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The Importance of Utilizing an Attorney for Debt Collection

Debt collectors have many restrictions on the manner in which they can collect a debt.  Did you know that, in North Carolina, attorneys are not subject to the same restrictions regarding debt collection that debt collectors or business owners are subject to?

Some business owners have heard of the federal law, the Fair Debt Collection Practices Act.  Fewer have heard of the North Carolina Debt Collection Act (the “NCDCA”).  The NCDCA prohibits debt collectors from collecting or attempting to collect a debt alleged to be due and owing from a consumer by means of unfair threats, harassment, unreasonable publication, deceptive representation or other unconscionable means.  There is a lengthy non-exclusive list of act in the NCDCA that are deemed to be improper.  When business owners attempt to collect debts, they could be subject to civil fines if challenged by their debtors.

It’s likely that very few business owners have heard of Reid v. Ayers, a North Carolina Court of Appeals case from 2000.  But Reid v. Ayers is perhaps the biggest reason that business owners should engage an attorney to assist with collection efforts when attempting to collect from a consumer.  Reid v. Ayers held that attorneys are exempt from the North Carolina Debt Collection Act for collecting “debts” on behalf of their clients. Although attorneys who handle collection disputes such as Maginnis Law are still bound by their ethical obligations, this exemption allows an attorney to have an easier time of collecting from “debtors.”

I put “debts” in quotes in the last paragraph because the definition of “debt” in this legal context is probably broader than it is in normal conversation.  Debt is actually broadly defined in this context, perhaps more broadly than you might think.  Under debt collection law, debt is defined as “any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.”  For example, Reid v. Ayers found that condominium association dues, assessments, and back rent are properly classified as debt.  So the term debt is construed broadly under the law.

Now, on the consumer end of things, claims under the NCDCA must also satisfy the requirements of a more general claim under the North Carolina Unfair and Deceptive Trade Practices Act (the “NCUDTPA”.)  The NCUDTPA prohibits “unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce.”  To establish a violation of the NCUDTPA, a consumer must show that the business committed (1) an unfair or deceptive act; (2) in or affecting commerce; (3) that proximately caused injury to the consumer.  The business does not have to intend for their act to be deceptive in order for it to qualify.  If you feel that you have been injured by an unfair or deceptive act while a business was attempting to collect from you, it is possible that you may have a claim under the NCDCA.  Business owners cannot go to any length in order to collect from you, and you are entitled to protect your rights as well.

Whether you are a business owner seeking to collect debt from a consumer, or you are a consumer who feels that a business owner is unfairly or wrongfully attempting to collect a debt from you, you may want to consider hiring an attorney to assist you in the process.

Ed Maginnis of Maginnis Law, PLLC is an attorney practicing civil business litigation and representing individuals in Raleigh, Cary, Apex, and Holly Springs, North Carolina.  He also services clients in Wake County, and throughout the state.  Contact him at 919-526-0450 or email him at to discuss your legal issues.