Fair Debt Collection is vital to ensure that the debt collection industry engages in legal and fair collection practices which do not degrade or oppress the quality of consumers’ emotional well-being. Congress passed the Fair Debt Collection Practices Act (“FDCPA”) in 1978 to primarily regulate third-party debt collectors. The debt collection process generally starts when a lender or creditor “writes” or “charges” the debt off for its tax and accounting purposes. The two general reasons why write-off or charge-off occurs is because the debt either is clearly uncollectible in the short run or the lender or creditor adheres to a set of federal rules requiring that closed-end credit be charged off after 120 days and that open-end credit be charged off after 180 days. Charged-off debts are treated as an expense or loss to the lender or creditor, reducing the lender’s or creditor’s taxable income; however, the underlying debt may still be legally collectible for a time period equal statute of limitations set forth by the state in which the consumer resides.
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