Fair Debt Collection Practices Act, Explained

Creditors have many options for pursuing the collection of debt. A creditor can communicate with the debtor to try to collect, file a lawsuit against them, take possession of their property, or engage a debt collection agency. The FDCPA allows debtors to challenge payoff demands and determine the validity of debts. Individuals have the good news that the FDCPA provides ethical guidelines for collecting consumer debts.

Only debt collection by consumers for personal, family, or household purposes is covered under the FDCPA. A debt collector collects or attempts to collect consumer debts regularly for another person or institution.

The FDCPA doesn’t protect debtors who are trying to collect personal debts. If you owe money to local businesses and they attempt to collect, the FDCPA does not define debt collectors. This Act applies explicitly to third-party collectors, including individuals working for a debt collection agency. The Act protects debtors against harassment from debt collectors, which can often involve threats.