Understanding the Rights
and Limitations of Creditors

You may have debt that you have fallen behind on and are being harassed by creditors. What are your options to make the seemingly endless bill collector calls and letters stop? Getting legal help could be the first step. 

Here at The Orantes Law Firm, we can help. We have decades of experience. While it may seem like you are out of options, filing for bankruptcy can help you gain a fresh start and leave the stress of your debt behind. Our firm serves clients located in Los Angeles, Irvine, or anywhere in Los Angeles County or Orange County.

Consumer Rights Laws

There are several consumer rights laws that exist to protect consumers from unlawful activity by creditors. 

Fair Debt Collection
Practices Act (FDCPA)

This law was established in September 1977. It places legal protections around consumers to keep them from being subjected to abusive debt collection practices and creditor harassment. It prohibits conduct such as: 

  • Repetitious phone calls intended to harass 
  • Using profanities
  • Threatening violence or harm
  • Not identifying who they are
  • Publishing a list of names of people who haven’t paid their debts

Additionally, the FDCPA prohibits creditors from misrepresentation of the amount you owe or false consequences or threats if you don’t pay the debt.

Fair Credit Reporting Act (FCRA)

The FCRA was enacted in October 1970. Its purpose is to promote the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies. This law regulates consumer credit information to protect them from inaccurate information in their credit reports. 

State Law

The state of California also enforces laws to protect consumers. The state is known for having one of the highest rates of consumer debt. Californians carry more credit cards (5.9) and more debt on those cards ($6,729) than the average American. 

For example, the California/Rosenthal Fair Debt Collection Practices Act gives all of the same consumer protections as the FDCPA but also incorporates added stipulations. It applies to not only debt collectors trying to collect, but the original creditors as well. California also put a statute of limitations on debt collection. If it is a written contract, there is a four-year statute of limitations on all unsecured debt. If there is an oral contract that secured the loan, there is a two-year statute of limitations to secure the debt. 

Collecting Debt

Debt collectors do have certain rights to take action in order to collect money that is owed. For example, they can file a lawsuit against you. If this happens, don’t ignore it. Speak with an experienced attorney immediately.

Creditors may also garnish your wages or take money from your bank account to pay the debt but this may only be done after a lawsuit has been filed and a court order obtained.

A creditor can also file a lien on your property thereby converting the judgment from an unsecured debt to secured debt. As a result, when you try to sell or refinance your home, the creditor can recover what is owed plus accrued interest from the escrow.

Bankruptcy Effects
On Creditor’s Rights

The effect of declaring bankruptcy can be a restart. If you declare bankruptcy, an automatic stay goes into place. An automatic stay is an injunction that halts collection actions by most creditors. More specifically, creditors are not allowed to:

  • Call you or send letters, texts, or emails
  • Place a lien on your property
  • Repossess your collateral
  • Foreclose on your home
  • Continue or file a lawsuit

If a creditor does not respect the automatic stay or discharge, they can be held in contempt. 

How The Orantes
Law Firm Can Help

Bankruptcy may seem complex, but we can simplify it for you. The Orantes Law Firm can help. If you are located in Los Angeles, Irvine, or anywhere in Los Angeles County or Orange County, reach out to us today for a free initial consultation to discuss your debts and the bankruptcy process.

Recent Posts