What does the Federal Trade Commission have to do with Bankruptcy

Although most folks have heard of the FTC or the Federal Trade Commission, most really don’t understand its role in the bankruptcy process.  A little history may be helpful.

In 1914 as a result of a bipartisan commission whose members were appointed by President Woodrow Wilson, the United States Congress passed The Federal Trade Commission Act.  The Act created a regulatory body known as the FTC.  The FTC was envisioned to allow government to be a watchdog over businesses that were believed to have an unfair advantage over consumers purchasing goods and services.

The FTC initially focused on curbing what it considered “unfair trade practices.”  The FTC sought to foster “fair competition” and to stifle “unfair competition.”  Understand that the use of the word “unfair” in this context doesn’t always mean what most of us would consider “unfair.” For example, it seems terribly unfair for credit card companies to increase your rate from 12% to 29.99% just because they can.  Unfortunately, that practice is not an “unfair trade practice” in the eyes of the FTC.  You may (and I do) disagree.

The FTC’s role in the bankruptcy process is primarily in its enforcement of the Fair Debt Collection Practices Act.  This Act is designed to protect consumers from scrupulous actions by debt collectors.  By passing regulations (and having the power of enforcement behind those regulations) the FTC provides its interpretation of what are deceptive and unfair practices.  It also decides what it perceives as a violation of the Fair Debt Collection Practices Act.

The FTC site answers a number of questions, including these two: (from the FTC site)

“Can a debt collector contact me any time or any place?

No. A debt collector may not contact you at inconvenient times or places, such as before 8 in the morning or after 9 at night, unless you agree to it. And collectors may not contact you at work if they’re told (orally or in writing) that you’re not allowed to get calls there.

How can I stop a debt collector from contacting me?

If a collector contacts you about a debt, you may want to talk to them at least once to see if you can resolve the matter – even if you don’t think you owe the debt, can’t repay it immediately, or think that the collector is contacting you by mistake. If you decide after contacting the debt collector that you don’t want the collector to contact you again, tell the collector – in writing – to stop contacting you. Here’s how to do that:

Make a copy of your letter. Send the original by certified mail, and pay for a “return receipt” so you’ll be able to document what the collector received. Once the collector receives your letter, they may not contact you again, with two exceptions: a collector can contact you to tell you there will be no further contact or to let you know that they or the creditor intend to take a specific action, like filing a lawsuit. Sending such a letter to a debt collector you owe money to does not get rid of the debt, but it should stop the contact. The creditor or the debt collector still can sue you to collect the debt.  “

Sometimes it’s just the threat of the pursuit of the FTC that will alter or slow down the activities of debt collectors.  However, even with the threat of the FTC many debt collectors continue to violate the Fair Debt Collection Practices Act.

Contact a Knoxville Bankruptcy Attorney

If you have been harassed by creditors or are considering filing for bankruptcy, contact Knoxville Bankruptcy Attorney Dan Scott by calling 865-246-1050 for a free consultation today.  We help people in Knoxville, Maryville, Sevierville, Jefferson City and surrounding areas.