Debt Collection Laws in Louisiana - Know Your Rights As A Debtor

Debt going to collections can be stressful. You might get frequent angry phone calls or scornful letters from the agency trying to get the money back. But is it legal?

If this happens to you, knowing how debt collection agencies work and what protections and assistance may be available to you is essential.

Read ahead to know your rights.

What is Debt Collection?

Debt collection happens when a consumer debt or business debt goes unpaid for a certain period.

Let's take the example of auto loans. Suppose you get one and then fail to make your repayments. Your creditor may report the debt as delinquent 30 days after the due date and start their collection efforts.

At some point, typically after 120 to 180 days of not getting paid, the creditor may give up trying to collect and charge off the loan. However, that doesn't mean you're off the hook. The creditor may sell your debt to a debt collection agency to recoup losses.

This means a different company may start sending you notices about your debt. It's still the same debt, and you still owe money — it's just that another agency has bought the right to collect.

If their collection efforts bear no fruit, the agency may file a debt collection lawsuit to get the money you owe. However, they can do it only within a certain period, as per the statute of limitations.

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Louisiana Statute of Limitations

According to Louisiana state law, the statute of limitations (SOL) on the collection of debts owed is -

• Three years for open credit card accounts (credit card and line of credit)
• Ten years for oral contracts (debt made on verbal agreements)
• Ten years for written contracts (debt made on written agreements featuring the terms and conditions of a loan, signed by you and your lender)
• Ten years for promissory notes (written agreements to pay back a debt in specified payments at a specific interest rate by a definite date)

Creditors can take legal action against you during these periods for the respective types of unpaid debt and hire debt collection agencies who can make persistent attempts at the collection.

If the creditor or collection agency threatens to sue you after the expiration of the SOL, you can send them an Expired SOL Notification Letter.

The SOL clock usually starts on your first missed payment date.

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What Debt Collectors Can & Cannot Do As Per the Debt Collection Laws in Louisiana

As a debtor, even if you get delinquent, you have certain protections against collectors provided by the Louisiana Fair Debt Collection Practices Act.

If a debt collector breaks any laws enforced by the Act while collecting delinquent debt, you can take legal action against them and get compensation.

Here are some of the most important protections offered to debtors by Louisiana law -

Harassment & Abuse

Debt collectors can't harass or hurt you to get you to pay back a debt.

Here are some actions that violate the condition -

• Use the threat of violence or harm;
• Publish your name on any public platform (however, they can provide this information to the credit reporting companies);
• Repeatedly call you with the intention of annoying you;
• Use obscene or profane language.

False statements

Debt collectors can't make false or misleading statements to trick you into paying back a debt.

For example, they can't -

• Falsely state how the debt will affect your credit report or credit score;
• Make false claims about them being lawyers or government officials;
• Make false implications that you have broken the law when you haven't;
• Pretend to run or work for a credit reporting company when they don't;
• Misrepresent how much you owe;
• Falsely indicate that papers they send you are legal forms when they aren't, or indicate papers they send to you aren't legal forms when they are.

Debt Collection Communication Dos and Don'ts

• Debt collectors can't communicate with you through social media if their message can be seen by the public or your social media contacts.
• Upon establishing contact, a collector must identify themselves and mention that they may use any information you give them in an attempt to collect the debt.
• A collector can't call you at an odd or inconvenient time or place. Typically, calls before 8 a.m. and after 9 p.m. are assumed to be inconvenient.
• Collection agents can't talk to anyone about your debt who's not living or present in your household. This means that the debt collector or original creditor can't get in touch with your employer or neighbor.
• If you send your creditor a cease and desist letter, they can no longer communicate with you. However, there are some exceptions, like they can contact any person to find what property you have upon getting a judgment against you, make an amicable demand for payment and contact others if you provide permission. The debt collector needs to limit mail contacts to one notice per month.
• Collectors cannot contact you directly if they know or should have known that you have an attorney.

Debt Validation

Along with the initial communication message, or within five days of first establishing contact, a debt collector has to send you a written notice mentioning the -

• amount of debt;
• name of the original creditor;
• fact that you can dispute the entire or portion of the debt within 30 days of receiving the notice. (If you don't dispute the debt within that time, the debt collector can assume the debt to be valid.)

If you send the collectors a debt validation letter, they must provide all the necessary documents verifying the debt.

The debt collector must discontinue their collection efforts for the entire debt or any part in dispute until they provide a copy of the documents proving that they owe the debt.

Other Unfair Practices

A collection agency can't use unfair or outrageous methods to collect unpaid debt. For example, it can't:

• Add interest, fees, or charges not mentioned in the original contract or authorized by state law;
• Accept a check postdated by more than five days and not notify you in writing of their intent to deposit the check between 10 and 3 days before the deposit;
• Deposit a postdated check before the date mentioned on the check;
• Solicit postdated checks by threatening you with criminal prosecution;
• Threaten to seize or repossess your property without any right to do so or no intention of doing so;
• Put any words or symbols on the outside of an envelope sent to you that suggests the sender is trying to collect a debt.

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What if a Debt Collector Breaks Debt Collection Laws in Louisiana

You have several options if a debt collector breaks any laws that protect you under the Louisiana FDCPA Act.

You can -

• Leverage the violation to negotiate a favorable settlement;
• File a complaint with the Consumer Financial Protection Bureau or the Federal Trade Commission;
• Sue, the collector in State Court or a Small Claims Court.

However, it's best to consult a lawyer before taking a step.

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Debt Relief in Louisiana

If you're struggling to manage your debts, here are some of the best ways to find debt relief in Louisiana:

Debt settlement: The process involves negotiating with creditors to reduce debt. You can do it on your own if you're good at negotiating and know all the nitty-gritty of the process or hire a debt settlement company to help you out.

Debt consolidation: It is the process of combining multiple high-interest debts into one low-interest loan with one monthly payment. Doing this can make it easier to manage payments.

Debt management plan: In a DMP, a credit counselor works on your behalf to negotiate better terms and reduced monthly payments with your creditors.

Bankruptcy: Although filing for bankruptcy is a last resort, it could give you a fresh start if you're drowning in debt. Speak with a bankruptcy attorney before you file.

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