Debt Collection Laws

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Debt collection laws prohibit collectors from engaging in abusive behavior, and help open up the lines of communication between debtors and collection agencies. These laws require full disclosure between the two parties and dictate the actions debtors can take in a collection situation.

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What is Debt Collection?

Debt collection refers to the action taken by a creditor or collection agency against a consumer who is obligated to repay a debt. Debts may be the result of miscellaneous charges and service fees for:

  • An extension of credit
  • Bounced checks
  • Medical bills
  • Utility bills
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Overview of Debt Collection Laws

The Fair Debt Collections Practices Act (FDCPA) is one of the most well known debt collection laws on the books. This federal law dictates which debt collection practices are legal and illegal.

Collection agency actions that are prohibited by the FDCPA and other debt collection laws include:

  • Harassment/Abuse – Collection agencies and their representatives are strictly forbidden to use foul, obscene, or abusive language. Threats of violence, repeated phone calls, and public harassment are also strictly forbidden.
  • Misleading Representations – Debt collection laws require full disclosure and prohibit false claims and representations. For example, a collection agency can't lie and claim to be associated with an attorney, law enforcement agency, or credit bureau.
  • Third Party Communication – Collection agencies are allowed to contact your attorney, credit reporting agencies, and the original creditor, but they are not allowed to contact your employer or other third parties to discuss your debt or the amount of money that you owe. However, there is one exception to this rule. Collection agencies can contact any third party for the sole purpose of determining your whereabouts.
  • Improper Debtor Communications – Debt collection laws are very specific when it comes to communications with a debtor. For example, collection agencies are not allowed to contact you before 8 a.m. and after 9 p.m. They are also prohibited from calling you at work or any other location that you deem inconvenient.
  • Other Unfair Practices – If you fail to pay a debt by the agreed upon due date, bill collectors cannot implement unfair practices in their attempt to collect the debt. Specifically, they cannot add on outrageous interest rates and fees, threaten to seize property they are not entitled to, or claim to pursue criminal prosecution. Collection agencies are also prohibited from ignoring debt disputes and communicating false credit information.
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Disputing Debts

By law, collection agencies are required to provide you with detailed information within five days of notifying you about the debt. This information includes, but is not limited to:

  • The name of the original creditor
  • The total amount owed
  • Your right to dispute the debt

Debt collection laws give you thirty days to dispute a debt. If you do not dispute the debt, the collection agency can assume the debt is valid and pursue further collection efforts.

Disputing a debt is extremely important if you feel like you do not owe the amount you are being asked to pay. It is also essential that you dispute the debt in writing and keep copies of any correspondence that you send and receive.

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A Final Note on Debt Collection Laws

Debt collection laws are in place to protect you. If you believe a debt collector has violated the law, you should document proof of the violation and complain to the appropriate state agency. You can also contact the Federal Trade Commission and the original creditor with your complaint.

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Comments

This may not be much of a comment as it is a question. I have been on the computer now for hours trying to find information as too how a credit garnishment firm can get away with not giving any sort of payment statement. Ive been getting over 500 dollers a month taken from my checks and the firm that is garnishing does not send out any statments to what they take and what is owed. To me this doesn't seem right. This firm can continue to pull money from my check and I will never know when its paid. Is this lawfull?

-- Contributed by: Richard Alden

LaTonya,

A creditor, or their representative such as a collection agency, can continue to present a check for payment for what the law calls a "reasonable time." You might want to consult a lawyer to determine if ninety days is considered a "reasonable time." As a general rule, you should 1) have funds in the account sufficient to cover outstanding checks and 2) stop payment on any checks that you cannot cover with your current checking account balance.

Thank you for your question.

-- Contributed by: SusanWeber

I wrote a check to a chiropractor in mid May. The check was first posted date due to me not having the funds a that time. The put the check against my account twice. Well on 8/28 the check was put against my account a third time by a collection agency and the money was withdrawn. I am wondering if they had the right to put this check a third time against my account without permission or without properly informing me. I received several phone calls but nothing in writing. I only spoke with them once and at that time informed them that i did not have the money and did not know when i would have the funds. Do I have any rights legally in this situation.

-- Contributed by: LaTonya
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