Do Debt Collection Agencies Have Insurance To Pay Damages When You Sue Them Under The FDCPA?

Do Debt Collection Agencies Have Insurance To Pay Damages When You Sue Them Under The FDCPA?

Do Debt Collection Agencies Have Insurance To Pay Damages When You Sue Them Under The FDCPA?Most debt collection agencies (debt buyers, collection lawfirms, traditional agencies, etc) do have insurance to protect them if you sue them for violating the Fair Debt Collection Practices Act (FDCPA).  This is important for several reasons.

First, you want to be able to receive money damages when a debt collector violates the FDCPA.

No one wants to be harassed by a debt collector — but if you are harassed you want to be able to be compensated.  The good news is the debt collector — if a legitimate company — normally will have insurance and so you can be compensated.

Often times the defendant collection agency will say it has no money and so can’t pay you.

But it will conveniently forget that it has a million or five million dollar insurance policy.

That’s important so that if you get a verdict, there will be money there to pay you and your lawyers.  It is the same reason you and I have car insurance — so if we mess up and hurt someone, there will be money to compensate them for the injuries we caused.

But will the lawsuit put the debt collector out of business?

Second, your lawsuit will not put the debt collector out of business.

It is a legitimate concern that you may have — “I don’t want to shut down the business.”  When the debt collector has insurance, there is little chance of this happening due to your lawsuit.  Just like a car wreck case will normally not bankrupt a driver who has insurance — that is the whole point of insurance is to protect the insured.

So the debt collector will not have to pay the majority of the damages — insurance will.  The debt collector will pay its “deductible” which is doable for them.

It does, however, get their attention….

Finally, your lawsuit will cause pain to the debt collector which may be the only thing that causes the debt collector to change for the better.

While you don’t want to destroy the debt collector, you do want the agency to feel pain so it will change its ways.

Your lawsuit will do this in several ways.

First, the deductible has to be paid.  This can be as little as a few thousand or as much as $50,000 or $100,000.

Second, the insurance company does not like paying out the settlement or verdict money.  So it will pressure the debt collector to make changes or it will not renew the insurance coverage.

Third, the premiums for the insurance can go up — just like if you are at fault in a car wreck and your insurance goes up.

Finally, your lawsuit will encourage others to step up and take action so this hurts the collector and forces them to re-evaluate their business practices.

If you would like to know more about your rights, call us for a free meeting or to receive our free information package on dealing with debt collectors.

You can call us at 1-205-879-2447.

Our receptionist will answer the phones and transfer you to Randi or Carolyn who will help you.

If you want to talk to us or make an appointment, they can make that happen.

We can also send you out a detailed package of information — at no charge — so that you can learn more about your rights.

Or you can fill out our online contact form if you would prefer.

We look forward to helping you.

Thanks for reading, and have a great day!

-John G. Watts

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