UNDERSTANDING CREDITOR RIGHTS AND LIMITATIONS
May 5, 2022
When you owe someone money, it is because you made a contract with them. You agreed to use credit on your credit card in exchange for monthly payments and accruing interest. You agreed also to make payments and pay interest on the car you drive or the house you live in. You even agreed to pay the cost of medical treatment that health insurance didn’t cover.
This contractual relationship works well until you fall behind on paying what you owe. Creditors, once anxious to sign you up, are equally anxious to make you pay up, or else. Perhaps this is where you are now, drowning in debt, harassed by creditors, and wondering how you will ever be able to put your financial house back in order.
It is true that those who lend money have the rights to be repaid. However, those rights are not limitless, and filing for bankruptcy can immediately provide you with some protection against incessant creditor calls and relentless creditor harassment. At the Winter Law Group, we can help you understand creditor rights and limitations and explore your options for financial relief. If you live in Fresno, Madera, Clovis, Visalia, or Merced, California, or in Madera or Merced counties, we should talk.
What Are the Key Consumer Rights Laws?
The federal Fair Debt Collection Practices Act (FDCPA) prohibits creditors from harassing, oppressing, and abusing those who owe them money. They also can’t lie to you or mislead you, for example, by stating they are attorneys when they are not, lying about the amount of money you owe, or threatening you with violence, arrest, or any action they are not allowed to pursue by law.
Another federal law, the Fair Credit Reporting Act (FCRA), protects the accuracy, fairness, and privacy of your credit report. The act regulates how credit reporting agencies can collect, access, use, and share your credit information.
California law also protects residents against abusive, deceptive, and unfair practices sometimes used by creditors. The state also recognizes and upholds the FDCPA and FCRA.
What Are Creditors Allowed to Do to Collect a Debt?
In order to collect debt while complying with federal and state laws, debt collectors must avoid certain actions, including:
Adding interest, fees, and other charges not specified in the loan or credit agreement
Threatening you or someone you love
Using profane language
Sending debt notices with certain information, such as that it is a debt notice or the amount you owe, where that information can be viewed by anyone else
Applying payments to a debt you have with a collector other than where you tell them to apply it
Constantly calling you at home or at work
Debt collectors are allowed to file a lawsuit against you in civil court in an effort to obtain a judgment against you. If a judgment is awarded, it will likely tack on accrued interest, creditor attorney’s fees, and other penalties. The creditor can use the judgment to garnish your wages or repossess property securing the loan or credit.
The judgment also allows the creditor the right to place a lien against something of value that you own, such as your home or vehicle. You should know that bankruptcy does not automatically discharge liens, so it is wise to file for bankruptcy before a creditor files a collection suit against you.
How Does Bankruptcy Affect Creditor Rights?
Upon filing for bankruptcy, the court will issue a stay order. Any creditor whose debt you have included in your bankruptcy filing must immediately cease and desist with all collection efforts. There can be no more bill collector calls or collection notices. The creditors named in the bankruptcy will be able to communicate only with the trustee and the court.
If creditors violate the stay by contacting you, or if they continue to harass you for payment of a debt that the court discharges in bankruptcy, you and your attorney can advise the court. The court, in turn, can hold the creditor in contempt of the stay or discharge order.
Legal Advocacy You Can Rely On
Collection agencies usually have attorneys. If you are being harassed by creditors and are struggling with debt, you should have one, too. At the Winter Law Group, we represent people like you who need financial relief and relief from the stress and annoyance of creditors pursuing repayment.
If you live in or near Fresno, California, count on us to provide the guidance and advocacy you need. Call the Winter Law Group now to schedule a consultation so we can get started on protecting your rights.