Delev & Associates, LLC

The high cost of unlawful collection practices

Collecting consumer or commercial debt can be an enormous challenge. It is not uncommon for people to try and avoid their responsibility to pay back loans or fulfill judgment claim orders, so it can be necessary to take aggressive measures to collect these payments.

However, if collections companies go too far with their efforts or fail to comply with the strict laws that are in place, they can be held legally and financially responsible for violations. For example, one company recently agreed to pay $675,000 in penalties for unlawful collections practices.

Encore Capital Group Inc. reportedly attempted to collect debts from consumers that were not eligible for collection. The company reached a settlement with a state's attorney general and must pay hundreds of thousands of dollars in civil penalties in addition to reforming their collection practices.

States have statutes of limitations in place which prevent taking legal action to collect debts that are too old. These time limits can vary based on the type of debt and an individual state's specified statute of limitations, but if a debt is too old, it can no longer be collected through filing a lawsuit. According to Bankrate.com, the statute of limitations for debts in Ohio is six years. 

Debt collection efforts can be closely scrutinized by state and federal agencies. If violations are identified, a collections company can face huge fines and penalties. In order to avoid these consequences, it can be crucial for people who are trying to collect debt to speak with an attorney who understands the legal allowances and restrictions associated with the appropriate practices of collecting business or consumer debts. With proper legal support and guidance, it can be possible to avoid costly mistakes and pursue effective ways to collect debt.

Source: Bloomberg, "Encore Settles Debt-Collection Claims in N.Y. Industry Probe," Christie Smythe, Jan. 9, 2015

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