Credit Cards, Debt Collection and Your Rights

The economy has been hard on many people. Job losses and the crash of the real estate market, and the accompanying plunge in home values, have left many people reeling.

Ironically, a recent story in the Orlando Sentinel points out as financial problems become worse, people rely more and more on their credit cards. Many arrive at the point of abandoning their homes before they surrender their cards.

The same article points out that average amount of credit card debt and mortgage debt have gone down. Although, it is not because the economy has improved, but because people are living in fear of a "double-dip" recession, and understand their economic resilience is shrinking.

As this fear of continuing economic troubles leads to further belt tightening for consumers, with Florida credit card balances for July 2011 averaging $6,442 and a 44 percent increase in mortgage delinquencies in the Orlando area from 2007 to 2010, all is not well.

If you have fallen behind on your mortgage or missed credit card payments, your account may have been referred out for collection. This means either an internal department at the credit card company or bank or a third party debt collection agency is now responsible for recovering your debt.

Credit Card Debt and Collections

Debt collectors may contact you in a variety of ways. They can contact you in person or by mail, phone, telegram or fax. There are laws that regulate how and how often they can contact you, however. And, they are not permitted to harass you in an effort to collect the debt.

Fair Debt Collection Practices Act

The federal Fair Debt Collection Practices Act (FDCPA) controls how debt collectors may operate and prohibits debt collectors from using abusive, unfair or deceptive practices. Debts covered include personal credit card accounts, auto loans, medical bills and mortgages.

Under the FDCPA, a debt collector is defined as someone who regularly collects debts owed to others. This includes collection agencies, lawyers who regularly collect debts and companies that buy delinquent debts and then try to collect them.

Generally, a credit card company collecting its own debts would not be subject to the act, nor would a bank attempting to collect on a delinquent mortgage.

However, if a mortgage servicer obtains a mortgage that is delinquent, they would be subject to the FDCPA as a debt collector.

The Florida Consumer Collections Practices Act (FCCPA) is similar to the federal act, and it also prohibits various abusive collection activities.

Statute of Limitations? Three Years? Five Years? More? Less?

An important element with any consumer debt is the question of statute of limitations. Statutes of limitations are legal time limits for filing a lawsuit.

In Florida, the statute of limitations on these types of debt is typically five years. This means from the time of the last payment, the creditor has five years to sue you to collect the debt.

Maybe It's not Five Years?

Two facts could change the amount of time that a creditor has to collect on a debt. One, if you make a partial payment, it restarts the clock on the limitations period. Second, the limitations period may not be five years.

Here is why; your credit agreement probably has a provision that is called "choice of laws" and it allows the credit card company to pick the law of a state other than where you live as being applicable to any lawsuits involving their card.

For instance, your credit card company may operate from Virginia, Delaware or Nevada and may have chosen the law of one of those states as the law that applies to any dispute involving your account.

If a creditor sues you in Florida, the Florida court will apply the law chosen by the credit card company. Depending on how the statutes are drafted, the laws and statute of limitations applying to your case may be different from Florida's collection law and statute of limitations.

This is why you may want to speak with an attorney if you are sued. The interaction of these statutes and case law can be very complex and determining choice of law questions adds even more complexity.

Legal Help

If your credit card debts are combining with other financial issues to create a perfect storm, contacting a bankruptcy attorney could provide you with options on how to proceed. A bankruptcy attorney can review all of your finances, your income, debts and any other relevant factor to help advise you of the best strategies for improving your financial health.