Camp Lejeune Command (USMC) response to illegal debt collection

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From the office of the Staff Judge Advocate, USMC

 

Command Response to Illegal Debt Collection Efforts

 

(Rev 1 Jun 2007)

 

1. Some of our adjutants, legal officers, and senior enlisted and officer leaders are receiving calls and correspondence from creditors and debt collection agencies attempting to pressure our service members into payment. Much of this correspondence is unlawful, violating Federal or state law concerning debt collection. There are very strict rules prohibiting creditors and debt collection agencies from contacting third parties, such as employers or command personnel, about debt information. Federal and North Carolina law, as well as Marine Corps policy, concerning the communication of debt information to third parties is outlined below. The linked debt collection response form at http://www.lejeune.usmc.mil/legal/Command%...0328%201330.htm is designed to assist command personnel in responding to illegal debt collection efforts.

 

2. USMC Policy. Marine Corps policy concerning debt collection is provided at Chapter 16 of the Legal Administration Manual, MCO P 5800.16A available at http://www.lejeune.usmc.mil/legal/LegAdinM...ndebtedness.doc . In sum, this policy provides that debt collectors must make a bona fide attempt to resolve the matter through direct contact with the debtor before the command will assist in collection. Furthermore, the command will not assist in any debt collection effort (a) if the collector's claims are patently false or misleading or ( if the debt collection effort violates state or Federal law. Out of state collectors will not be assisted if they are violating the law of the state where the installation sits.

 

3. Federal law. The Federal Fair Debt Collection Practices Act, Title 15, U.S. Code, section 1692, et seq, available at http://www.lejeune.usmc.mil/legal/Fed%20FDCPA.doc prohibits debt collectors from engaging in various abusive practices. Section 1692c specifically pertains to debt collectors communicating debt information to third parties. With very limited exceptions (such as solely to locate the debtor without communicating debt info) such third party communication is prohibited. The Federal FDCPA applies to debt collectors; generally, those who are hired to collect debts for some one else.

 

4. North Carolina Law.

 

 

 

a. North Carolina has two separate debt collection statutes. One of them, like the

 

Federal law applies to debt collection agencies, those collecting debts for others. (NC Gen Stat ch 58 70-1 thru 130, available at http://www.lejeune.usmc.mil/legal/NCGS%2058-70.doc ), The statute contains specific prohibitions against contacting third parties, such as employers.

 

 

 

b. North Carolina law, unlike Federal law, also prohibits the communication of debt

 

information to third parties by creditors attempting to collect their own debts. (NC Gen Stat 75-50 thru 56, available at http://www.lejeune.usmc.mil/legal/NCGS%20%...0to%2056%20.doc ). In accordance with section 75-50 of that statute, it applies to the collection or attempted collection of consumer debts by “any person engaging directly or indirectly, in debt collection from a consumer [except for debt collection agencies covered by the other North Carolina debt collection statute]. †This statute prohibits a variety of abusive debt collection practices. NC Gen stat 75-53 specifically prohibits most third party debt communication. Debt collectors are authorized to provide such information to third parties if the debtor gives consent. However, debtor consent is not valid unless given after default; that is, after the debtor has breached the contract, most commonly by missing a payment. The purported consent given by the consumer at the outset, such as when signing a contract to purchase goods or services with installment payments, is legally ineffective. Such “consent†does not lawfully confer upon the creditor any right to contact commanders or other third parties. Many of our local lenders attempt to use such ineffective “consent.â€

 

 

 

c. North Carolina law prohibits debt collectors from threatening to take actions that

 

they are not lawfully authorized to take. North Carolina courts have said that wage garnishment is not authorized in this state as a means of collecting ordinary consumer debt (as opposed to family support obligations). Harris v Hinson 87 NC App 148, 360 SE 2d 118 (1987), available at http://www.lejeune.usmc.mil/legal/Harris%2...Garnishment.doc. Thus, a threat to garnish the wages of a North Carolina employee is unlawful.

 

 

 

Note that above debt collection rules may not be applicable to MCCS debt collection efforts against service members and that the Marine Corps has.

 

 

 

5. Command personnel are urged to provide evidence of such illegal debt

 

collection to the Legal Assistance Office and other appropriate authority. On line complaint forms are available at the web sites of

 

 

 

the Camp Lejeune legal assistance office,

 

http://www.lejeune.usmc.mil/legal/

 

[click on the “consumer law†folder, then “formsâ€]

 

 

 

the consumer protection section of he North Carolina Attorney General http://www.ncdoj.com/consumerprotection/cp_about.jsp