The Fair Debt Collection Practices Act (FDCPA) is the main federal law that governs

debt collection practices. The FDCPA prohibits Debt collectors from using abusive, unfair or
deceptive practices to collect past due debts from consumers or debtors. Creditors (owners of
the original debt) are not governed by the FDCPA. Debt collectors that violate the FDCPA must
pay consumers up to $1,000 and/or actual damages if they violate the act.
There are three types of companies that pursue you for a debt:
Creditor. This is the company you signed with on the original obligation. This debt or
obligation may be passed to other creditors. Generally, FDCPA protection doesnt exist for
consumers unless (1) the new creditor that was assigned or purchased your debt did so when the
debt was already defaulted or charged off or (2) the creditor that is collecting on its own debt is
pretending to be a debt collector (this is called the False Name Exception). In both cases, the
creditor becomes a debt collector and is covered by the FDCPA.
Debt Collector. This is a third-party collector for the original creditor or new
creditor/owner that services the debt but does not own it. These collectors are hired by the
creditor who still owns or holds the debt. The debt collector generally can only settle the debt
within guidelines set by their boss, the creditor. They must follow the rules of the FDCPA or
pay the consumer damages for any violation.
Debt Collector Owner. A debt buyer owner of an old or charged off debt is still a debt
collector and must follow the FDCPA. This is sometimes called a Junk Debt Buyer. The
difference between the buyer and the servicer is in who controls both the management and
settlement of the debt. A debt buyer controls the collection and can settle it directly with the
consumer for any amount it wants.
This is the best chance a consumer has of settling a debt and using a violation of the
FDCPA by a collector for the biggest discount. Huge debts in the tens of thousands are settled for
nothing in the right circumstances as the debt buyer who purchases the debt does so for pennies
on the dollar.
TIPS on the most common violations of the Fair Debt Collection Practice Act (FDCPA)
1. Debt collectors can call you at work. Tip: However, once you advise them that you are
not allowed to receive the calls in the workplace they have to stop. Providing them with
another number is a good response and helps your case if you have to sue them because
the work calls did not stop. Tip2: Have someone witness your attempt to tell them to
stop. A letter to the collector (certified, return receipt requested) is even better.
2. Debt collectors can call neighbors or others to seek location information. However,
they can only do it once and must identify themselves without identifying they work for a
debt collector and never state you owe a debt.
3. Debt collectors can threaten to sue you. They cant threaten to sue you unless they
intend to do it-which is statistically rare vs how many debt claims there are. Further, you

cant be threatened with garnishments (you have to sue someone first), liens or arrests.
This practice is common to scare people into paying debts. Fear Factor: if you are being
threatened at an early stage of the collection process, it is probably illegal.
4. Debt collectors can call you on a debt. They must identify themselves as debt collectors
on the first and any subsequent calls. They cant leave messages at your home or work
place identifying themselves as debt collectors if it is likely someone else will hear or see
this information. A debt collector making a third party aware of your debt has violated the
FDCPA.
5. Debt collectors must provide you with your Validation or dispute rights under the
FDCPA. Within five days of the initial contact with you, debt collectors must provide
you with your right to dispute and seek validation of the debt (in writing), the amount
of the debt owed and the name of the creditor they are collecting for.
Tip: Debt collectors sometimes send a letter telling you of your right to dispute or
seek validation of the debt but purposely avoid telling you must seek the dispute
or validation in writing. They do this as the law requires they cease any collection
only if they receive the request to dispute or validate in writing. So, if you were
to just call for this information because you are not aware you have to write the
request, they can still collect on the debt or even contact your credit report if there
is nothing in writing from you.
6. You cant be sued on a debt where your last payment was over six years ago. So, be
aware of debt collectors that threaten lawsuits on old debt. See below on settling old debt
or responding to time barred lawsuits.
7. Debt collectors can place a debt on your credit reports. However, it is a violation of
the FDCPA to place false information on your credit report. Debt collectors will re-new
old debts or place false amounts on your credit history to scare you into paying old or
false debts.
8. Debt collectors cant contact you or allege you owe a debt:
1. If you are represented by an attorney
2. You have sent them a cease and desist letter
3. If it is after 9pm or before 8am on any day
4. You dont owe the debt
5. It is at an unusual time or place or a place known to be inconvenient
6. They cant use threatening or abusive language
7. Cant threaten to put you in jail
8. Debt collectors cant call you repeatedly
Tip: Send the debt collector a certified letter detailing any of the above so
there is proof in writing if it eventually goes to court. Also, it is legal to tape
phone conversations if there is one party giving permission to do so-some
state require permission of both parties.

