The Fair Debt Collection Practices Act only governs certain types of debt and does not protect businesses who owe business debt. The following are some of the requirements debts must meet in order to be governed by the Fair Debt Collection Practices Act:
- The debt must be a consumer debt which was incurred for personal, household or family reasons. For example, if you have a credit card and used it to purchase groceries and clothing for your family then it would be covered by the Fair Debt Collection Practices Act. But if you had a credit card that was used to purchase inventory for your business, that debt would not be covered by the Fair Debt Collection Practices Act.
- A debt collector must be involved in the collection of the debt. In other words, if the original creditor is trying to collect the debt from you, they are not governed by the Fair Debt Collection Practices Act.
- The debtor must be a real person not a corporate entity or business. For example, if your Limited Liability Corporation owes a creditor, that debt is not governed by the Fair Debt Collection Practices Act.
The Fair Debt Collection Practices Act protects individual consumers from debt collection practices that can be characterized as harassment, demeaning, threatening and/or misrepresents facts to the consumer, among other things. Although business debts are not covered by the Fair Debt Collection Practices Act, businesses who owe non-consumer debt may have other protections under their state and even federal laws. For example, a creditor who is owed a debt by a business owner may be prohibited from discussing that debt with a neighbor because doing so is a violation of that debtor's privacy rights. If you are being harassed by a debt collector and you believe they are in violation of the law, please contact an attorney.