Overview of Alabama Debt Collection Practices
The purpose of this introduction to Alabama debt collection laws is to provide insight into the laws and regulations governing the collection of debts within the state of Alabama. These laws play a crucial role in determining how debt collection agencies and creditors can interact with consumers. It’s important for consumers, creditors, and debt collection agencies to have a comprehensive understanding of the legal framework governing debt collection activities in Alabama.
In Alabama, debt collection laws are designed to protect consumers from abusive, deceptive , and unfair debt collection practices while also providing a framework and structure for collection agencies and creditors to follow in order to remain within the law. These regulations are comprehensive and cover a variety of topics from initial communication to the resolution of debts.
It is critical for consumers to be aware of their rights when dealing with debt collectors. Under Alabama and federal laws, consumers are protected from harassment, false statements, and other unethical collection tactics. Failure to follow these laws can result in substantial legal repercussions for debt collection agencies. Appropriate actions must be taken to ensure that any debts in question are handled in accordance with all applicable laws and regulations.
Alabama Debt Collectors Act Terms and Provisions
The Alabama Debt Collection Practices Act provides, in pertinent part:
§ 8-19-5.
(a) In addition to all other acts or practices declared unlawful by the laws of this state, the following unfair or deceptive trade practices and trade regulations committed by a person engaged in trade or commerce are hereby declared unlawful and prohibited:
- (1) Causing or attempting to cause damage to property of any other person without the consent of the owner thereof or the person entitled to the possession thereof.
- (2) Deceptively omitting material information from any statement with regard to a particular consumer transaction.
- (3) Doing any other act or reaching any agreement, written or oral, directly or indirectly, with a consumer which will materially alter or impair the consumer’s legal rights, or notify the consumer that he or she has such impaired legal rights.
- (4) Causing confusion about the amount of the debt owed or any requirement in connection with an existing or prospective consumer transaction.
- (5) Offering goods or services without a bona fide intention to sell them as offered or to offer those services.
- (6) Representing that the subject of a consumer transaction has sponsorship, approval, performance characteristics, accessories, uses or benefits which it does not have.
- (7) Representing that the subject of a consumer transaction is of particular standard, quality or grade if it is of another standard, quality or grade.
- (8) Representing that the seller has a sponsorship, approval or affiliation a person does not have.
- (9) Advertising goods or services with intent not to sell them, unless the advertisement sets forth the quantity available.
- (10) Representing that the consumer has an obligation to pay for goods or services if the consumer did not request or solicit the goods or services.
- (11) Promising performance that is materially different from performance that is actually rendered.
- (12) Making false representations or omissions of a material fact with the intent that others rely thereon in respect to any subject not covered by the provisions of the Uniform Commercial Code.
- (13) Cause other similar wrongful actions which are not specifically prohibited by the provisions of subsection (a) of this section, which are done with the intent to deceive or mislead or that have the capacity or tendency to deceive or mislead.
(b) In addition to the acts and practices provided for in subsection (a) of this section which are unfair or deceptive, the following are likewise unfair and deceptive acts and practices:
- (1) Using any form of communication in the collection of debts which has a tendency directly or indirectly to create a likelihood of confusion or misunderstanding among the public.
- (2) Falsely representing that the claimant has in the claimant’s possession in his possession, or will provide any written or signed statement represented to be or so closely resembling any judicial, governmental, legal or official report, document or notice, and falsely representing that the documents were legally authorized or issued or sent by any governmental agency or attorney.
- (3) Using any false, deceptive, or misleading representation or means in order to collect a debt or attempt to collect a debt or to obtain information concerning a consumer.
(c) A violation of the provisions of this subsection shall constitute a deceptive act or practice in violation of the provisions of the Alabama Deceptive Trade Practices Act.
What Actions Are Banned for Debt Collectors under Alabama Law
Debt collectors in Alabama, like those in many other states and at the federal level, are prohibited by law from engaging in certain types of conduct. These protections are important for those who face harassment from aggressive or deceptive debt collection tactics, whether they occur over the phone, through the mail or in person.
Harassment
Prohibited harassment by debt collectors in Alabama can include numerous behaviors. These include: These actions are prohibited by law to prevent unnecessary psychological pressure or embarrassment on the part of consumers.
False Representation
False representation by debt collectors is prohibited under federal law by the Fair Debt Collection Practices Act. Debt collectors cannot engage in any behavior that misrepresents the status of a debt, falsely implies the presence of legal action or falsely implies an affiliation with the government.
Unfair Practices
There are numerous unfair practices prohibited by Alabama law as follows: Other than the exceptions above, debt collectors are allowed to go about their business without restriction, as long as they do not harass, deceptively represent or do anything unfair to the consumer in Alabama.
Consumer Rights under Alabama Law
As an Alabama consumer, you have a number of rights under federal and state law that protect you from third party debt collectors. Under the Fair Debt Collection Practices Act (FDCPA), Alabama consumers have the right to dispute a debt. In Alabama, you can ask a collections agency for verification of debt that they claim you owe. When you exercise this right, the collection agency will have to send you a written verification letter. The letter must include the amount of the debt you owe and the name of the creditor to whom it is owed.
If you have already disputed the debt, you may also dispute the information contained in your credit report. You are entitled to have notice of this dispute included in your credit report. By disputing the information you know to be inaccurate, you are exercising your right under the FDCPA to challenge harmful and misleading information that might impact your credit and affect your ability to buy a home, get a car loan or even get a job.
You may also have the right to have the debt collector cease further communications with you. A debt collector is not allowed to call you at unreasonable times, such as before 8 a.m. and after 9 p.m., unless you request it. Under the FDCPA, Alabama consumers can also stop a debt collection agency from contacting them by sending a cease and desist letter requesting that the collection agency stop contacting them.
Alabama consumers have the ultimate right to validate their debts. What this means is that every consumer has the right to have the validation of their debt if they are being pursued for collection. Too often, collection agencies jump straight into debt collection without the required verification. If a debt collection agency has not complied with the FDCPA, then you may have the right to take legal action against the debt collector.
What to Do if a Debt Collector is Harassing You
To determine whether you have been the target of harassment, consider whether the debt collector has: If you believe that the debt collector’s actions meet either definition of harassment, then consider the following steps: First, document the communications that you have received from the debt collector. Make sure to obtain and keep careful notes of the times that you are receiving calls, the names of people that you are speaking to, what they are saying to you, etc. If you receive a letter, make sure to save that as well. Second, consider whether to file a complaint. You can file a complaint with the Federal Trade Commission ("FTC") here. The FTC investigates alleged violations of the FDCPA and will take action when there is evidence of a pattern or practice of abuse. You also can file a complaint with the Consumer Financial Protection Bureau ("CFPB") here. The CFPB accepts complaints about many types of financial products , including debt collection. Debt collectors who are actually registered with the CFPB must respond to complaints that are made there. The CFPB will forward your complaint to the debt collector and work to get you a response, often in under 15 days. Third, consider whether you should hire an attorney. An attorney can help you understand your rights and whether it makes sense to pursue legal action against the debt collector. If you obtain a judgment against the debt collector, such as under the FDCPA or the state law counterpart, then you may be able to collect money from them to reimburse you for damages that you incurred as a result of their unlawful conduct.
The Effect of Federal Laws on Recovered Debt in Alabama
The federal government has enacted several laws to regulate not only creditors, but also third-party debt collectors to ensure that the collections process is fair to the consumer. The rules and regulations laid out in these federal laws also apply in the state of Alabama. One of the most important federal laws pertaining to the collection of debt is the Fair Debt Collection Practices Act (FDCPA). This law regulates the activities of debt collectors in terms of the methods they may use to contact you, including how and when they can call your home or work. The law states that debt collectors cannot contact you in a way that may be considered harassment, or contact you at inconvenient times. You have the right to maintain an attorney-client relationship. If you hire an attorney to represent you regarding these debt issues, the debt collector is required by law to work directly with your attorney, rather than pursuing the consumer directly. However, if the debt collector calls you at home, you have the right to request that they no longer call you. This request must be made in writing, and the debt collector will have 30 days to respond, either by satisfying the debt or having their lawyer contact you to explain how the case is being handled. You may also inform your debt collector that you do not wish to have further communication with them. Once this is done, they are prohibited by law from contacting you for any reason. However, notifying them that you don’t want them to contact you does not prevent them from taking further action. These subsequent actions may include trying to collect the debt via a different method, such as through the court system. Sometimes the collection agency might even send the debt to court before the 30 days have passed. This does not mean that the person did not send a request to cease communication; it simply means that the debt collector plans to prove to the court that it is legally entitled to collect the debt. Information you provide to the debt collector may be used in the future to show the court that the debt collector’s continued efforts were no longer appropriate. As long as personal information has not been provided, there is no issue with the debt collector communicating with the consumer. As you can imagine, debt collectors use very aggressive techniques to collect unpaid debts from consumers, and the legal system allows them to take drastic steps to prove their point. Some of the actions they may take include filing a lawsuit in court, garnishing wages or attaching liens to property. Courts in Alabama must uphold these judgments in accordance to the federal laws, and are not permitted to allow debt collectors to abuse them in any way.
Strategies for Handling Collections and Avoiding Debt
The best way to deal with debt is to manage it properly in the first place. Tips for avoiding debt fall into two broad categories: financial planning and communication with creditors.
Financial Planning
Strategies for successful financial planning include:
It is worth noting that praying for your finances more than you budget for them is not a successful financial strategy.
Communication
If you find yourself in a position where you are struggling to make payments, or even falling behind, it is critical to communicate with your creditors.
Your creditors would rather know what the situation is than think their money is just being hoarded somewhere until you spend it on yourself. Particularly with an initial delinquency, the creditor may be perfectly willing and able to work with you to find a way to bring the debt current.
A common option is to negotiate a "goodwill concession," where the creditor may agree to allow you to pay the debt as agreed or even settle the debt to avoid a negative report to the credit bureaus. Avoiding the negative report can save you money in terms of interest rates, higher monthly payments, or higher collateral payments on other notes.
Under Alabama case law, a creditor that agrees to a goodwill concession is not obligated to extend the same offer again, even if you fall behind in the future. Therefore, it is important to come to an agreement with the creditor that you believe you will be able to comply with.
A couple of strategies for communicating with your creditors when you first realize you may need to involve an attorney include:
A small business may well have an employee that is accustomed to dealing with the creditors of the business.
In Summary
No one intends to fall on hard times. But when it happens, there are many tools available to help you avoid damaging the financial future – your own, and your family’s – as much as possible.
How to Obtain Legal Help in Alabama
Consumers in Alabama seeking legal help related to debt collection issues can turn to a number of resources to find qualified legal assistance. The Alabama State Bar Association helps consumers find a qualified attorney through the Lawyer Referral Service, which offers referrals throughout the state. The Alabama State Bar Association also offers a military resource center that provides information and assistance for military members and their families. LawHelp . org is a national online resource that helps people with low- and moderate-incomes find free legal aid programs in their communities. Legal representation in many types of consumer debt matters is available through the Legal Services Alabama office for residents of Walker County, Alabama. Debt collection issues can also be handled by private law firms such as Baker, Donelson, Bearman, Caldwell & Berkowitz, PC to protect consumers’ rights as against violations of applicable laws against debt collectors and creditors.