt collectors include lawyers and law firms who are attempting to collect any alleged debt, including mortgage foreclosures. When a third-party debt collector contacts an alleged debtor, the collector must, in the first communication or within five (5) days thereafter, furnish the alleged debtor with a “dunning letter.” The dunning letter must inform the alleged debtor that the collector is attempting to collect a debt and inform the alleged debtor that they have thirty (30) days to dispute the debt. The alleged debtor has thirty (30) days to dispute the debt, requiring the collectors to furnish validation of the debt. Validation of the debt can either be a signed judgment order or a statement made under penalty of perjury by an officer of the original maker of the debt. Failure to notice the alleged debtor of their due process rights subjects the collector to suit for violation of the Act, and any action to collect without informing the alleged debtor of their due process rights or failure to cease collection activity until timely validation subjects the collector to suit for damages under the Act and voids any legal proceedings including mortgage foreclosures. The Act also allows damages when the collector makes false statements regarding the character or amount of the alleged debt. An aggrieved party has one year from the violation of the Act to sue or one year from the taking of property by the collector. An aggrieved party under the Act is entitled to one thousand dollars ($1,000.00) in statutory damages, plus unlimited damages for intentional infliction of emotional anguish.