The Fair Debt Collection Practices Act (FDCPA) was developed in 1977 to protect consumers from unscrupulous debt collection practices. Among its provisions, creditors are prevented from using abusive practices in the process of collecting debts, including using profanity and other harsh language when communicating with consumers, calling consumers at odd hours of the day and threatening to put indebted consumers in jail.
While this law is supposed to protect consumers from creditors, the U.S. Supreme Court recently ruled that it does not apply to companies that purchase debt and attempt to collect on it. According to a recent reuters.com report, the high court unanimously ruled that the FDCPA did not apply to Santander Consumer USA Holdings Inc., a company that collects debt purchased by other companies after it fell into default.
The court reasoned that the law only applies to debt collectors, not companies such as Santander who become creditors (as opposed to debt collectors) by simply purchasing the debt. Naturally, Santander was pleased with the verdict, while attorneys representing consumers believe that the ruling will inspire other companies to evade the law by simply buying debt.
Regardless of how unfair those with consumer debt may believe the ruling may be, all creditors must yield to those who have filed a bankruptcy claim. The automatic stay that applies in such cases applies to all collection efforts, regardless of who initiates or continues such a claim.
If you have additional questions about bankruptcy and how it may affect collection efforts, an experienced bankruptcy attorney can advise you.
The preceding is not legal advice.