9. It is a violation of the FDCPA to make false representations or be deceptive when

collecting on a debt or providing collection information.
a. A Debt collector cant use Attorney Letterhead unless the attorney is
meaningfully involved in the collection.
b. A Creditor (company you owe the debt to) cant pretend to be a debt
collector or use a debt collectors name or letterhead unless the debt
collector is meaningfully involved in the collection alone.
c. A Debt collector cant pretend to be a government agency like a police
officer, prosecutor or some government sounding collection
department.
d. A Debt Collector cant collect processing fees or convenience fees
when providing a way to pay the debt by credit card or check unless
the agreement between you and the creditor states they can -they rarely
do.
e. A Debt Collector cant add court fees and attorney fees on to a debt
when the case has not gone to court.
f. A debt collector cant collect more than the original contract for the
obligation allows.
10. Foreclosure Law Firms Are Debt Collectors.
1. Firms foreclosing on homes must follow the FDCPA. This a recent rule change
so it is very common for the foreclosure firm to break the law when collecting on
mortgage debt. Debt is debt whether it is a credit card, personal loan, medical bill
or home loan.
11. Debt collector must advise of the SOL in a letter.
If a debt collector sends you a letter that says you offering a generous discount on
a debt that is older than six years old (Statute of Limitations) and does not advise
you that it is beyond the SOL and/or that any payment made will start the six
years running again, this is a violation of the FDCPA.
TIPS on how to handle Debt Collectors that write or call you:
1. Responding to Debt Collection Letters. If you receive a letter in the mail from the debt
collector the letter must advise you:
a. The name of the Creditor; and
b. The amount of debt you owe; and
c. Your rights to dispute and how to seek validation in writing that the debt collector
owns the debt; and
d. The Creditors are not debt collectors. It should be clear that the debt collector is the
one collecting the debt and not the creditor (company you owe the debt to).
a. Sometimes Creditors purchase the name or letterhead of a debt collector to scare
people into thinking they are being chased by a debt collector when in reality, it is
the creditor pulling the strings. It is a violation of the FDCPA to misrepresent who

is collecting on the debt. So, make sure there is a real address and phone number
of the debt collector and that you are not told to contact the creditor to settle the
debt. If it is just a Creditor using the name of a debt collector, then it is a
violation of the FDCPA. Settlement Tip: if the collector is doing this, you can
advise them you have a claim against them and negotiate a better settlement.
b. Attorney Letterheads and Collection. If the debt collection letter is from an
attorney, again, make sure there really is an attorney collecting on the debt. Debt
collectors use the Attorney name and letterhead (usually in the biggest font and
print in the letter) to scare you into thinking that the price of poker just went up
and you had better pay to avoid a lawsuit. Again, misrepresenting that a lawyer is
involved in a collection or falsely implying a lawsuit is on the horizon are
violations of the FDCPA. Settlement Tip: if the collector is doing this, you can
advise them you have a claim against them and negotiate a better settlement.
2. Keep a paper trail, Register by Mail. Always send either a Validation letter or Cease
and Desist letter to a debt collector by Certified Mail.
a. The first letter from the debt collector should always give you 30 days to dispute
or seek validation of the debt (proof you owe the debt) from the collector. You
should send a letter requesting they prove they own the debt and you owe it to
them. Send certified and keep a copy of the SIGNED letter.
b. Once the debt collector signs for the Validation letter, it is not allowed to collect
on the debt again until it validates the debt. If they contact you again without
validating, you have a FDCPA violation against them. Settlement Tip: if the
collector is doing this, you can advise them you have a claim against them and
negotiate a better settlement.
i. Cease and Desist Letter. If you know you dont owe the debt or the debt is
older than six years old, send a Cease and Desist Letter (Certified).
ii. Once a debt collector receives a Cease and Desist letter (Telling them not
to contact you again), they must cease and desist from contacting you
again. If they do, you have an FDCPA case against them for $1,000.
iii. Keep a copy of the SIGNED cease and desist letter and green card they
signed so that you have support for an FDCPA case if they contact you
again.
c. Debt collector must advise of the SOL in a letter.
If a debt collector sends you a letter that says you offering a generous discount on
a debt that is older than six years old (Statute of Limitations) and does not advise
you that it is beyond the SOL and/or that any payment made will start the six
years running again, this is a violation of the FDCPA.
3. Settling Cases or Debts.

