Woman Accuses Debt Collector of Violating Federal Law

An Arkansas woman is suing a debt collection agency attempting to collect on a balance the woman owed to Citibank, according to a debt collection lawsuit filed in Arkansas federal court.

In July, Portfolio Recovery Associates, a debt collection agency based in Little Rock, Ark., filed a consumer debt lawsuit against Rosalie Shahan accusing her of defaulting on a Citibank credit card. Portfolio alleges she owes owes $1,279.09.

But according to Shahan’s debt collection lawsuit, filed in October, the last statement she received from Citibank showed a balance of $1,159.11. The amount Portfolio is alleging Shahan owes contains interest and late charges accrued after Citibank discharged Shahan’s account, a practice that is against the law.

The federal Truth in Lending Act requires creditors to send statements each billing cycle if there exists an outstanding balance where a finance charge has been imposed.

Since Citibank discharged Shahan’s account, Citibank was not required to send periodic statements to her, according to the unfair debt collection lawsuit. However, Citibank “took advantage of this exception” and imposed finance charges and/or interest after the discharge occurred.

Since acquiring the account, Portfolio is required to abide by the same terms and laws as Citibank, Shahan asserts.

Portfolio is engaging in “unfair and unconscionable means” to collect a debt, the unfair debt collection lawsuit charges, and is making false representations and engaging in deceptive means in an attempt to collect the debt. Shahan is demanding attorney’s fees and damages as well as a jury trial.

The Truth in Lending Act is also known as the Consumer Credit Protection Act of 1968. It was designed to keep lenders from advertising loan terms that are only available to preferred borrowers as well as puts strict terms for advertising consumer credit.

Congress passed the Fair Debt Collection Practices Act (FDCPA) 10 years later to target illicit practices employed by creditors and debt collectors. It provides debtors with protection and allows debtors to challenge creditors to determine the accuracy and validity of debts.

The FDCPA considers a debt collector anyone who regularly collects debts owed to others, such as collection agencies, companies that purchase and attempt to collect on delinquent debts, and debt collection lawyers who help companies who help creditors, debt buyers, or even debt collection firms.

Debtors can receive $1,000 in damages, in addition to actual damages suffered, to be paid by debt collectors found to have violated the FDCPA.

Some of the tenets of the FDCPA preclude using false statements and deceptive practices, collecting debts not owed (such as debts discharged in bankruptcy or previously settled), debt collection harassment, telephone harassment, collection of expired debts, making improper reports to credit reporting agencies, failure to cease communication upon request and improper communication with third parties.

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If a lender or debt collector engaged in unfair debt collection practices, you may have a legal claim and could be owed compensation for violations of the Fair Debt Collection Practices Act (FDCPA).

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DISCLAIMER: Debt collection itself is not illegal. However, debt collection firms collecting on consumer debts must adhere to the FDCPA. Even though debt attorneys are investigating these companies, their debt collection practices may be legal.