Debt Collection in Alabama: Definitions, Laws, and Collecting on Debts
Debt collection in Alabama is governed both by particular laws and statutes in Alabama, as well as the national legislation called the Fair Debt Collection Practices Act. In this article, we will take a look at how an individual or an organization may collect a debt in Alabama, define what those debts may be, and what debt collection individuals or agencies are expressly not permitted to do.
Aside from a statue that defines whom a “debt collector” is and some specific taxes that must be paid, Alabama has no additional provisions, laws, or statutes that change in any significant way that debt collection functions outside of the original Fair Debt Collection Statute.
What is debt?
Any monies owed to individuals or organizations, whether they were for the purchase or rental of an automobile, medical care, or credit cards are covered under the term “debt.” This essentially means that any financial transaction in which the full amount of the service or product was not paid is considered debt. After a certain period of time, usually outlined clearly in the purchase or rental contract, the monetary value may be collected from the debtor.
It is important to note that what can be collected by the debt holder, or the debt collection agency employed by the debt holder, is not necessarily limited to money. This can also include the object that was rented or sold initially that was not paid for.
How can a debt be collected in Alabama?
The first part of the debt collection process in Alabama involves communications between the agency charged with collecting the debt and the debtor. This communication serves to inform the debtor that the debt collection agency has actively begun seeking to collect the debt from the debtor. These communications can be in person, by postal mail, by telephone, or by fax. However, debt collectors may not contact debtors, or anyone associated with the debtor, during what are considered “unreasonable times or places.” This means that debt collectors may not contact debtors before 8 AM or after 9 PM (unless the debtor has expressly agreed to be contacted during these hours). Further, a debt collector may also not contact a debtor at his place of employment if the collector is aware that your employer would disapprove.
This communication process can be halted at the behest of the debtor if they follow a particular procedure. Specifically, this means that they debtor must write a letter to the debt collection agency that indicates that they may not contact the debtor again unless it is to inform the debtor that they will not contact them again. However, the debt collection agency may notify the debtor if they, or the original creditor, intend to take some specific action.
Debt collection agencies are permitted under law to contact other people associated with the debtor, but they may only do so to find out where the debtor lives or works. Broadly speaking, debt collection agencies are prohibited from contacting anyone except for the debtor more than once. Debt collection agencies are also usually barred from informing any other party that the debtor owes money to the creditor.
Please note, however, that if the debtor maintains the services of a lawyer, then no party except for the lawyer may be contacted by the debt collection agency.
After the initial communication between the debt collection agency and the debtor, the agency must then send a letter within five days that states the amount of money that is owed, the name of the creditor to whom that money is owed, and what action will be taken if that money is not paid.
Additionally, contact between the debt collection agency and the debtor must be terminated immediately if the debtor sends a letter that states that he does not owe the original creditor any money. However, if the original creditor sends the debtor proof of their debt, then the debt collection agency may resume contact and actions against the debtor.
What are debt collection agencies barred from doing in their work to collect on a debt?
There are a number of different actions that are outlined in the Fair Debt Collection Practices Act that debt collection agencies and original creditors are expressly prohibited from doing. Below, we will list and explain some of these.
Actions that debt collection agencies can and cannot take in Alabama:
1. Debt collection agencies, and the original creditor, may not use any threats of physical violence or force against the debtor, any persons associated to the debtor, the reputation of the debtor, or any physical property of the debtor.
2. Debt collection agencies, or the original creditor, may not publish lists of consumers whom refuse to pay their debts, and they may not advertise those debts, or give false information about debtors to any party. Note, however, that both may contact credit bureaus.
3. Debt collection agencies may not repeatedly contact debtors with the intent to annoy them into paying their debt, and nor may they contact them in any way without first indicating that they are from a debt collection agency.
4. Debt collection agencies and original creditors may not falsely claim to be attorneys, government representatives, or that they work for a credit bureau. Further, they are also not permitted to imply that debtors have committed a crime and will thus be arrested.
5. Debt collection agencies and original creditors may not misrepresent how much money is owed, nor can they falsely claim that they will seize, garnish, attach, or sell your property or wages (unless the collection agency and/or creditor actually intends to do so, and it is legal to do so).
6. Debt collection agencies and original creditors are expressly barred from claiming to take legal actions against you which are illegal for them to take.
You should note that any and all debt collection practices that are not expressly forbidden in the Fair Debt Collection Statute are permitted. With this in mind, it is best to keep a highly accurate record of all communications with the debtor, including the total amount owed, to whom, all interest rates and other charges, and any actions that you have informed the debtor that will be taken.