A collection agency can also operate as an agent of the creditor. The agency can charge a fee for collecting debts and the fee can be a percentage of net amount that is due. Debt collectors send demand letters/debt collection letters. Debt collection letters/collection letters are letters that demand for payment of a debt/bill. A collection form letter/demand letter is sent by collection agencies to debtors. A credit and collection letter is different from letters of collection. A letter of collection is a letter authorizing a person to keep in his safe hands the properties of a deceased person.
A formal final demand letter should state the following:
- What amount is due,
- Since when it was due,
- When you would like the amount paid, and
- Who owes the debt.
Dozens of varieties of collection letter samples and collection letter forms are available online. It is also advisable to view a couple of sample debt collection letters before drafting one. But many form letter examples/sample forms are confusing. Our Fair Debt Collection Letter Collection Forms avoid confusion over the multiplicity of fair debt collection forms available online and also explain how to use this forms. You can view the template/sample collection letters of formal final demand letters here.
The Fair Debt Collection Practices Act
The United States debt collection industry, through various regulations, ensures fair debt collection practices at both the federal and state levels. At the federal level, the Fair Debt Collection Practices Act (FDCPA) is the main statute, while at the state level, various debt collection laws play the role of ensuring fair practices. All these laws and regulations protect debtors from abusive and deceptive practices.
In the context of the collection of a debt, the FDCPA defines a "consumer" to include a borrower's spouse, parent, guardian, executor, or administrator. The Fair Debt Collection Practices Act (FDCPA)/Fair Debt Practices Act lays down minute details that address aspects like behavior of debt collectors when they are in the process of collecting debts. Harassment by debt collectors is also prohibited by the Act. Threatening a debtor and using obscene language are examples of harassment. According to the FDCPA,
- Collectors cannot threaten a debtor or pretend to be a credit bureau;
- A bill collector cannot use abusive tactics and unfair practices;
- Consumers are protected from debt collection harassment;
- Bill collectors may not exercise unfair methods to collect debts/checks;
- Debt collectors cannot harass, oppress, or abuse a debtor or any third party who they may have to contact;
- Collecting callers can contact a debtor only at reasonable times or places;
- Calls can be made only between 8A.M. and 9P.M., unless otherwise agreed by the debtor;
- Debtors cannot be contacted at work if they have informed the agency (orally or in writing) that such calls are not permitted at workplace;
A debt collection agency cannot also make false or misleading representations. This includes written communications, the appearance or wording of which make it look like authorizations issued by a federal or state agency. Thus documents or representations that give false authorization of a document's origin are not permitted to be used.
There are two categories of U.S. state laws on fair debt collection:
- Laws that require that debt collectors should be licensed or registered; and
- Laws that safeguard debtors from specific unfair practices by debt collectors.
When debt recovery through debt collectors or collection agencies fails, you can approach a court. Before making claims for recovery of money, it is best to approach an attorney to understand if court action is best suited for you. Attorneys can help you analyze if you are likely to win your claim or not. For example, if a claim is for money owed for work done or goods delivered, you are most likely going to win.