The Fair Debt Collection Practices Act is a United States statute and can also be referred to as 15 USC 1692. Since the Federal Trade Commission is in charge of overseeing this act, they have prepared a version of the Fair Debt Collection Practices Act, that is easier for consumers to read.

When it comes debt, people have developed some strange notions. Misconceptions about the Fair Debt Collection Practices Act can get you in trouble if you don’t inform yourself properly. I highly recommend reading the act itself by following the link above to find out what it really covers. Here are some of the misconceptions about it:

NOT TRUE: The Fair Debt Collection Act statute of limitations allows me to not pay off my debt.

If you search the Fair Debt Collection Practices Act, you will discover that the words “statute of limitations” do not actually appear in the statute. Now, that does not mean that such limitations do not exist. In fact, they do, but they are determined by the states. You can look up what the statute of limitations for your state are.

NOT TRUE: The Fair Debt Collection Act eliminates the universal default clause.

While the act does put many restrictions on creditors, it does not specifically eliminate the universal default clause. And this is one to really pay attention to. The universal default clause means that the lender can change your interest rates on the credit you have with them, if you default on a debt you have with another lender.

This can be disastrous to your paycheck. Some of the credit cards available have stated interest rates in the 30 percent range, if you fail to make a payment on time or are otherwise considered in default. Just because you were late paying off one bill, you could find your minimum payment on your other debts going up to the point where you can no longer afford to pay them.

NOT TRUE: The Fair Debt Collection Act keeps creditors away from me.

The act restricts abusive practices by debt collection agencies, but it does not keep them from collecting a debt you owe. For example, it limits the hours during which a debt collector can contact you.

NOT TRUE: The Fair Debt Collection Act gives me the right to renegotiate my debt.

If you cannot make your payments, negotiating a new arrangement is a good idea, and most creditors are willing to work with you, but they are not obligated to do this. If you find yourself in this position, you can find some scripts as to how to approach a creditor on the telephone and in writing to negotiate different terms.

Overall, you are better off because of the consumer protections built into the Fair Debt Collection Act. It restricts many of the harassing practices debt collectors had gotten into the habit of using to collect their debts. No more excessive telephone calls, no more embarrassing information leaked to your neighbors, no more threats of violence, no more banging on your door in the middle of the night.

Your best defense, however, is to not put yourself into this position in the first place. Instead of trying to wait out the statute of limitations on debt, deal with it the moment you get in trouble. If you have a car loan and you suddenly lose your job, look for a new job immediately. If you find that your new sources of income can’t handle your debt, contact your creditor, and try to negotiate a lower payment immediately.