You can settle a case or debt quite easily. You can do a lump-sum settlement with the debt
collector for probably 50%-70% of what you owe on the debt if you offer a lump sum
payment. You can get an even more favorable settlement if you promise payment
immediately, sometimes up to a 60% discount depending on the age of the debt and if the
debt collector owns the debt or not.
a. Debt Collector Ownership Advantages. Usually on an older debt. If the debt
collector is a Debt Buyer that owns the debt, you are dealing with a company that
probably paid pennies on the dollar it. They have the room to negotiate huge on
the debt. With patience, you can settle with the debt buyer sometimes up to 70%
off the original value.
b. Debt Collector is a Servicer of the debt. A Servicer collects on a debt that is
relatively new and usually owned by the original creditor. Debt collectors have
less room to negotiate but a lump sum settlement will probably get you 20% to
30% off the claim.
c. Statute of Limitation Debts (SOL) (*hit out of Luck). The Debt Collectors
biggest weapon is the threat of a lawsuit. If you have not made a payment on a
debt in over six years, you cant be sued on the debt and a Cease and Desist
letter to the collector ends any threat. They may try to place the debt on your
credit but any false notation on your credit subjects the collector to more lawsuits
so it is less likely to pursue you once you cease and desist on an SOL debt.
d. Friday or End of the Month Settlements. Debt collectors operate on quotas and
have to settle cases to keep their clients or jobs. Friday settlement are always the
most favorable for the consumer.
4. Make Sure Everything is in Writing. Get all settlements in writing! Many settled debts
show up again but with a different debt collector. A written release or settlement is a get
out of jail card free and could be the basis of a lawsuit against the new debt collector. It
could also be a lawsuit against the old debt collector for selling the debt to the new
collector when it knows the debt was settled. Tip: Once you dispute a debt, a debt
collector must inform any subsequent owner of the debt that it is disputed-debt.
Collectors dont like to buy disputed debts as that means a debtor is educated and could
cause them trouble. It also lowers the price a debt seller can charge for the debt. Debt
collectors will sell debts without telling the new collector of the dispute because it
increases the price. You will then have an FDCPA case against the old collector when the
new collector shows up. So Register by mail, keep a paper trail.
TIPS on How to Respond to a Collection Lawsuit
12. Answer the lawsuit. A Debt collectors biggest profit maker and business
model is to obtain a Judgment and then be able to garnish your bank account
and paycheck.

13. Fighting the lawsuit is priority #1. Answering the lawsuit immediately
increases the chance to negotiate a better settlement because the debt collector
does not want to spend more money on litigating the case and will be more
open to settling the case. This usually occurs on the first day the court requires
the parties to meet at a pre-trial or mediation.
14. How to Answer. Again, the most important thing to do is Answer the lawsuit
even if you owe the debt. You dont need an attorney to file an Answer.
Michigan residents can find their appropriate form at
http://courts.mi.gov/Administration/SCAO/Forms/courtforms/generalcivil/mc
03.pdf. Dont admit anything but always tell the truth. Admissions will be
used against you.
15. No Standing to Sue You. Examine the paperwork attached to the lawsuit.
Debt collectors rarely have the proof showing they have standing to file the
lawsuit. They attach an affidavit from their own office or some title paperwork
and figure 95% of people being sued wont challenge their right to sue. This
usually leads to a default or judgment. Be the 5% and challenge their standing
or right to sue you. You can negotiate a better settlement or even have the case
thrown out if you challenge the paperwork. TIP: Generally, Judges know the
paperwork in a collection lawsuit is bogus or false but they cant do anything
if no one is asking them. They have to remain neutral and deal with the case
request in front of them.
16. Beings Sued in the wrong place. It is against the Fair Debt Collection
Practices Act (FDCPA) to sue you in a district you dont reside in. So, if you
are being sued in Troy but you live in Warren, you not only have a right to
have the case dismissed against you in Troy, you have a right to seek $1,000
against the debt collector for violating the FDCPA. TIP for settlement-facing
the violation, most debt collectors may just dismiss the whole thing and agree
to settle the debt on favorable terms.
17. Settling the Lawsuit with a debt collector. Leave a paper Trail. If you
come to an agreement to settle the case after a lawsuit has been filed against
you, make sure any settlement includes a dismissal with prejudice. A dismissal
with prejudice means the case can never be brought against you again. A
dismissal without prejudice means the debt collector can sue on the debt
again.
HUGE TIP: If you are being sued and a debt collector starts to negotiate with you, it may
be just a way to pass the 21 days to eventually default you and seek a judgment. So, even
if a debt collector agrees to settle the case, get your Answer in or their agreement in
writing (Paper Trail) to dismiss the case. It increases your chances to get a better

