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Guide To Debt Collection

Debt Collection FAQs: A Guide for Consumers

If you end up behind on your payments on a bill, or one of your creditor’s mistakenly believes you are, you may soon come in contact with a debt collector. If this happens to you, you need to know that you are protected by the Fair Debt Collection Practices Act (FDCPA), enforced by the Federal Trade Commission (FTC), against abuse, deception, or any other unfair methods of debt collection.

A debt collector can be an agency, lawyer, or independent debt collection company – and the FDCPA provides you with certain rights when dealing with all of them.

Below are some frequently asked questions about the FDCPA, and how it can affect you.

What kinds of debts are included in the Act?

All personal, family, and household debts are covered. This includes credit cards, mortgages, medical bills and automobile loans. Debts you owe from running a business are not however included in the act.

Can a debt collector contact me any time or any place, and how can I stop them from contacting me?

Collectors can only call during appropriate hours of the day. This means no calls after 9pm or before 8am, unless you tell them it’s OK. They can also not call you at work if you make it clear you are not allowed to accept calls there.

It is often beneficial to talk to a collector at least once, to see if the situation can be resolved, even if you can’t repay the debt immediately. If you then decide you want no further contact from the collector, here is how to go about it:

Send by certified mail, a letter informing them that you want no further contact. Pay for a return receipt to ensure they receive it, and keep a copy for your records. After receiving your letter, they may only contact you further to tell you there will be no more contact, or to inform you of further action they are taking, such as a lawsuit. Sending this letter does not clear the debt, but will stop them from contacting you.

Is it OK for a collector to contact other people about my debt?

If you have a lawyer representing you in matters regarding the debt, the collector must contact them. If you aren’t being represented by legal counsel, the collector may only contact other acquaintances of yours in order to obtain your contact information and address. They are generally not allowed to contact such people more than once. They are NOT allowed to discuss your debt with anyone except you, your spouse and your attorney.

What must the debt collector inform me of regarding my debt?

Within 5 days of first contact, a collector must give you a written “validation notice” stating the amount of money owed, and who the creditor is. It must also include how you would go about showing you don’t owe the money, if that is the case.

What if I don’t think I owe the money? Can they keep contacting me?

Not if you send a written letter stating that you don’t owe the debt within 30 days of receiving the validation notice. However, if they provide you with written proof of the debt, they can reestablish contact.

What is a debt collector not allowed to do?

Harassment. Collectors cannot abuse or harass you, your friends or family regarding the debt. They may not:

  • Threaten physical harm or violence;
  • Make public your name as someone who won’t pay their debt;
  • Verbally abuse you using inappropriate language.

False statements. Debt collectors must tell the truth during the collection process. They may not

  • Misrepresent themselves as attorneys or employees of the government;
  • Imply you are a criminal;
  • Misrepresent themselves as employees of a credit agency;
  • Lie about the amount of the debt;
  • Lie about whether the papers they send you are/aren’t legal forms;
  • Imply you will be arrested for lack of payment;
  • Falsely threaten garnishment of wages;
  • Falsely threaten legal action not allowed by law;
  • Provide false information regarding the debt to anyone;
  • Provide fake court or government documents;
  • Provide a fake company name.

Unfair practices. Debt collectors are also prohibited from several other methods of collecting a debt. They may not:

  • Collect any interest or fees on the debt that weren’t in the original contract that created the debt;
  • deposit a post-dated check early;
  • falsely threaten to seize your property
  • use postcards as a method of contact.

Can I decide to which debt a payment will count towards?

Absolutely. If a collector is collecting on multiple debts, they can only apply payments from you to the debt of your choice.

Can a debt collector garnish my bank account or my wages?

Only if they have won a judgment against you, and this will only happen if they have successfully sued you to collect the debt. If this happens, the judgment will state how much can be garnished from your wages, and a third party, such as your bank, will turn over the funds directly.

If you get a summons for a lawsuit – don’t ignore it. This is your only opportunity to prevent possible wage garnishment.

Can my federal benefits be garnished?

The following federal benefits cannot be garnished:

  • Social Security Benefits
  • Supplemental Security Income (SSI) Benefits
  • Veterans’ Benefits
  • Civil Service and Federal Retirement and Disability Benefits
  • Service Members’ Pay
  • Military Annuities and Survivors’ Benefits
  • Student Assistance
  • Railroad Retirement Benefits
  • Merchant Seamen Wages
  • Longshoremen’s and Harbor Workers’ Death and Disability Benefits
  • Foreign Service Retirement and Disability Benefits
  • Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Outside the U.S.
  • Federal Emergency Management Agency Federal Disaster Assistance

In certain cases, some federal benefits may be garnished if you owe taxes, child support, alimony or have student loan debt.

What should I do if I believe a debt collector is violating the law?

If a debt collector crosses the legal line, you can sue them within one year of the violating act. If successful, the collector will owe you for damages caused by their illegal methods, or up to $1,000 even if you can’t prove any direct damages. Costs associated with the lawsuit can also be covered. However, even if they violate the law, this does not erase any debt you might owe.

What should I do if a debt collector sues me?

Do not ignore it. Respond either personally or hire a lawyer to respond for you in a timely manner.

Where do I report a debt collector for an violating the law?

You should report any issues with debt collectors to both the FTC (www.ftc.gov) and your state’s Attorney General’s office (www.naag.org). They will be able to help you determine your individual rights specific to your state.

For More Information

More information can be found at www.ftc.gov/credit and www.mymoney.gov, both official government sources for financial education.

To file an official complaint with the FTC, or get more information, visit ftc.gov or call 1-877-FTC-HELP (1-877-382-4357).