Debt Collection Laws - They Protect You
Get help with scams and harassment They happen in the world of debt
If you or a loved one are in debt, you need to understand basic debt collection laws and how they can impact you. Debt can be a serious elderly issue, and the elderly are frequently harassed. Especially if they own property. These laws were established by the U.S. federal government to protect the consumer, and are called the Fair Debt Collection Practices Act
(FDCPA). Each state
also has its individual debt collection laws; for instance, regarding the statute of limitation, serving legal papers, written or oral contracts, and bank and wage garnishments. It is important that you know and understand your rights under debt collection laws, and what a collector can and cannot do to you.
During my years in the field of collections, I did come across those who violated the law. But the majority of debt collectors and collection attorneys are honest, are very familiar with debt collection laws, and follow them to the T. But the violators certainly are out there.
NOTE: We are not attorneys, and this information is not to be construed as giving legal advice. It is merely informational assistance. You should always seek legal advice from an attorney before making any decisions about these matters or if you have questions about debt collection laws. Please refer to our Disclaimer statement for further details. There are professional organizations that can assist you.
Debt Collection Law
Here are just some of the basic debt collection laws you should know about (and these can change, so consulting a professional is important).
- One of the most important debt collection laws: A debt collector must identify themselves as such. This is called the “Mini-Miranda Warning,” and is worded typically like this:
“This is an attempt to collect a debt.
Any information obtained will be used for that purpose.”
- Every communication from a debt collector must contain this warning.
- If you are contacted by a debt collector, immediately set up a special file and make notations of all phone calls. You can also record them. Keep all correspondence. Make sure you understand what they can and cannot do under debt collection laws.
- When collectors first contact you by letter, they must represent themselves under their correct name and full address.
- Debt collection laws require that they truthfully represent the amount you owe, including interest and fees.
- They cannot collect for extra fees, collection “costs,” or attorneys fees that are not allowed by law or by the original contract or agreement.
- They must name the original creditor to whom the debt was owed, such as a credit card company or medical facility.
- They must give you notice that you have 30 days in which to dispute the debt. If you do not, the debt is then considered valid.
- If you send them a letter within 30 days to dispute the debt or ask for verification, they must send you verification by mail. Make sure you always include your full name and account number on all correspondence with them.
- You may also tell them in the same letter to cease communicating with you. This is called a “cease letter.” (Just sending a letter asking for verification is not the same as a dispute and cease letter; they may still communicate with you).
- If you clearly instruct them to cease communicating with you, they must stop all collection phone calls and letters until they have proven that you owe the debt. They must send the proof of debt to you.
- If they contact you anyway after you’ve sent your cease letter, they are violating the FDCPA debt collection laws, and you can file suit against them.
- However, they can still contact you to let you know they have stopped collecting, or to notify you of legal action they are taking against you.
- If you hire an attorney and notify the collector, agency, etc., they must immediately cease communicating directly with you, and can then only do so with your attorney.
- Keep copies of all letters. You can send your letter to them by certified mail to provide proof. You may also send a copy of all letters to the original creditor, but only if they still own the account.
- Note: Your debt may have been bought out by a debt buyer, who now legally owns your debt – not the original creditor.
- If collectors contact you by phone, you have a right to insist on all information in writing as well.
- They cannot repeatedly phone you in a harassing or annoying manner, nor call late at night. The law considers unreasonable hours to be between 9:00 p.m. and 8:00 a.m.
- They should not call you more than 3 times per week.
- They cannot call you at work if your employer does not allow such phone calls. They cannot threaten you with violence or harm, nor intimidate or embarrass you.
- They cannot swear or use obscene language.
- They cannot discuss your debt account with any other person without your explicit permission, including employers, family, friends and neighbors.
- Note: If you have a judgment against you, the creditor, collection attorney, etc., can communicate with your employer regarding garnishment.
- They cannot represent themselves as an attorney unless they are.
- They cannot represent that their paperwork is a legal document unless it is.
- They cannot represent themselves as the government.
- They cannot accuse you of committing a crime – debt is not a punishable crime.
- They cannot say that you will be arrested unless you pay – this is an illegal threat and harassment.
- They cannot threaten you with jail – you cannot go to jail for a debt.
- They cannot report false information to a credit bureau.
- They cannot threaten to garnish or “attach” your bank account or wages, unless they have legal right to do so, such as a judgment. These are illegal empty threats and scare tactics.
- They cannot threaten to take your property unless they have the legal right to do so.
- They cannot threaten to file a law suit against you unless they can legally do so, and intend to truly carry out legal action. Again, illegal scare tactics.
- They cannot state that they will send your account to their “legal department” if they do not have one.
- They cannot pretend they are with a large collection agency if they are not.
- Unless they are the actual creditor or an attorney, they cannot say they will recommend that you be sued. Collection agencies are not allowed to give legal advice. Such a recommendation would be giving legal advice to the creditor.
- Unless the collection person is an attorney, no collector is allowed to give any advice to you that can be interpreted as legal advice.
- All legal paperwork must have been reviewed by an attorney before sending.
- Their legal correspondence should be hand-signed by the attorney so it is clear that it has been reviewed.
- They cannot sue you or threaten to do so if your debt is past the statute of limitations.
- They cannot garnish or seize any funds or property that are legally exempt.
- If they do sue you, it must be in a court within the jurisdiction in which you live.
- If you do make a payment by post-dated check, they must not cash or deposit the check before that date.
- Also, they must send you a reminder notice 3 to 10 business days prior to depositing the post-dated check, that they will be doing so.
- Before you pay or agree to pay anything, make sure you know the statute of limitations for your type of debt, in your state. If your debt is “post-statute,” you are not required to pay.
- If you have filed bankruptcy, they must immediately cease all collection activities -- if you remembered to include that particular debt on your list!
- Two different agencies or offices cannot collect on the same debt.
- The FDCPA has what is called the "least sophisticated consumer standard." That means even if you may be sophisticated enough to see through their tactics, someone else may not be and may believe their threats or tactics.
The above list includes just some of the debt collections laws. You do not need an attorney to just make a collector stop contacting you. If a collector, collection agency, or attorney violates the FDCPA law, you are entitled to damages for these violations – for this you should have an attorney.
You can bring a law suit against them – but make sure you hire a good consumer protection lawyer who knows what he/she is doing. I have personally seen many attempts to bring action against collectors, debt buyers or creditors by lawyers who did not fully understand the details of collection law. They accused the collectors of violations, but they were technically wrong. So they lost. And the “debtor” still had to pay those attorney fees. Collectors have also been known to wiggle out by stating it was a clerical error or innocent human error.
I can tell you from working in different capacities for years within the collection business, that errors are definitely made. Debt collection laws are broken. Especially since debt is bought and sold amongst creditors, brokers, and debt buyers. When you pay off any debt, keep the final statement proving the debt is paid in full, with zero balance. And keep it for years. Creditors and collection agencies do sometimes keep sloppy records. Your paid-off debt may be erroneously resurrected and you may have to prove you paid it. I have seen it happen many times.
Also see our articles on Paying Off Debt, and Bad Debt Loan.
The Federal Trade Commission of the U.S. government has issued an excellent report to help consumers understand Debt Collection FAQs.
Click here to link to the report.
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