Debt Collector Consumer Protections
Debt collection practices at a glance
Harassing, abusive, unfair, or misleading debt collection can leave a person feeling vulnerable and threatened. There is a way to fight back. The Fair Debt Collection Practices Act, often referred to as the "FDCPA", protects all of us from unfair, misleading, harassing or abusive conduct by debt collectors. California also has adopted its own FDCPA, called the Rosenthal Fair Debt Collection Practices Act. In fact, in California protections against such malicious behavior on the part of debt collectors are rather broad. You can sue the debt collector and the original creditor who is using the debt collector for violations of California law. In California, even repossessors are subject to the Fair Debt Collection Practices Act. A repossessor can be sued for threats, misrepresentations, abuse and unfair conduct while attempting to repossess property, even if the repossessor had the right to take the property and the repossession itself was entirely lawful.
Who is protected by the Fair Debt Collection Practices Act?
Under both federal and California law, any person who owes or is alleged to owe a consumer debt, that is a debt incurred for a personal, household or family purpose, is entitled to the protections of the fair debt collection laws. Debt that was incurred primarily for a business purpose is not covered.
What can you recover from a debt collector?
A consumer who wins a case under the fair debt collection laws can recover in a number of ways.
- Actual Damages (usually based on emotional distress, e.g. anxiety, fear, nervousness, loss of sleep).
- Statutory Penalty (even if there are no actual damages a consumer is entitled to a statutory penalty that can range from $100 to $1000 for violations of fair debt collection laws).
- Attorneys Fees and Costs (a consumer who wins his or her case is entitled to attorneys' fees and costs).
Car Repossession Consumer Protection
An important subcategory of consumer protection, especially in Southern California is car repossessions. Consumers should be aware that they have certain rights and protections when it comes to car repossessions. Do not feel helpless. At Theta Law Firm, LLP, we can help you fight back against unlawful conduct during repossessions.
If a consumer has a car loan, the lender can retake possession of the consumer's car after a default by "self-help" repossession. A lender does not need to file a lawsuit or wait for a courts approval to retake possession of a car, they can just send a repossession company out to take custody of the car when there is a default on a payment. However, the key aspect of this practice that is important to remember is that the right to "self-help" is extremely limited and is replete with strict requirements.
What Constitutes an Unlawful Repossession?
- When a creditor repossesses a car without there being an actual default on the agreement. For example, if there was an agreement that you the consumer would pay a certain amount of money by January 1st and the creditor repossesses the car on December 31st, that is an unlawful taking because there has not been a default.
- When there is a "breach of the peace" while conducting the repossession. This can include several different circumstances including, but not limited to:
- repossessing property over the consumer's objection
- using or threatening to use force before or during the repossession
- threatening the consumers arrest or other involvement by law enforcement
- forcing a person to stop his or her car
- breaking through a closed or locked barrier, like a garage,
- damaging the vehicle, and
- gaining access to the car through a garage without permission
Rights If Your Car Has Been Repossessed
There are two main rights that a consumer has after his or her car has been repossessed.
- The right to bring back the original contract on the vehicle by paying off all monies past due, plus any delinquency charges, late fees, collection costs, and repossession costs. There is a possibility that a lender can deny a consumer the right to reinstate the contract. If this is the case, the only other way to obtain the vehicle is through what is known as redemption.
- Redemption of a vehicle means that the consumer can pay in full the balance that is due under the loan, plus any delinquency charges, late fees, collection costs, and repossession costs. After redemption, the car is the consumers outright. However, because of financial circumstances, the redemption option is more costly in the short run.
Creditors must also at all times provide consumers with detailed written notice of their right to reinstatement and/or redemption. The written notice must be accurate and complete. The notice should also disclose all charges and other information necessary for the consumer to reinstate the contract or redeem the vehicle.
If for some reason you are not able to reacquire the vehicle with one of the above mentioned options, the vehicle will be sold at auction. After this, the proceeds from the auction will be applied to the loan balance that is outstanding and you will still owe the difference. As you can see, repossession of a vehicle involves many specific and nuanced requirements. At Theta Law Firm, LLP, we will fight to make sure that all of your rights and options have been explored so that the loss of your vehicle is a last resort and all legal avenues have been pursued to obtain the best results.
What can you recover if proper protocols are not followed?
- If a creditor does not provide the proper notice in the correct form after repossession, the consumer will not owe any outstanding balance on the remaining contract.
- A consumer that prevails on a claim under the fair debt collection laws can recover actual damages (the value of the car)
- A consumer will also be able to recover statutory damages and attorneys fees or costs
- A consumer can also recover on the basis of conversion which allows the consumer to recover either the fair market value of the car or the amount that is able to compensate the consumer for his or her loss of use of the car.
- Additionally, under the theory of conversion a consumer can recover punitive damages.
Other Consumer Protections
There are many other areas where consumer protection laws apply. The most prevalent modes of recovery in California are:
- The Unfair Competition Law (Business and Profession Code § 17200)
- The False Advertising Act (Business and Professions Code § 17500), and
- The Consumer Legal Remedies Act (Civil Code §§ 1750-1784).
At Theta Law Firm, LLP, if you are an individual, or a business we can help you sort through the consumer protection laws and work with you to create the correct strategy to protect yourself or your business. If you are a consumer, we will use our knowledge and capabilities to maximize the desired outcome and achieve positive results. Our personal, client focused representation puts the needs of the client first.