Overview of the Law Governing Debt Collection Practices – Part IV

Some additional requirements and what happens if you violate the FDCPA or CFDCPA –

Validation of debts. Under 15 U.S.C. §1692g provides as follows:

Within five days after the initial communication with a consumer in connection with the collection of any debt, a debt collector shall, unless the following information is contained in the initial communication or the consumer has paid the debt, send the consumer a written notice containing –

(1) The amount of the debt;

(2) The name of the creditor to whom the debt is owed;

(3) A statement that unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector;

(4) a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of the judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector; and

(5) a statement that, upon the consumer’s written request within the thirty-day period, the debt collector will provide the consumer with the name and address of the original creditor, if different from the current creditor.

The above provision is the basis for the FDCPA language to be included in collection letters and in voice mail messages to the consumer.

Attorneys Fees. Attorney’s fees can only be collected in Colorado if there is a written agreement allowing the recovery of attorney fees or there is a statute that allows their recovery.

A debt collector or attorney cannot threaten a recovery of attorney’s fees unless allowed by the underlying documents and state law, and the amount cannot be stated until reduced to judgment. 15 U.S.C. 1692g(b) and Aramburu v. Healthcare Financial Services, F. Supp. 2d 21 (D. Conn. 2005).

An attorney can engage in collection action on a contingency fee basis so long as the requirements of Rule 1.5, C.R.P.C. are followed along with the Rules Governing Contingent Fees, Chapter 23.3. Chapter 23.3 includes Colorado Supreme Court approved contingent fee agreements and disclosure statements.

Civil liability. The civil liability for violating the FDCPA is “actual damage” sustained by any person and additional damages not to exceed $1000 for an individual and not to exceed the lesser of $500,000 or 1 per cent of the net worth of the debt collector for a class action together with all attorney fees and costs. 15 U.S.C. §1692k.