In January 2011, this blog published a guest column by Pablo Gibson about bankruptcy and creditor harassment. I’d like to look at creditor calls more broadly, and outside of bankruptcy.
CREDITOR CALLS If a creditor is contacting a borrower directly, the standard is the Maryland Consumer Debt Collection Act,Md. COMMERCIAL LAW Code Ann. § 14-202 and 203, which applies to both collection agencies and creditors. The Act says that:
In collecting or attempting to collect an alleged debt a collector may not:
(1) Use or threaten force or violence;
(2) Threaten criminal prosecution, unless the transaction involved the violation of a criminal statute;
(3) Disclose or threaten to disclose information which affects the debtor's reputation for credit worthiness with knowledge that the information is false;
(4) Except as permitted by statute, contact a person's employer with respect to a delinquent indebtedness before obtaining final judgment against the debtor;
(5) Except as permitted by statute, disclose or threaten to disclose to a person other than the debtor or his spouse or, if the debtor is a minor, his parent, information which affects the debtor's reputation, whether or not for credit worthiness, with knowledge that the other person does not have a legitimate business need for the information;
(6) Communicate with the debtor or a person related to him with the frequency, at the unusual hours, or in any other manner as reasonably can be expected to abuse or harass the debtor;
(7) Use obscene or grossly abusive language in communicating with the debtor or a person related to him;
(8) Claim, attempt, or threaten to enforce a right with knowledge that the right does not exist; or
(9) Use a communication which simulates legal or judicial process or gives the appearance of being authorized, issued, or approved by a government, governmental agency, or lawyer when it is not.
In Maryland, the criminal harassment statute does not apply to creditor calls, according to the Court of Appeals in Galloway v. State, 781 A. 2d 851 - Md: Court of Appeals 2001. The leading case on creditor harassment law in Maryland as an invasion of privacy is Household Finance Corp v. Bridge, 252 Md. 531 (1969), 250 A.2d 878 . Another one is Summit Loans Inc. v. Pecola, 288 A. 2d 114 – Md Court of Appeals 1972.
Creditor harassment has also been characterized as the intentional infliction of emotional distress. This standard is applied in Dick v. Mercantile-Safe Dep. & Trust Co., 492 A. 2d 674 - Md: Court of Special Appeals 1985. Borrowers should contact the Attorney General’s Consumer Protection Division at (410) 528-8662 if they believe they are being harassed by a creditor.
COLLECTION AGENCY CALLS If a collection agency is attempting to collect on the debt, the consumer has much more protection. The federal Fair Debt Collection Practices Act (FDCPA) applies to collection agencies, not the original creditors, and it strictly limits the practices that they can use to collect debts. If a collection agency violates this Act, the borrower may have grounds for a lawsuit.
The FDCPA prohibits collection calls before 8am or after 9pm, prohibits calls after a written request from the borrower to stop, prohibits calls to borrowers known to be represented by an attorney, and numerous other practices. They are detailed in layman’s language here: http://en.wikipedia.org/wiki/Fair_Debt_Collection_Practices_Act The full Act can be found at 15 U.S.C. 1692.
BANKRUPTCY When a borrower files a bankruptcy petition, a court order called the automatic stay takes effect, prohibiting any creditor or collection agency from contacting the borrower. This order goes into effect under 11 U.S.C. 362.
If a creditor or collection agency violates the stay, the debtor may have grounds for a lawsuit and should notify their attorney immediately with dates, times, names and any other information about the phone call.
Creditors and collection agencies will normally stop all action upon receiving notice that a bankruptcy petition was filed. The bankruptcy court mails notice to all creditors listed on the debtor’s mailing matrix when the bankruptcy case is filed.