Golden Gate Collections

Can I get in trouble for trying to collect my debt?

The easiest answer this question is, “of course you can get in trouble if you’re a knucklehead.”  There are a few ways you can screw up debt collection in a way that actually creates more trouble for you:

Lying – Anyone can get in trouble for misrepresenting things to a court, or for lying to law enforcement officers. Lying to the debtor is trouble, too. For example, it is illegal (a misdemeanor punishable by imprisonment for up to six months and/or a fine of up to $2500) to try to mislead someone who owes you money by sending them a document that looks like it comes from the court or another government agency when that document doesn’t. California Civil Code section 1788.16.

Violence – As tempting as it may be, don’t channel your inner Marsellus Wallace and hire someone with a pair of pliers and a blowtorch to get medieval on the debtor. That stuff works a lot better in the movies. Even threatening such behavior can get you in trouble.

Defamation – Calling out the debtor publicly can have consequences, depending on what you say. Laws against defamation apply to debt collection like they apply to everything else.

Special Cases

Even if you avoid breaking kneecaps and forging court documents, you might still run aground of the law.  State and federal law have rules and procedures that govern debt collection in certain situations.

Fair Debt Collections Act (FDCA) – People collecting debts which qualify as “consumer debt” may be subject to both California and federal fair debt collection practices act.  “Consumer debts” are debt taken on by natural persons (a natural person is a living, breathing one is opposed to a Corporation) and involving money or property or services used primarily for personal, family or household purposes. Violating the FDCAs may subject you to paying the other side attorney’s fees and substantial penalties.

Landlord/Tenant – The FDCAs and California’s tenant protection laws, protect tenants from certain collection methods by landlords.  If you are trying to collect owed rent, you should be very careful and should talk to a lawyer. Violating the laws which protect residential tenants can also subject you to having to pay the other side attorney’s fees and penalties.

Bankruptcy – If the person you are collecting from have declared bankruptcy, you are probably going to have to move your collection activity to bankruptcy court. Typically, the filing of bankruptcy, will create “automatic stay” from the federal bankruptcy court which prohibits collection activity from state court, or anywhere but the bankruptcy court. Violation of the automatic stay can get you in trouble.