Business law

Business debts are not covered by the FDCPA

The Fair Debt Collection Practices Act (FDCPA) has guidelines enforced by the Federal Trade Commission (FTC) to regulate and ensure fair debt collection. This law came into existence to address consumer complaints of overly aggressive and violent behavior by recovery.


Any personal or household debt is not linked to personal or family-owned company is covered by this Act. It is amounts due to personal loans, auto loans, mortgages, credit cards and medical bills. Unfortunately, the FDCPA guidelines do not apply to debts of your business. Understanding the FDCPA principles can protect you from a lot of trouble and you reinforce the information needed to report violations of the Act.

Collection agencies and third party debt collection employed by these agencies is guided by the FDCPA guidelines. There are debt collectors, whose activities are not limited by the FDCPA guidelines. The parties that are excluded from the law are:

  • Agents internal recovery i.e. creditors collecting their own debts
  • Banks that collect their own debts

In all this one contracted for commercial purposes and that the debtor incurred the debt to commercial debt are not protected by the FDCPA.

Under the FDCPA a debt collector has the right to call you to request payment for a debt they think you need. However, it must validate the debt in the absence of which you can dispute the debt. You can also send a cease and desist order letter by registered mail with return request to stop all communication with you post. After that it only twice, can contact that is to inform you that it would not be called again and that he would insist legal action.

A debt collector may not harass you for payments cannot threaten you in any way. Practices that are considered illegal include, but are not limited to the following:

  • Illegally collect fees or interest
  • Place a collector or post dated check in early
  • Threatening to seize your assets outside the courts
  • To contact you via postcard.

The FDCPA prohibits collectors with initiating the foreclosures of wages on their own. If a court passes a judgment in favor of the recovery to enter your salary then they can initiate the action. Federal Benefits such as social security and SSI benefits, veteran, student aid and railroad retirement benefits are normally exempt from garnishment.

A debt is considered commercial debt when the debt is taken to start your business. This type of debt is treated separately and is not covered by the FDCPA. Therefore, before you consider yourself protected by the FDCPA, it would be better to understand the law completely.

Time of prescription debts
Prescribed debts are very old debts that have passed the statute of limitations (SOL) and can no longer be collected. These debts are beyond the limit at which a creditor or debt collector may attempt to collect or sue to collect from you. The period of SOL on debts varies from one state to another, from three to ten years. In some states, it is longer than ten years.

The Federal Trade Commission (FTC) and private attorneys apply the guidelines in fair debt collection by a federal law on the fair debt collection practices act (FDCPA). While legitimate debts can be collected by creditors or debt collectors engaged by creditors, the FDCPA acts to ensure collection practices fair debt by third party debt collectors trying to collect debts.

Limitations on how debt collectors can affect all types of debts, including prescribed liabilities imposed by federal law. Under the FDCPA, a debt collector generally is a person or organization that is engaged in the collection of debts owed to others. It also includes lawyers who collect debt for others on a regular basis. The FDCPA restricts debt collectors to engage in unfair, improper, illegal or unethical while trying to collect debts. The FDCPA does not cover the original creditors try to recover their debts.

Prescribed debts are not clearly mentioned in the FDCPA. Recovery can attempt to recover debts prescribed, but the FDCPA does not say anything clear about this. The FDCPA comes into picture when debt collector acts rude to you. They can attempt to collect prescribed debts, but they should not sue or threaten to sue you for the debt. If a debt collector attempting to collect or sues you for a prescribed debt obligation, you get the suit dismissed in court by proving the time limitation of the state debt.

Prescribed debt may appear on your credit report, but again, it depends on how long the debt was delinquent. If the debt has been delinquent for more than the SOL time or seven years in most cases, it may not appear on your credit report. In bankruptcy cases, debt collector may not even try to collect any time after making the debt.

Here are some tips that can be followed for future protection:

  • Ask for a form or a letter to creditor indicating your communicates with any other obligation
  • Consult a lawyer about the validity of the letter issued by the creditor
  • Sue a collector if you believe that the collector has violated the law by attempting to collect a debt from you
  • You can sue a collector for violations within one year of the date of the contravention
  • Your lawyer can help you recover suffered damages or expenses and attorney fees of the Court.