settlement and avoid the collector that is just holding settlement talks to trick you into not
Answering the lawsuit.
a. SOL (*hit out of Luck). The Debt Collectors biggest weapon is the
threat of a lawsuit. If you have not made a payment on a debt in over
six years, you cant be sued on it as the debt is beyond Michigans
Statute of Limitations (SOL). If you are sued on a time barred or SOL
debt you have a perfect defense and an FDCPA violation you can sue
them on. Settlement Tip: if the collector is doing this, you can advise
them you have a claim against them and negotiate a better settlement
to get something in writing against any new collector that shows up.
Be aware of tax ramifications if you settle a debt you owe. The IRS
may perceive this as a form of income.
b. Tax tip. If you settle a debt in a lawsuit, dont sign anything that says
the debt is waived or eliminated if you believe you dont owe the debt.
If you eliminate or waive the debt, it could be seen as income. So, just
dismiss the case with prejudice and the debt has to go away anyway
without being perceived as an income source and cant be used against
you again.
TIPS on how to handle Student Loan Debt.
1. If you are being pursed for a private student loan, there are a lot more remedies or
protections.
a. Private student loans (borrowing from a bank and not the government) have a
Statute of Limitations of six years. Government loans have not SOL and cant be
discharged in bankruptcy unless there is extreme financial hardship proven by the
student borrower.
b. Being sued for a private student loan is generally a good thing.
1. Private Student loan collectors can sue you but they rarely have the proper
paperwork to prove their case because these loans are usually sold and resold
and the proof is long gone. See above tips on handling collection lawsuits.
2. Look out for Debt lawsuits where you are being sued by a company generally
called the National Collegiate Student Loan Trust (NCSLT). Never seen a
lawsuit by these guys where they have the proper proof or paperwork and
there are hundreds of thousands of these lawsuit around that people are
agreeing to settle when they shouldnt. The law firms suing on these debts
know how worthless these NCSLT debts are yet they claim to do you a favor
settling the debt for 50% off and already bloated and false claim. Settlement
Tip: Fight any NCSLT case. If you know you owe it and dont fear the real
owner of the debt is going to show up one day, settle these debts for 80% off.
A 20% payment is good for peace of mind if you know you owe something-but
get it in writing.
c. There are some solutions for Government loans (Navient, Sallie Mae).

i. There are good programs online to settle or decrease payments on

government student loans. Use the National Student Loan Data System,
Department of Education and Studentaid.ed websites.
ii. There are legitimate companies that can help navigate this area, usually
attorney based. But be aware of companies charging you for what you can
do on your own from the above websites.
iii. Unlike any other debt collection, with government loans, nothing happens
until you cure the default. Once you work out the default, you can
receive your risk and payment dramatically.
iv. Government student loans have enormous power. It is the only time where
they can get a Garnishment of your wages without a Court Order or
Lawsuit. Sometimes, they can garnish the wages within 30 days of the
threat. So, action cures fear-Cure the Default and you are on your way.
d. Debt collectors collecting government loans.
1. Even if a debt collector is contacting you on behalf of the Department of
Education for a Government loan, they still have to follow the law and
FDCPA. Debt collectors will always break the law and will create
opportunities to fight back even with the government student loan.