Most people know that now the collectors cannot harass any debtor as they did in the olden days as a common debt collection practice. No matter how big a debt you carry or no matter how dire your financial situation is, debtor harassment is an absolute no-no in modern debt collection methods. However, what most of the debtors do not know is that there is lot more into the federal law that governs debt collection agencies especially their collection methods.

Debt collectors cannot lie to the debtors about the outstanding debt amount or even about their identity. They cannot pose as an official from the law enforcement or as a certified attorney as well. Apart from that, they cannot make any false promises and guarantee anything that is beyond the peripheries of their operation.

In short, they must abide by the guidelines laid by the state and federal government and abstain from any actions or practices that may be deemed unfair and harassing to the debtor in the eyes of law.

Complaints for malpractice

Just as in any other aspect of the judicial system nothing seems to be foolproof and absolute in debt collection practice as well.

There are still complaints about unfair practices and malpractices by the debt collectors made by the debtors to the FDCPA. Debt collectors still follow the harsh and hard collection processes.

There are few alarming instances of medical debt collection practices that came to light early in 2012. These instances revealed that most of the major debt collection companies engage representatives working on their behalf in different hospitals and emergency rooms. Their job is to collect payments from the patients for those treatments they are yet to receive.

There are several other instances where the officials found that these debt collectors broke the law regularly in a few ways such as:

• The debts collectors are alleged that they did not clarify who they were and did suppressed that fact that they are in fact debt collectors
• They blended in with hospital staff purposefully in the disguise wearing scrubs in the hospital emergency rooms
• They even accessed the health records of the patients which the officials believe to be confidential and hence a violation of federal privacy laws.

These and several other complaints against the debt collectors by the debtors have raised doubts and put on a few question marks on the designing and implementation, enforcement and practice of the federal laws to regulate debt collection processes.

Results and consequences

As a result of these practices the three major credit reporting bureaus namely Experian, Trans-Union and Equifax is convinced that there is an immediate need to make some alterations in the law for the benefit of the innocent and victimized patients.

• Of late they have set a 180-day waiting period before ant hospital or a health care provider can include a medical debt of any person on the credit report.
• The government has also come up with many different debt relief programs and benefits and encourages debtors to avail these according to their eligibility to ease their financially stressed conditions, no matter whatever be the type of debt they carry, medical or otherwise.
• A debtor can now opt for debt consolidation loan or even go for debt settlement negotiation to pay a lesser amount that they actually owe to a creditor and pay it off in a lump sum after some time. Moreover, debtors also can declare them bankrupt as it was always an option before and now. However, out of all these debt settlements seems to be very popular due to several reasons though other too has a few positive aspects as well. If you are stressed out with your debts you can click here to know more about debt settlement companiesand team up with them to work out a suitable debt payment plan.
• Laws are also made to protect the debtors even during the caller making the call asking for payments. This is the Telemarketing Sales Rule or the TSR that the federal law enforced by the Federal Trade Commission or FTC. Applicable to telemarketing service generally this act was originally passed in 1995 and has been amended several times.

This act saw a significant change and addition in it in the year 2010 when the FTC included regulatory measures to control the harsh operational procedures of the debt settlement companies. One of the most significant parts of the amendment that provided a considerable relief to the debtors is the ban on advance fees demanded by these debt collection agencies.

The amended TSR

The TSR after amendments is very strict about the fees collected by the debt collection and even by the debt settlement companies. According to the inclusions in the amended TSR it is specified clearly that a debt collection agency is not eligible or legally allowed to collect fees from the debtors until and unless one or all of the following conditions are fulfilled:

• The debt relief service is successfully completed
• Service may include renegotiation, settlement or reduction of dues, changed terms or tenure of at least one of the debts of the consumer
• There is a written settlement agreement
• A debt management plan designed
• Any other agreement is made between the debtor and the creditor and
• The debtor has made at least one payment to the creditor according to the settlement agreement negotiated by the debt settlement company.

Apart from all these requirements, there is an exemption made by FTC in the TSR that disallows the debt relief provider from meeting a client face-to-face. Surprisingly, even after so many amendments and strict enforcement of the laws, very few debt settlement companies are found to comply with the ban on advance fees. In order to bypass the restrictions and continue charge advance fees from their clients these companies usually send an agent on their behalf to perform an in person signing agent with the consumer.

It is therefore recommended that you consult a consumer law attorney to deal with the complicated legal issue and to analyze your precise situation and facts.