If you owe student loans and have ever fallen behind on your payments, you may have noticed how quickly collection efforts can get aggressive. Sometimes debt collectors move past aggressive to illegal tactics such as threats and harassment. The US Fair Debt Collection Practices Act (FDCPA) sets guidelines for what collectors can and cannot do and say when it comes to getting money from you. But a recent ruling has made it risky for debtors to protect themselves from hostile collectors.
Olivea Marx had defaulted on a student loan and her lender hired General Revenue Corporation to collect on the debt. General Revenue Corporation (GRC) has a track record of abusive debt collection practices – you can read a number of complaints about their tactics here – and Ms Marx filed a FDCPA complaint against them because they falsely threatened that they could garnish 50% of her wages and drain her bank account in a series of harassing phone calls.
General Revenue Corporation offered $1,500 to settle the complaint – a clear admission of their abusive practices – but Ms Marx declined the settlement. The case went to a short trial and the judge found in favor of GRC – how, I don’t know, since the company had offered a settlement. Then GRC went after her for court and attorney fees of $4,543.
Not only did the harassment continue, but now they were harassing her for additional costs. Ms Marx asked that the court and attorney fees be dismissed because the law states that in order for these costs to be ordered in a FDCPA case, the suit must have been brought in bad faith and with intent to harass the creditor.
The case ultimately went all the way to the Supreme Court and in their ruling on February 26th, the high court upheld the award of court costs and stated Ms Marx had to pay. Their reasoning? The justices in the majority said that the law didn’t say “only” – as in court costs can be awarded “only” if the case brought was in bad faith. This seems to me to be parsing language too much. Why would it have been mentioned in the law at all if it wasn’t intended to be put into practice?
The bottom line is that a court case may not be the best venue to try to fight illegal debt collection tactics by GRC and other similarly aggressive organizations. If the debt collector makes you angry, but is not violating the FDCPA, your best approach will likely be to let go of the anger and forgive – after all, it is their job to try and collect monies owed. And if you allow anger over how they treat you to consume you, you will only hurt yourself. Instead of getting mad, if you are illegally harassed and threatened by a collector over late student loans, there are some steps you can take to protect yourself:
$$ First, if you get calls on your cell phone, download an app that lets you record the conversation. Tell the debt collector that you are recording the phone call to ensure they comply with the FDCPA. That should put a lid on some of their tactics. If they tell you that you can’t record the call, tell them you are within your rights to do so as long as you notify them. This way, if there is any abuse, you’ll have voice records to substantiate your complaint.
$$ Second, if they are calling you at work, you should take the call in private, put it on speakerphone and record the call. Tell them they are being recorded and ask them not to call you at work again. They have to comply if you make this request. If they persist, ask for their name, business name and address. Tell them you are writing a cease and desist letter about work phone calls and if they persist, you’ll file a FDCPA claim.
$$ Third, follow up with a certified letter saying you don’t want to be contacted by phone any more. Provide your address and ask them to communicate by mail only for any further debt collection activities. Even the dodgiest of firms will be less likely to make illegal threats in writing. Correspond with them by mail – not phone – to keep the harassment to a minimum.
$$ Fourth, if they continue to call after the letter asking them to cease and desist, contact your state attorney general office and file a FDCPA complaint. You may also want to notify your student loan lender that the debt collection firm they’ve hired is breaking the law and that you’ve filed complaints (do this in writing) – also provide information about state and federal complaints you’ve made against the firm. Perhaps the lender will think twice about using the firm if they know they’re acting illegally.
If you’re one of the many people who owe student loans you cannot pay, it can be tough. Perhaps Congress will finally take notice of this crisis and take steps to make it easier to get debt relief. Until then, if you owe student loans, try Tuition.io’s free student loan management tool to optimize your debt!