Debt Collection Laws
There are laws in place to protect you from unlawful debt collection activities, deceptive practices, and harassment for debt.
Debt Collection Laws and Creditor Harassment
Overall, credit card companies, lenders, and other creditors cannot:
- Call you early in the morning or late at night
- Call you at your job (but only if you tell the debt collector you can't get collection calls at work)
- Contact you directly if you have an attorney
- Contact other people about your debt or bother your family
- Contact you at all (but only if you tell them in writing not to)
- Harass you, your friends, or your family
Note: The fact that a creditor can't contact you directly if you have an attorney is a very good reason to get one. An attorney can also help you understand your rights to consumer credit and not being harassed and may be able to negotiate a settlement or a payment plan with a creditor.
You Are Protected by the Fair Debt Collection Practices Act
The Federal Fair Debt Collection Practices Act (FDCPA) gives you these rights and protections against creditors. It also protects your spouse, parents (if you are a minor), legal guardian, executor, or an administrator.
The FDCPA details how creditors can communicate with you and who is protected. Read on for specifics about each section of the act.
How Creditors Can Contact You or Talk to You
Any communication between you and the creditor is carefully controlled under federal law.
A debt collector or creditor can only contact you at a "usual time." The law defines this as after 8 a.m. and before 9 p.m. in the time zone where you live. They can only contact you at unusual times or places if you have given them permission or a judge approves it. Overall, a creditor cannot inconvenience you and should make every effort to contact you at standard times and places.
A collection agent can call your work or call your work phone unless your employer prohibits these calls. You need to work with your attorney or tell the collection company that they cannot contact you at work.
Creditors Talking to Your Attorney
Be sure to tell the debt collection person or agency that you have an attorney. You may need to provide the attorney's name and address. They may call your attorney to confirm that you have legal representation. They can also ask your attorney if they can contact you directly (your attorney will say no unless you have discussed this option).
If your attorney fails to respond back to the debt collection agency, they might go back to contacting you.
Creditors Talking to Family, Friends, or Third Parties
A debt collection agent cannot talk to your friends and family unless:
- There is an exception under the law in section 1692b
- You gave permission to the debt collector
- A judge gives them permission
- It is considered "reasonably necessary" to contact you to collect the debt (a judge needs to rule that this is a fair remedy in your case)
Creditors can talk to your attorney, consumer reporting agencies, other creditors, attorneys for their own company, or attorneys for individual debt collection agents. The majority of debt collection agencies have their own team of attorneys.
What Can a Debt Collector Tell Friends and Family?
Information gathering about you is legal, but it must be kept to where you are located or how you can be contacted. You can report a collections agent if they do not stick to these rules:
- Must identify themselves as a collections agent or give the name of the creditor
- Must explain they are confirming or correcting location information (this might sound something like "I just wanted to check if this is still their cell phone number?" or "Do they still live at this address?"). Verification of the debt is legal.
Note: They do not have to identify their collection agency or employer unless asked. By law, you do not need to answer any of their questions if they call you.
The debt collector is breaking the law if they:
- Say your friend or family member is in debt
- Contact you more than once (unless you ask them to call you back or they have a "reasonable" belief that you have new information)
- Send you a postcard
- Mail you anything that shows they are a debt collector or are collecting debt from your friend or family member
- Contact you after they know your friend or family member has an attorney
These laws keep debt private from friends, family members, and most third parties. If a law is broken, you should tell your attorney right away.
Asking Creditors Not To Talk to You
You can ask a debt collection agency to "cease communication" by written notice. You can also write to tell them you are refusing to pay the debt. Once the collection agency receives your request, they cannot contact you except to:
- Respond to say they won't contact you again
- Say they are no longer trying to collect on your debt
- Offer special remedies to resolve your debt (such as offering to dismiss some of the debt if you pay a lump sum right away)
- Warn you that they intend to use a special remedy for your debt
These responses can come by mail, but the envelope cannot indicate it is about debt or debt collection. It cannot be a postcard or telegram that shows you are in debt.
What Type of Behavior Does the FDCPA Bar a Debt Collector From Engaging In?
The FDCPA prohibits debt collection agencies from using abusive, deceptive, or unfair tactics. Debt collectors may not engage in:
- Harassing Behavior: A debt collector may not use profanity, threats of violence, or repeatedly call the debtor to cause annoyance.
- Using False or Misleading Statements: A debt collector may not lie about the amount of a debt, claim to work for a credit reporting company, or claim to be an attorney or government representative.
- Threatening Behavior: Debt collectors may not say that a debtor will be arrested for not paying debts or threaten to garnish a debtor's wages or sell their property, unless permitted by law.
- Unfair Collection Practices: A collector may not add interest or fees that the original agreement disallows, contact a debtor by postcard, or deposit a posted-dated check early.
Are Debt Collection Agencies Allowed To Add Interest to the Original Debt?
The FDCPA does not prohibit adding interest to the original debt if:
- The original agreement allows a debt collector to add interest during the debt collection process
- State law allows it
State law determines the maximum interest a collector may charge.
Am I Required To Wire a Late Payment Through Western Union?
No. Some collectors will insist on receiving a delinquent payment through a wire transfer or through overnight or express mail service.
Neither federal nor state law requires you to make a late payment through any of these services. It is acceptable to mail the payment or to use a debit card or checking account to make the payment.
Can Debt Collection Agencies Collect a Debt by Garnishing My Wages or My Bank Account?
Yes. If the debt collector receives a court judgment after filing a lawsuit against you, the collector can collect the debt by:
- Garnishing up to 25% of your net wages
- Taking the funds from your bank account
- Recording a lien against your real property
In many states, even if you have no assets at the time of the judgment, the collector can continue to try to collect the debt for up to 20 years.
Know When to Ask for Help
Repaying debt is a challenging and draining task for many people. Debt counselors and debt reduction programs are available to help — just be wary of scammers.
You can talk with a bankruptcy attorney for free if you think bankruptcy is the right fit. Filing for bankruptcy is a serious endeavor that shouldn't be taken lightly. You'll get a fresh start to rebuild your credit and regain financial health. One of the best ways to ensure a successful bankruptcy is to hire an experienced bankruptcy attorney.