It’s not a secret that military families tend to be mobile. We move more often than the general population (I cringe every time I’m asked to list my mailing addresses from the past 10 years). We may buy a car in Georgia, a house in Virginia and work in California.
This mobile lifestyle combined with a steady paycheck is why military service members, their spouses and veterans are frequent targets of predatory debt collection.
When I use the term, predatory debt collection, I’m not talking about legitimate student loans that you refuse to pay each month. When I use the term, predatory debt collection, I am referring to cases where the service member already paid the loan or never took a loan out in the first place.
For example, let’s say the service member went to a payday loan or payday advance for a short-term unsecured loan. This soldier, Marine or sailor needed fast cash and they needed it that day. So they decided to use this service. Then, according to the loan’s agreement, they repaid the loan and its interest.
Then 6 months later, this service member gets a phone call in the middle of the night saying he still owes money on the loan. The bill collector doesn’t provide any information about the source of the debt, how old it was and whether it was paid or not. By this time, the service member may be stationed in a different state or serving on a deployment. In that case, the spouse is contacted and left wondering “do we owe money on that loan?” The debt collector threats to contact the service member’s commanding officer. The debt collector mentions that the unpaid debt will result in the loss of a security clearance. This scenario is the type of situation discussed during Senate hearings on predatory debt collection.
This is abusive, aggressive or predatory debt collection. And predatory debt collection is against the law.
The Fair Debt Collection Practices Act (FDCPA) “prohibits debt collectors from using abusive, unfair, or deceptive practices.” Under the FDCPA, a “debt collector is someone who regularly collects debts owed to others. This includes collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them,” according to the National Association of Consumer Advocates. The FDCPA applies to personal and household debt. This means it applies to your mortgage, your car loan and your credit card.
Senators have discussed cases of predatory debt collection that include lenders sending illegal foreclosure notices, overcharges on their mortgages and notices that credit cards weren’t properly canceled. Congress is working to strengthen the laws regarding abusive debt collection, but until then service members, veterans and their families need to be aware of the Fair Debt Collection Practices Act.
Here are 3 things you need to know about predatory debt collection.
Don’t Talk. Ask for a Written Notice. A debt collector must send a written “validation notice” telling you how much money you owe within 5 days after first contacting you. In this written notice, you will find the name of the creditor and how to dispute the debt if you don’t think you owe the money.
Don’t Ignore It. Dispute It. These phone calls and notices can be annoying and inconvenient. If you know that you don’t owe any money to this debt collector, don’t ignore it. Send the debt collector a letter stating that you don’t owe this money and request that they stop contacting you. You must send this letter within 30 days after receiving the validation notice mentioned above. Keep a copy of your letter.
Don’t Be Afraid to Report Abuses. If you believe that a debt collector is targeting you and your spouse, report the problem to your state Attorney General’s office and the Federal Trade Commission. Be prepared to give them a copy of your dispute letter and documentation about any phone calls.
Unfortunately service members often are pressured with predatory debt collection. But knowing the law and your rights can prevent you from becoming a victim of predatory debt collection. Take time to study the law so you aren’t caught off-guard when predatory debt collectors call you.