Got a call from a debt collector? There are several national and state laws in place to protect consumers and ensure debt collection companies are acting fairly. Knowing what your debt collector can and can’t do can help you spot when you’re being harassed and avoid common scams.
The main law that protects consumers is the Fair Debt Collection Practices Act (FDCPA), though many states have other laws to add additional protections. If you think a debt collector is violating the FDCPA, file a complaint against it with the Federal Trade Commission (FTC).
What is the FDCPA?
The FDCPA is a federal law that prevents debt collectors from harassing or misleading consumers. It covers debt collection for mortgages, credit cards, personal loans, medical debt and other types of debt for personal use.
How does it protect me?
Quite a few protections are allotted by FDCPA.
1. Limits when you can be contacted
Debt collectors are only allowed to contact you between 8 a.m. and 9 p.m.
2. Limits where you can be contacted
Debt collectors are prohibited from calling you at work if you asked them not to.
3. Restricts who debt collectors can contact
Debt collectors are only allowed to talk to you or your attorney unless they have permission from a court. Generally, they must communicate with your attorney if you have legal representation.
4. Protects against harassment
Debt collectors can’t use obscene language, threaten violence or repeatedly call you for no reason.
5. Allows you to cut off most contact
If you send a written letter to a debt collector asking it to stop contacting you, it can only reach out to say there will be no more contact or say that it’s taking legal action against you.
6. Prevents misrepresentation
Debt collectors aren’t allowed to claim they’re an attorney, imply they’re affiliated with a government agency or credit bureau, or tell you you’ll have your wages garnished or go to jail. It also doesn’t allow them to operate under another business’s name or otherwise falsely represent themselves.
7. Requires a written notice
If it doesn’t provide details about your debt right away, a debt collector must send a written notice within five days of contacting you. It must include:
How much you owe.
The original creditor’s name.
An explanation that you have 30 days to dispute the validity of the debt.
If you don’t think it’s valid, the debt collector is required to send you a judgment or other verification of your debt. It’s not allowed to communicate with you by postcard.
8. Limits how much it can collect
Debt collectors aren’t allowed to collect more than the amount you owe according to your original contract. It also can’t threaten to collect any property that you haven’t put up as collateral.
9. Regulates how payments with postdated checks work
Want to pay off your debt with a check postdated more than five days in advance? Debt collectors are required to give written notice that they intend to deposit a postdated check between three and 10 business days before they make the deposit.
They also aren’t allowed to deposit or threaten to deposit a postdated check early.
10. Limits where you can be sued
A debt collector is only allowed to sue you in the judicial district where you signed the contract or where you live.
If it’s suing to collect collateral you put up to back a loan, it can only file a lawsuit in the judicial district where that property is located.
Before you sign up with a debt relief company
Debt relief companies typically charge a percentage of a customer’s debt or a monthly program fee for their services. And not all companies are transparent about these costs or drawbacks that can negatively affect your credit score. Depending on the company you work with, you might pay other fees for third-party settlement services or setting up new accounts, which can leave you in a worse situation than when you signed up.
Consider alternatives before signing up with a debt relief company:
Payment extensions. Companies you owe may be willing to extend your payment due date or put you on a longer payment plan if you ask.
Nonprofit credit counseling. Look for free debt-management help from nonprofit organizations like the National Foundation for Credit Counseling.
Debt settlement. If you can manage to pay a portion of the bill, offer the collection agency a one-time payment as a settlement. Collection agencies are often willing to accept a lower payment on your debt to close the account.
Debt collector laws by state
While each state must follow the FDCPA, most have additional laws that regulate how debt collectors interact with consumers. Use the table below to learn how your state protects you.
I feel like my rights were violated. What can I do?
If you believe a debt collector has violated the law, the next step is to file a complaint. If it’s a FDCPA violation, you can file a complaint with the FTC. Otherwise, you can file a complaint with your state attorney general’s office.
How to file a complaint with the FTC
You can file a complaint with the FTC on its website or by calling 877-382-4357. Here’s how to get started online:
Select Credit and debt from the list of categories.
Select Debt.
Complete the questions with information about yourself and the debt collector.
The FTC shares complaints with law enforcement and contacts the business in an attempt to get the issue resolved. If you think you have a real case for an FDCPA violation, you can also sue the debt collector for damages like lost income. Even without damages, you could be awarded up to $1,000 to cover attorney fees and other costs associated with the case.
If you join a class-action lawsuit with other consumers, you could recover money for damages up to $500,000 or 1% of the debt collector’s net worth — whichever is less.
How to file a complaint with your state’s attorney general
Each state’s attorney general office has its own process for filing a complaint. You can typically get more information about the complaint procedure by visiting its website. Often, you can file a complaint online or over the phone.
Debt relief companies typically charge a percentage of a customer’s debt or a monthly program fee for their services. And not all companies are transparent about these costs or drawbacks that can negatively affect your credit score. Depending on the company you work with, you might pay other fees for third-party settlement services or setting up new accounts, which can leave you in a worse situation than when you signed up.
Consider alternatives before signing up with a debt relief company:
Payment extensions. Companies you owe may be willing to extend your payment due date or put you on a longer payment plan if you ask.
Nonprofit credit counseling. Look for free debt-management help from nonprofit organizations like the National Foundation for Credit Counseling.
Debt settlement. If you can manage to pay a portion of the bill, offer the collection agency a one-time payment as a settlement. Collection agencies are often willing to accept a lower payment on your debt to close the account.
Bottom line
Federal and state debt collection regulations are meant to ensure fair measures are taken for both the borrower and the collector. Familiarizing yourself with these laws can not only help you navigate the debt collection process but can also help you avoid scams.
To get a few more details on debt collection laws, take a look at these answers to common questions.
Does the FDCPA cover business debt?
No, the FDCPA only applies to individuals. There currently aren’t any federal laws governing the commercial debt collection industry. Instead, you’ll need to look into your state’s regulations.
My creditors are harassing me for repayment. Is this a FDCPA violation?
No, the FDCPA only applies to debt collection companies, not your original creditors. However, it might be in violation of one of your state’s debt protection laws. Check with your state’s attorney general office for more information on how you’re protected.
How long is the statute of limitations on debt collection?
It depends on your state, but typically you have between four and six years before a lender or debt collector is required to stop requesting repayment.
Anna Serio is a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY.
If you have debt collectors contacting you about overdue accounts, learn what rights and options you have to work through the process in a suitable way for you.
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