What Debt Collectors Can and Cannot Do

Dealing with a debt collector can be a difficult and upsetting experience. The main objective of collectors is to collect the debt because they keep a percentage of it. In the past, unscrupulous debt collectors threatened borrowers, called at all hours of the day and night, posed as someone else, and contacted the debtor’s friends and family, hoping that harassment constant would lead to the payment of the debt. Under federal law, these practices are now illegal, although that doesn’t mean they never happen.

Key points to remember

  • The federal Fair Debt Collection Practices Act protects consumers from abusive treatment by third-party debt collectors.
  • Some states also have their own, even more restrictive laws.
  • If a debt collector breaks the rules, you can report it and even sue for damages.

What debt collectors are not allowed to do

In the United States, the Fair Debt Collection Practices Act (FDCPA) details specific practices that are prohibited in third-party debt collection efforts. (This does not apply to a creditor’s in-house debt collectors.) Many states have their own debt collection regulations, which can further restrict debt collectors.

The FDCPA limits the means by which collectors can contact debtors. They can only call between 8 a.m. and 9 p.m., not at times that might inconvenience you, the consumer, unless you have given them permission to call you at those times. They cannot call repeatedly in a short period of time to harass you. Collectors cannot threaten that you will go to jail or that they will make the debts public. They also cannot call your employer about your debt, unless it is for unpaid child support. If you tell collectors not to call you again, they are not allowed to do so, but their collecting efforts may continue in other ways.

Collection agents cannot imply that they can garnish your salary or take other personal property to settle the debt. For that to happen they would have to sue you in court and get a court judgement. The federal government is an exception, however, and it is allowed to seize without such a judgment.

If you provided a collection agent postdated checks to settle the debt, they cannot try to cash the checks sooner, even though the banks may allow them to do so. They also cannot charge you any fees, penalties or interest that were not agreed upon in the original contract with the creditor.

Protection of your personal information

To guard against identity theft, experts advise never giving anyone, including a debt collector, personal or financial information over the phone. Legitimate debt collectors will not ask you for bank account or credit card numbers.

Since scammers often pose as debt collectors, always confirm with the company to whom you owe the money that they have remitted the collections on your account to that debt collector. Never pay a person or company whose legitimacy you have not verified.

Report a collection agent

If you are sued by a debt collector who violates FDCPA rules, you can report it to your state attorney general’s office, the Federal Trade Commission, and the Consumer Financial Protection Bureau.

You may also be able to sue the debt collector if their actions violated the law. As the Federal Trade Commission explains, “You can sue a collector in state or federal court within one year from the date the law was violated. You can sue for damages, such as a lost wages and medical expenses. If you can’t prove damages, you can still receive up to $1,000, plus reimbursement for attorney fees and court costs.”

The essential

If you need to deal with a collection agent for unpaid bills or accounts, know that you have legal rights. Always be sure to protect your financial information and don’t assume the debt collector is legitimate until you verify this with the creditor in question. If the debt collector breaks the rules, you can report them to state and federal regulators and possibly sue for damages.

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