When does the FDCPA apply?
The FDCPA (Fair Debt Collection Practices Act) is a powerful federal consumer protection law but it does not always apply to your situation.
If you are dealing with a debt collector, the first step is to figure out if the FDCPA even applies to you.
If it does not, then you’ll need to look to Alabama state law or some other federal law for protection from abusive debt collectors.
But if the FDCPA does apply, it gives you great protection from collectors.
Here are the requirements for the FDCPA to apply:
- You are a consumer — not a corporation or partnership
- Consumer debt — not business debt
- Debt collector — not the original creditor but someone who collects debts and when they first got the debt, the debt was in default
You are a consumer — a human being
The law is designed to protect consumers. While some courts say it applies to LLCs, LLPs, etc, most courts require that you be a human to get the protection of the FDCPA.
The debt being collected is consumer/personal debt, not business debt
Sometimes this gets a bit complicated but the general idea is business debts are not covered by the FDCPA.
But debts that are personal or for your household are covered.
Here are some examples:
- Truck loan for your tow truck — business debt not covered
- Discover card mainly used for groceries, gas, etc — personal so covered
- Medical bills — personal so covered
- House payment — personal so covered
- Student loans — personal so covered
- Sued for causing a car wreck — typically considered “not personal” so no covered
Hopefully, the list above gives you an idea of what is covered or not covered from the standpoint of the debt.
So we know you need to be a consumer, have consumer debt, and now the last requirement is . . . .
You are dealing with a debt collector
A debt collector is someone who collects debts for others or collects its own debts but in either case, the debt must be in default when the “debt collector” gets the debt.
Here are some examples:
- You take out a Capital One credit card. Even if in default now, it was not when you took it out so Capital One is not a debt collector
- You have a Bank of America home loan and its always been with Bank of America — not a debt collector
- Maybe you have a credit card that went into default and now Midland Funding or Portfolio Recovery has it — they are a debt collector
- You have a home loan that went into default and now Ocwen has it — they are a debt collector
- Or, you had a loan with Santander, and then your car was repossessed and now Cascade Capital or Velocity has your deficiency loan — they are a debt collector as it was in default when they supposedly received the loan
“Default” normally means not paying on the date it was due. We figure this out by looking at the contract which tells us exactly what a default is under the contract. Normally this is not paying on the due date.
So the bottom line is the FDCPA is very powerful when it applies — the first step is to make sure it applies to your situation.
If you have questions about debt collectors or the FDCPA, please feel free to get in touch with us by calling us at 205-879-2447 or contacting us through our website.
-John G. Watts
Watts & Herring, LLC
Birmingham and Madison Offices in Alabama
We represent consumers from all parts of Alabama