Home Financial Education Understand What Debt Collectors Can and Cannot Do

Understand What Debt Collectors Can and Cannot Do

Published January 2021 by Jordan Semprevivo

Disclaimer: The following is for information purposes only and should not be viewed as legal advice and should not be relied upon without consulting an attorney.

It is legal for creditors to employ debt collectors to help them collect money that is due to them. However, when attempting to recover money from you, some debt collectors may resort to unfair, deceptive, or abusive practices in an effort to intimidate you.

You should be aware that the law grants you widespread and well-defined protections against abusive debt collection practices. 

According to the Consumer Financial Protection Bureau, the laws that limit what debt collectors can do and say are the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), several federal laws that apply to creditors as well as debt collectors, and a patchwork of state laws. 

The Fair Debt Collection Practices Act is the federal law governing debt collection practices that places limitations on what debt collectors can do and say. 

The FDCPA covers collection efforts on several debt-types:  

  • Mortgages 
  • Credit card debt 
  • Student loans 
  • Auto loans  
  • Medical debt 
  • Household and personal loans 

The law does not cover business debt, and it does not limit the collection efforts of creditors to whom you are directly indebted. Its provisions only cover debt collection agencies, lawyers, and debt buyers who have made debt collection a business. 

The Fair Credit Reporting Act governs how information about debt collection affects your credit report. 

On the state level, there are several Unfair and Deceptive Acts and Practices laws that may or may not include your original creditor under their limitations. 

According to the mentioned laws, here is what your debt collector can and cannot do. 

Debt Collectors Cannot Contact You at Any Time and Any Place They Want

Debt collectors cannot call you whenever they please. According to the Consumer Information Page of the Federal Trade Commission, collectors can only call debtors between 8 AM and 9 PM. This provision leaves no room for harassment through incessant phone calls at inopportune times. Collectors cannot call you at work if you make it clear to them that you cannot take calls in the workplace. 

Debt collectors can contact you through text messages, letters, and emails. 

Debt Collectors Cannot Contact Other People about Your Debt

Debt collectors can only contact you and your spouse about your debt. They can request limited information from others about your address, workplace, and phone number once. 

Tip: You can stop debt collectors from contacting you by sending them a letter asking them to cease contact. Use certified mail and the return “receipt option” so you can later certify the collector’s receipt of your letter. Keep a copy of the letter for yourself as well. 

Debt Collectors Cannot Harass You

By the FDCPA’s definition, this means that they cannot: 

  • Use or threaten to use violence or physical harm
  • Use incessant phone calls to pressure you 
  • Use foul language to intimidate you 

Debt Collectors Cannot Mislead You

The law forbids debt collection agencies to masquerade as government officials, threaten legal action if they do not plan to actually take such action, or threaten consequences such as arrest. 

Debt Collectors Cannot Take Unfair Liberties with Your Debt

Debt collectors cannot charge extra interest on what you owe. Also, they cannot seize or threaten to seize your property unless it is legally allowed. 

Debt Collectors Have to Send You a “Validation Notice”

The notice has to include the following information:

  • The identity of the creditor to whom you owe money 
  • The amount you owe 
  • The procedure you need to follow if you think the debt is not yours 

Tip: If you believe the debt is not yours, send a letter to the collector specifying the facts. You can also request a verification of the debt. If you send such notice within 30 days of receiving the validation notice, you compel the collector to deliver written verification of the debt before the collector can resume collection efforts. 

Debt Collectors Cannot Force You to Apply Your Payments to a Debt of Their Preference

You retain full control over which debt you want to pay off first.

Debt Collectors Can Sue You

If debt collectors initiate legal action, be sure to respond so that you can retain your rights regarding the repayment of your debt.

Debt Collectors Can Garnish Your Wages

To do so, debt collectors must obtain a legal court order. Always respond to lawsuits to preserve your right to contest such orders. 

Debt Collectors Can Contact You about Old Debt That is Past Statute of Limitations

If your debt is past the statute of limitations, it means that debt collectors cannot sue you successfully over it. Do respond to any such lawsuits, however, to make sure that you do not allow the collector to obtain a court order to garnish your wages. 

Tip: Be aware that time-barred debt may still affect your credit report. 

If you want to get rid of time-barred debt, you may be able to convince your creditors to settle for less. Debt settlement is one way to try to obtain debt relief, even on debts that are not time-barred. Through debt settlement, you may be able to eliminate debt effectively. 

If you are the victim of debt collection abuse, log a complaint with the Federal Trade Commission, the Consumer Financial Services Bureau, or the office of the attorney general in your state. 

If you choose debt settlement as your path to debt relief, you may shave a considerable amount off your principal balance owed. Get a free savings estimate to see how much you can save. To find out more about your debt relief options, contact a ClearOne Advantage Certified Debt Specialist at 866-481-1597. 

Get a free savings estimate 

Topics: Financial Education