The COVID-19 crisis has taken its toll on Americans. Not only is it affecting the mental and physical health of American adults, teens and children, but also it’s making it difficult for people to pay their bills. Over 70 million people have bills in collections and nearly 32% have collections accounts on their credit reports.
Unfortunately, these numbers are expected to rise.
Many Americans have suffered a reduction in income due to the virus and are finding it nearly impossible to keep up with mortgage payments, utilities, credit card bills and other debts. If you default on these payments, you are sent to a debt collection agency.
If you’ve ever dealt with collection agencies before, you’re familiar with the aggressive tactics they use. They can break even the strongest people by calling repetitively and harassing them to pay up. They’ll even go as far as to call family members. And just when you might have thought that relief is on the way, a new law is giving them more ways to contact you.
Changes Made to the Federal Fair Debt Collection Practices Act
The Federal Fair Debt Collection Practices Act (FDCPA) prohibits debt collectors from using unfair, abusive and deceptive tactics to collect money. Because the law was passed in 1977, it didn’t take into consideration digital communication methods like text messages, emails, voicemails and social media. Changes were finally made to include these methods of communication.
Here are some of the things that debt collectors can now do under the new law, which is expected to go into effect sometime later this year (probably November):
- Debt collectors may call up to seven times a week
- Debt collectors can send an unlimited number of texts and calls
- Debt collectors can contact you on social media
How debt collection agencies will use social media is yet to be determined. The rules do state that debt collectors cannot communicate or attempt to communicate through a social media platform if it can be viewed by your contacts. They can, however, contact you through private message, but they must disclose their identity.
How Often Can Debt Collectors Contact You?
In January 2021, the unemployment rate in the US was 6.3 percent. With high unemployment rates and historic job loss, the last thing people need is to receive relentless calls from the collection agencies. There are protections for debtors, so it’s important to know your rights and how to handle collection agencies if they do call.
Below are the protections you have:
- If you are sent a text, email or other form of digital communication, you are allowed to opt out of receiving these messages.
- When debt collectors leave a phone message, they must report the name of the business, request a response and provide you with contact information.
- Debt collectors are not allowed to send emails to work addresses (though there are some exceptions).
- Some states have a statute of limitations on how long debt can be collected. In New York, it’s six years.
What if You Can’t Afford to Pay the Creditors? Can You File for Bankruptcy?
If you’re facing significant debt problems, especially during the pandemic, bankruptcy is a powerful tool. It stops most collection actions, including the following:
- Medical bills
- Personal loans
- Credit card balances
- Gym memberships
- Overdue utility bills
- Garnishment in New York
Bankruptcy doesn’t stop everything though. You will have to continue paying child support, alimony, most tax debts and student loans. Discuss your options for bankruptcy with an experienced Brooklyn bankruptcy lawyer. They can discuss the different types of bankruptcy – Chapter 7 and Chapter 13 – as well as the things that can and can’t be wiped out.
How Soon Does the Creditor Harassment Stop?
Once you file for bankruptcy, the court issues an “automatic stay” that places a stop on creditors calling your home or garnishing your wages. This happens almost right away. If the creditors continue to call and harass you, they’re violating the automatic stay. This can result in fines, attorney fees and even lawsuits against the creditors.
If you feel the collection agencies are violating the automatic stay, there are a few things you can do. First, tell the creditors about your bankruptcy. Many times, the creditor is unaware of your situation and will stop collecting once they know about your case.
However, if the creditor doesn’t leave you alone, you can notify the bankruptcy court. Let them know that the creditor is in violation of your automatic stay order. The courts will get involved if they find the creditor willfully and intentionally acted after learning about your bankruptcy.
Midtown Bankruptcy specializes in Chapter 7 and Chapter 13 bankruptcy. We realize that this is a challenging time for many people and we are here to help! Contact a Brooklyn bankruptcy lawyer today to learn more about the bankruptcy process and how it can help you eliminate old debts.