What is the FDCPA? The Fair Debt Collection Practices Act is a federal law that dictates how debt collectors and creditors must go about collecting debt. Collectors and creditors who violate the provisions can be sued for damages. However, the FDCPA does not apply to all types of debt; certain types are exempt from the provisions of the FDCPA. Businesses need to know which debts are protected by the FDCPA and which are not.

Do you have commercial debt issues to work through? For representation and guidance from an experienced business attorney, contact The Weisblatt Law Firm at (713) 666-1981. Protect your future. 

Debts Covered by the FDCPA

Debt is a powerhouse industry in Texas and across the United States. Companies buy and sell debt totaling many billions of dollars, and debt collection companies seek to recover some or all of the hundreds of billions in outstanding payments.

The FDCPA was designed and implemented for the purpose of addressing the abusive, unlawful, and deceptive debt-collection practices rampant throughout the country. It applies to credit transactions and non-credit transactions, such as transactions resulting in an unpaid balance. It is specifically meant to address collection efforts of primarily consumer debt that was incurred for personal or household purposes.

Debts of this nature include:

  • Mortgages
  • Credit card debt
  • Personal loans
  • Medical bills
  • Student loans.

The FDCPA outlaws a variety of debt collection practices during the pursuit of the above-listed debts, including deception and misrepresentation, harassing phone calls, and threats. Debtors can take swift legal action when debt collectors cross the line of legality.

Debts Not Covered by the Fair Debt Collection Practices Act

Although the FDCPA covers a variety of different types of debt, they are all within the same debt category consisting of debts based on private, familial, or household expenditures. Numerous other types of debt do not fall under the purview of the FDCPA.

Business Debts

The FDCPA does not control commercial debt collections, which are dealt with in other legislation. Hence, business-to-business and other forms of commercial debt do not activate the protections of the FDCPA. Understanding this distinction helps immensely when navigating the debt collection process.

Certain Credit Transactions

In some commercial credit transactions, debts are involved as security. An example of this practice would be the use of accounts receivable financing. These debts are not covered by the provisions of the FDCPA.

Debts Owed to the Government

Certain types of government debt are also outside of the scope of the FDCPA, including:

  • Debt from tax assessments
  • Debt from the overpayment of benefits
  • Other government debt.

Student loans, however, are subject to the FDCPA, even though the loan payments are owed to the government.

Credit Union Debts

When a credit union seeks to recover debt without the use of a third party, it becomes its own debt collector. Technically, the FDCPA applies only to third-party debt collectors hired to collect a debt. That said, credit unions may still be held liable for unfair, deceptive, or abusive acts or practices for not following FDCPA rules. The Consumer Finance Protection Bureau (CFPB) issued a memo in 2013 demonstrating how credit unions may indeed be liable under the FDCPA.

Debts not in Default

The terms of the FDCPA apply only to debts in default. As long as a debt is not in default status, third-party debt collectors may proceed without the constraints of the FDCPA.

Debts Collected by Original Creditors

When a creditor hires a debt collection agency, the FDCPA applies. However, when the creditor seeks to collect the debt themselves, the FDCPA is not applicable. Creditors cannot be sued under its provisions for violating provisions of the law.

Other Non-FDCPA Debt

There are almost countless types of debt in the commercial and consumer worlds, many of which are not protected under the FDCPA. For example, if an institution has debt of its own that is held in its name, the institution is not covered by the FDCPA when seeking to deal with this debt.

Also, debts that are associated with a fiduciary relationship or with escrow receive no FDCPA protection. Debts of this nature include debt owed for mortgage escrow or debt owed in a trust.

The Weisblatt Law Firm has decades of experience in all matters relating to business debt and debt collection.

Get Help from a Debt Collections Attorney Today

Debt collection is a tricky process. Those with debts to collect must be aware of the provisions of the FDCPA or face legal consequences. If you are dealing with issues relating to business debt, a business debt collection attorney can help you collect debt owed to you or defend during debt collection efforts against you.

To meet with an experienced debt collections lawyer, reach out to The Weisblatt Law Firm. Attorney Andrew Weisblatt is ready to discuss your case and find effective solutions. Call (713) 666-1981 today.

Houston Business Contracts Attorney

Attorney Andrew Weisblatt

Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio