Can I Sue a Debt Collector?

Yes, you may be able to sue a debt collector or a debt collection agency if it engages in abusive, deceptive, or unfair behavior. A debt collector is often someone who buys a debt from a creditor who, for whatever reason, has been unable to collect from a consumer.

They often pay much less than what the consumer owes, as creditors prefer to get some money rather than none. Then the debt collector goes after the consumer for the full amount of the debt. The bottom line is that debt collection agencies have invested in your debt and must pursue collection with aggressiveness to make money. 

This incentive to be aggressive can sometimes lead debt collection agencies to cross the line into unlawful behavior. When they do, you have legal options, including the right to sue. Be aware of the one-year statute of limitations.

What To Expect When a Debt Collector Is Pursuing You

The process can be overwhelming. You get call after call, letter after letter demanding payment. You get a shiver up your spine whenever the phone rings and dread checking the mail because of what you may find. This can cause a lot of anxiety, to say the least.

You do have some protection. Debt collectors and debt collection agencies must abide by strict rules when seeking to collect a debt. Although you may have remedies under state law as well, the federal Fair Debt Collection Practices Act (FDCPA) protects you against abusive practices.

What Is the Fair Debt Collection Practices Act?

Congress believed that many debt collectors engaged in abusive, deceptive, and unfair debt collection practices. In its view, these practices contributed to personal bankruptcies, marital instability, the loss of jobs, default judgments, and in general invaded consumers' privacy. So it passed a law to stop this behavior.

The FDCPA applies to debt collectors and debt collection agencies that try to collect consumer debts. These include:

• Mortgage payments
• Credit card debt
• Medical bills
• Student loan debt
• Homeowners' Association dues
• Dishonored checks
• Residential rent
• Water and sewer bills

Keep in mind that the statute does NOT apply to taxes, business debts, or child support obligations. Note that it does not prevent an original creditor from trying to collect its own debt, just the third-party debt collectors and debt collection agencies.

When You Can't Sue: Required Conduct of Debt Collectors

The FDCPA requires debt collectors to:

• Identify themselves as a debt collector
• Note during the initial communication with you that the information obtained is for the purpose of collecting a debt
• Identify the name and address of whom you owe the debt to
• Tell you that you have the right to dispute the debt within 30 days (lawyers call this a “Section 1692g Notice")
• Provide validation of the debt if asked for it

When You Can Sue: Prohibited Conduct by Debt Collectors

The FDCPA generally prohibits debt collectors from doing all sorts of harassing things, including:

• Phone calls outside of the hours of 8:00 a.m. to 9:00 p.m.
• Swearing at you
• Lying to you
• Pretending to be a lawyer
• Communicating with you at all after you have told them in writing within 30 days of first contact to leave you alone, dispute the amount of the debt, or demand validation of the debt
• Causing your phone to ring off the hook
• Calling you at work if you or your employer tells them not to
• Sending you postcards
• Contacting anyone other than your lawyer if you have one
• Putting your name on a “bad debt" list
• Reporting or threatening to report false information to a credit reporting agency
• Threatening to take legal action without the right or intent of doing so
• Threatening to repossess property without the right or intent to do so

Reasons to Sue: Common Claims Brought Against Debt Collectors

Consumers who choose to sue debt collectors and debt collection agencies often assert the following claims:

• Improper communications (e.g., calling too early or too late, calling you at work after you have told them not to, calling you directly when you have a lawyer)
• Harassment or abuse (e.g., using or threatening violence, profane language, putting your name on a list of people who do not pay their bills, repeatedly calling you just to harass, annoy, or abuse you, advertising a debt for sale to try to coerce you into paying)
• False or misleading representations (e.g., lying about who they are, the details of the debt, etc.)
• Unfair practices (e.g., threatening to deposit a postdated check early, to repossess property without the right or intent to, improperly trying to garnish your wages, calling collect so that you incur unnecessary charges, etc.)
• Improper or incomplete disclosures (e.g., failing to notify the consumer of the right to dispute the debt, hiding the creditor's name, failing to state that the debt must be disputed within thirty days or else it is presumed valid, etc.)
• Improper payment processing (e.g., failing to apply a payment as instructed, applying a payment to a disputed debt, etc.)

Common Defenses a Debt Collector Might Raise in a Lawsuit

Debt collection agencies are sophisticated, and most are not stupid. They know they might get sued, so they have practices designed to minimize exposure. These include robust compliance management systems and high standards for preserving records of debts they have purchased.

If you sue a debt collector or debt collection agency, expect that they might try to avoid liability by arguing the following debt collection defenses:

• The consumer cannot prove a violation of the statute in your debt collection lawsuit, as they have the burden of proof
• The debt collector made a bona fide error
• The debt collector has implemented procedures reasonably adopted to avoid errors (e.g., compliance training, audits, document disposal procedures, and regular software updates and training)
• The consumer brought the claim too late (you only have a year from the date of the violation to bring your lawsuit)

If You Sue You May Be Able to Recover Damages

If a debt collector or a debt collection agency violates this law, you may be entitled to recover monetary damages. These include your actual damages, statutory damages up to $1,000, and if you win, costs and reasonable attorney fees. You cannot get punitive damages, as those are damages designed to punish a wrongdoer.

If you lose, you may have to pay the debt collector's costs and attorney fees.

To Sue or Not To Sue: What Should You Do?

If you are being harassed by a debt collector, there are steps you should take. Maintain records of all contacts, whether they take place at home or at work. Record calls. Save any voice mails. Keep all texts and emails. You want to have proof in case you do decide to speak with a lawyer.

Even if you decide not to sue, you could still report the debt collector to your state attorney general. The attorney general's office may choose to investigate your complaint.

The Law Does Change

Suing a debt collector or a debt collection agency can get complicated, even more so since the federal Consumer Financial Protection Bureau (CFPB) issued a rule, effective November 30, 2021, that changed the landscape.

The rule is long but, in general, it does the following:

• Limits debt collectors to seven attempts to reach you by phone per week
• If a debt collector does reach you by phone, they must wait a week before calling you again
• Clarifies how debt collectors can communicate by voice mail, email, and text messages
• Lets you specify how you want to be contacted (phone, text, or email)
• Provides a non-exhaustive list of factors for a court to consider when determining if a debt collector can prove it complied with the law

The federal law also clarifies:

• Consumer protection requirements for certain disclosures
• How debt collectors can communicate by voice mail, email, and text messages
• That you need not use magic words when telling a debt collector to leave you alone

This process is complicated, so consider getting the help of a lawyer. They can give you legal advice and either get you a debt settlement or represent you in court if you want them to. Remember that any claim under the statute must be brought within one year of the alleged violation, so act sooner rather than later.