Legal Question in Credit and Debt Law in California
Fair Debt Collection Act
I received a letter from a collection agency stating the following: ''Once we obtain a judgment I will proceed to the foreclosure of your home.'' ''You did not have enough self worth to send a check as promised.'' You need to stop telling your employees everything will be ok. Everything will not be ok.'' Your employees will begin to gawk as your car is taken from your establishment.'' ''Best of luck trying to convince your employees that you are an upstanding person for much longer.'' The collection agency states that because my company is an LLC and this is a commercial debt the Fair Debt Collection Act doesn't apply. Is their statement about the Fair Debt Collection Act correct? Are these methods, threats and personal attacks in an attempt to collect a debt permissible under Federal or State (CA) law?
3 Answers from Attorneys
Re: Fair Debt Collection Act
Because they threatened to take your home, I would say they have crossed the line and unilaterally turned this into a consumer debt. Sounds like you may need to hire an attorney to push back on this collection company.
Re: Fair Debt Collection Act
Hard to say whether either federal or state FDCPA applies without reading the contract or other debt instrument. If you personally guaranteed the debt, perhaps you have an argument that this is really a consumer debt. In any event, the off-the-wall language and behavior you cited is not going to impress the judge.
At some point this kind of behavior becomes actionable as the tort of intentional infliction of emotional distress, and possibly defamation, interference with contractual relations, and/or invasion of privacy if directed or communicated to your employees or other third parties.
Remember, in a FDCPA case your attorney fees are paid or reimursed.
Re: Fair Debt Collection Act
Collection attempts regarding a business debt are not covered by the FDCPA. However, there tactics do raise a cause of action under other theories, including California's Unfair and Deceptive Acts and practices statute (UDAP). Feel free to contact me if you would like to pursue this.
Yours truly,
Bryan
619.400.4929
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