Monday, March 3, 2014

Carolina Consumers can Dispute Debts Verbally Under FDCPA

Carolina Consumers Can Dispute Debts Verbally Under FDCPA

As attorneys who represent clients in debt collection cases, whether credit card, mortgage, or other, we pay close attention to important legal decisions which impact our clients’ rights. A new Federal court ruling which impacts both North Carolina and South Carolina has been handed down and favors consumers instead of debt collectors.

Debt Collector - Medium

Consumers/borrowers have rights under the Fair Debt Collection Practices Act  and the FDCPA also sets forth certain mandatory requirements for debt collectors.

The United States District Court of Appeals for the Fourth Circuit (which has jurisdiction over North Carolina, South Carolina, Virginia, and West Virginia) recently overturned a lower court’s ruling and has confirmed that a consumer may dispute the validity of a debt verbally.

The FDCPA requires that a debt collector, within 5 days of the initial collection communication, send the alleged debtor a written notice which contains certain statements, including information regarding the alleged debtor’s rights. In this case, the letter from the debt collector stated that the consumer had the right to dispute the validity of the debt within 30 days, but that said dispute had to be in writing. Because the Fair Debt Collection Practices Act does not state that the dispute must be in writing, the lower court ruling which agreed that it had to be in writing was struck down.

As a result of this ruling, a consumer can call a debt collector within the allowed time frame and verbally dispute the validity of the debt. This dispute triggers duties on the part of the debt collector.

While having such disputes in writing makes sense for everyone in almost all situations, the United States Court Of Appeals is correct that the FDCPA does not state that these disputes must be written. This may result in an even messier state of affairs, and we would not be surprised to see the creditor / debt collection industry lobby for the FDCPA to be changed to require a written dispute.