Consumer Protection Laws
If you're consumed by tons of debt, you might be wondering if there are any laws out there that protect you. Good news-there are.
The Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from using abusive or deceptive practices to collect from you.
The FDCPA covers personal, family and household debts, including money you owe on a personal credit card account, an auto loan, a medical bill and your mortgage.
A debt collector may not contact you at inconvenient times, such as before 8 a.m. or after 9 p.m. unless you agree to it. Collectors also may not contact you at work if they're told that you're not allowed to get calls there.
Consumer Credit Protection Act
The Consumer Credit Protection Act (CCPA) protects employees from discharge by their employers because their wages have been garnished for any one debt and limits the amount of an employee's earnings that may be garnished in any one week.
Wage garnishment occurs when your employer withholds your earnings for the payment of a debt as the result of a court order or other equitable procedure.
The CCPA also protects you by limiting the amount of earnings that may be garnished in any pay period to less than 25% of your disposable earnings or the amount of which disposable earnings are greater than 30 times the federal minimum wage.
This act also gives wage you the right to receive at least partial compensation for the personal services you provide despite wage garnishment. This law also prohibits an employer from discharging you because of garnishment of wages for any one debt.
Statute of Limitations Laws for Debt Collection Agencies
The Statute of Limitations refers to the window of time that collection agencies can continue to legally pursue delinquent and unpaid debts. This means that unpaid debts do have an expiration date when collection agencies have to stop their collections activities.
This time period varies based on your state's laws. Keep in mind that this time period commences from the date of the last reported activity on your account. This date is shown on your credit report. This is not the date the account became overdue. Activity on the account includes making a payment, entering a payment agreement or even making a promise of a payment.
Debts that are excluded under the Statute of Limitations include child support, federal student loans and federal and state income taxes. There is no expiration date that prevents collection of these types of accounts. Most other types of credit agreements are covered.
New Policies for Credit Cards
Signed in May 2009 and set to go into effect in 2010, the Credit Card Accountability, Responsibility and Disclosure Act (CARD Act) imposes restrictions on credit card companies.
The bill:
- Requires credit card companies give cardholders 45 days advance notice of an increase in interest rates.
- Prohibits credit card companies from increasing interest rates retroactively on existing balances unless the cardholder is more than 60 days late in making a payment.
- Prohibits credit card companies from marketing and issuing cards to borrowers under the age of 21.
- Permits consumers to set credit limits lower than the limit offered by the credit card company.