Just like everywhere else in the country, Alabama consumers are saddled with a high level of student loan debt. And just like everywhere else, Alabama consumers are facing highly abusive debt collection practices from the twenty or so federal student loan collection agencies.
We will cover these in more detail later, but here are some of the more common student loan collection agencies’ violations of the Fair Debt Collection Practices Act (FDCPA):
- Threats to garnish wages without following the proper procedure to do so;
- Threats to take federal benefits, including tax refunds and social security benefits, without following the proper procedures;
- Lies about what is necessary to “rehabilitate” a federal student loan;
- Lies about the option to consolidate a federal student loan in order to remove it from a default status;
- Lies about what will happen with credit reporting when a loan is rehabilitated;
- Lies about bankruptcy discharge not being available for student loans;
- Lies about the options of cancelling student loans due to disability, school closings, etc.; and
- Illegal contacts with neighbors, employers, and family members.
The FDCPA protects against violations by collectors, even collectors who are collecting student loans.
As a reminder, the FDCPA strictly prohibits collection agencies from lying to consumers. Period. There is no reason, good or bad, for a collector to lie to a consumer. If a collector is going to attempt to explain the law to consumers, it better get it right.
Collectors like to argue that the laws are complicated so it is ok if they “accidently lie” about what the law is . . . No — if you explain the law (especially as a non lawyer) then you need to explain it correctly.
The FDCPA also prohibits the collectors, even of student loans, from threatening action which the collector cannot take or will not take. For example, a collector cannot just snap his fingers and garnish your wages. A process must take place including a letter sent to you, an opportunity for a hearing, etc. So for a collector to lie (which is illegal) and threaten an immediate garnishment without following the steps, is also illegal as a threat that the collection agency cannot take.
We will look at these types of lies and illegal threats in more detail in later posts but we hope this quick overview and summary gives you some insight.
Remember that student loan collectors feel that they are above the law. They feel they can do anything. With no repercussions because they do have extra-ordinary collection powers. But they still must follow the law.
When they refuse to follow the law, it is appropriate for Alabama consumers to sue the collection agencies to hold them responsible for money damages. This is the only way these collection agencies will learn to follow the law — when it becomes more expensive for them to break the laws than it is to follow the laws. Here is an example of a lawsuit against the infamous General Revenue Corporation for allegedly violating the FDCPA and the TCPA (calls to cell phones) of an Alabama consumer.
If you live in Alabama and are dealing with student loan collection agencies, let us know and we will be glad to discuss your situation with you. You can call us at 205-879-2447 or you can fill out our online contact form and we will get right back with you.
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