Why It Pays To Know Who You Are Paying

OK, so you owe a debt, but who is trying to get you to pay up? There are two kinds of people who might call you looking to collect money that you owe to a creditor. The creditor themselves (think Visa), or a third party debt collection agency that Visa might hire to collect their debts for them. The Fair Debt Collection Practice Act (FDCPA) was composed in the 1970s and extends a wealth of protections for consumers. These are strict regulations and rules that a bill collector must follow, and if any of these rules are broken, there is a great possibility that take the agency that violated the FDCPA to court. But what about that deadbeat friend of yours who owes you five bucks? Are you required to grant them thirty days to refute your claim? Clearly, as both you and your friend's wallet know, you don't.

My point is that the FDCPA is a very special set of rules meant specifically for a very special set of people: third party bill collectors. Browse through Morency v. Evanston Northwestern Healthcare Corp. This was a district court case in Illinois from 1999. In this court case, a hospital issued and sent out pre-collection notices in an attempt to collect money that was owed to them. For third party debt collectors, this is a definite no-no according to the FDCPA. What could have happened? Well, anybody that got the letter might have been off the hook for their debt. But after looking at the situation, the court held that the hospital was a creditor, because the money was going directly to it, and not a third party collection agency, so the FDCPA did not apply.

This case has not been the first of its kind, and courts will take many questions into consideration to determine if the creditor should also be deemed debt collector. In a lot of these cases they ask the following questions: Does it say on the letters that get mailed out if the debtor doesn't pay up the debt will be sent out to collection? Did the creditor hire a collection agency only to send letters, not on commission? Is the collection agency itself just a mailing service?

Here's another example: if a debtor neglects to respond to a letter sent out by a bill collection company, and said collection agency has no further contact with this individual, it probably won't be held to third party bill collection company standards. If a collection agency doesn't receive the files or information on the debtors, then it probably won't be considered a debt collection agency either.

And that finishes our lesson on the differences between third party bill collection companies and creditors trying to collect, and why it pays to know who you are paying. Good luck trying to get that five bucks back from your buddy!

Rapid Recovery Solution is a medical collection agencies