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Creditor and Consumer Rights LITIGATION


If contacted, consumers should request various documents (such as statements of account, the underlying contract, etc.) to verify the debt. For most collection matters, the underlying claim against the consumer is for breach of contract, which has a three year statute of limitations if governed by North Carolina law. Even if the debt is otherwise owed, debt collectors are not allowed to initiate a lawsuit against consumers for debts exceeding the statute of limitations. Consumers should be aware of their liabilities and when they were incurred—they may inadvertently extend the statute of limitations by making a partial payment and thereby reaffirming the debt.

Consumers should keep good records of their debts and document their interactions with debt collectors, especially if they believe the debt collector’s conduct violates the law. Consumers should also be aware that, in addition to collecting money, debt collectors may attempt to collect information about the consumer in furtherance of those efforts. Any personal information disclosed may be used against them by a collection agency.

Debt Collectors and Debt Buyers

North Carolina was the first state to enact legislation treating debt buyers (essentially, companies who buy debt from creditors and attempt to collect it on their own or hire third parties collectors) the same as debt collectors. Debt collectors and debt buyers, when contacting consumers via telephone, must disclose who they are and that any information obtained may be used for the purposes of collecting a debt. To create an accurate record of those conversations, debt collectors and debt buyers should consider recording all calls and, if they are, consumers should be notified the calls are being recorded.

If contacting consumers in writing, the same disclosures must be made and accurate record-keeping is the single best defense against meritless claims of purported violations of the FDCPA and NCFDPA. Aside from not running afoul of the law, debt collectors and debt buyers would be wise to behave politely and professionally when dealing with consumers. In the vast majority of instances, consumers with bad debt found themselves in that position unwittingly and would gladly pay their debts if they had sufficient funds. Cooperative communications are the best method for resolving whether the consumer may be able to make payments over time to satisfy the debt.

For the statutes relevant to debt collectors and debt buyers, click here.


Unlike the FDCPA, North Carolina debt collections laws also apply to creditors. Creditors, even when collecting debts owed directly to them, should obey the same prohibitions as those directed at debt collectors. For the statutes relevant to creditors, click here.

Creditors aren’t typically liable for violations of debt collections laws committed by collection agencies hired on their behalf, but the possibility for vicarious liability exists. The potential liability of the creditor will hinge largely on the degree of its control over the collection practices exercised by the debt collector. Creditors should be careful and diligent when hiring debt collectors and should consider the inclusion of indemnity provisions in their contracts to protect themselves from debt collectors’ unlawful conduct.

Frequently Asked Questions

The four elements of a FDCPA claim are:

  • a consumer
  • is allegedly obligated to pay a consumer debt
  • which debt is attempted to be collected by a debt collector
  • who violates the FDCPA

To prove a claim pursuant to the NCFDPA, a plaintiff must show:

  • the underlying obligation is a debt
  • allegedly owed by a consumer
  • and the party trying to collect it (such as a creditor, debt collector, or debt buyer)
    • - commits an unfair or deceptive act or practice
    • - that is in or affecting commerce
    • - and such conduct causes the plaintiff injury

A “consumer” is any person obligated or allegedly obligated to pay a debt.

“Consumer debt” is said to be any debt incurred for personal, family, or household purposes. These debts include medical and credit card debts, car purchases, home furnishings, and goods and services obtained for personal use.

Commercial debts and those incurred by businesses are not covered by the FDCPA and the NCFDPA.

According to the FDCPA, a “debt collector” is any person is any person or company who uses interstate commerce and regularly collects debts for third party creditors.

The definition of a “debt collector” according to the NCFDPA is broader and applies to any person engaged in debt collection from a consumer, including creditors attempting to collect their own debts. However, unlike the FDCPA, the NCFDPA has a “learned professional” exception in Chapter 75 of the North Carolina General Statutes which excludes professional services activities, such as those of lawyers and doctors.

Threats and coercion, harassment, unfair practices, and misrepresentations about the debt or how it will be collected are all proscribed acts. Other, specifically prohibited acts include:

  • contacting the debtor at inconvenient times (before 8:00 a.m. or after 9:00 p.m.)
  • causing the telephone to ring or contacting the consumer with such frequency as to be unreasonable or to constitute harassment
  • contacting the debtor at his/her place of employment after being asked to stop
  • contacting a debtor known to be represented by a lawyer
  • contacting a debtor’s relatives or neighbors in an effort to collect the debt
  • contacting the debtor in an attempt to collect the debt after the debtor demands in writing that such communication cease
  • threatening to use violence or other criminal means to harm the person
  • threatening to accuse any person of fraud or any crime that would tend to cause disgrace, contempt, or ridicule
  • using obscene or profane language to harass the debtor
  • concealing the debt collector’s identity
  • misrepresenting the amount or legal status of a debt
  • misrepresenting any compensation a debt collect may receive for collection of the debt
  • misrepresenting the debt collector is a lawyer
  • misrepresenting that nonpayment of the debt will result in arrest
  • misrepresenting the debt collection has information or something else of value for the consumer
  • using a false name in furtherance of attempting to collect the debt or obtain information threating to take any legal action that is not intended to be taken
  • using deceptive means to collect the debt or obtain information from the consumer
  • failing to disclose in oral or written communications that the debt collector is attempting to collect a debt and that any information obtained will be used for that purpose
  • misrepresenting documents as legal paperwork or misrepresenting legal paperwork as not being so and not requiring action by the consumer
  • misrepresenting that the debt collector is employed by a consumer reporting agency; collecting any amount above the principal debt (such as interest) unless allowed by the underlying agreement between the debtor and creditor
  • requesting postdated checks while threatening criminal prosecution; threatening to deposit postdated checks prior to the date on the check
  • communicating with a consumer regarding a debt via post card

Within five (5) days of their initial contact with a consumer, debt collectors must send a written notice with the following information:

  • the amount of the debt
  • the name of the creditor to whom the debt is owed
  • a statement that the consumer may dispute all or a portion of the debt within thirty (30) days or it will be assumed to be valid
  • a statement that the debt collector will obtain verification of the debt if the consumer disputes it within thirty (30) days
  • a statement that, upon the consumer’s request he/she will be provided the name and address of the original creditor

A debt collector who violates the FDCPA shall be liable for:

  • any actual damages sustained by the person
  • statutory damages up to $1,000 per violation
  • the plaintiff’s litigation costs and attorneys’ fees

The FDCPA is considered a “strict liability” statute—in other words, if the plaintiff can prove the debt collector violated the act, even if the person is not actually damaged as a result of the wrongful conduct, he/she is still entitled to collect statutory damages of up to $1,000 per violation and attorneys’ fees. In many cases, the legal fees will exceed the damages awarded and the mandatory nature of their imposition has encouraged litigation.

However, if a lawsuit is brought pursuant to the FDCPA in bad faith or to harass the debt collector, the court may order that the plaintiff pay the defendant’s costs and attorneys’ fees.

A debt collector who violates the NCFDPA shall be liable for:

  • any actual damages the plaintiff sustained
  • civil penalties between $500 and $4,000 per violation
  • possibly punitive damages pursuant to Chapter 75 of the North Carolina General Statutes
  • possibly attorneys’ fees

While a plaintiff may recover punitive damages pursuant to NCFDPA claim, over and beyond the civil penalties, their imposition is far less certain, as is an award of attorneys’ fees (unlike the mandatory imposition of attorneys’ fees in a FDCPA claim).

Within one (1) year of the date of violation.

Within four (4) years of the date of the violation.

If the violation is unintentional and resulted from a “bona fide” error when attempting to collect the debt and the debt collector had procedures in place designed to avoid such error, liability may be avoided. Courts will likely consider the frequency and nature of alleged past violations to determine whether the violation is fairly construed as unintentional and/or whether the procedures in place were reasonably adapted to avoid the violation in issue.

Consumers may also be damaged by debt collectors who file incorrect information with consumer reporting agencies and credit bureaus. If that happens, plaintiffs are required to file suit under the federal laws regarding credit reporting agencies rather than the FDCPA or the NCFDPA. Similarly, the Truth in Lending Act requires that a creditor conduct a reasonable investigation of a consumer’s claim that there was an unauthorized use of a credit card.

The inclusion of information such as social security numbers, credit card numbers, and driver’s license numbers in collections actions is a violation of North Carolina’s Public Records laws and subjects the filer to liability, as would the North Carolina Identity Theft Protection Act.