Dealing With Debt Collectors: Know Your Rights

Getting calls or letters from a debt collector can be stressful, especially if you’re already struggling financially. But you have important rights under federal law, and knowing them can help you respond calmly, protect yourself from abusive practices and make good decisions about how to handle the debt.

Who the law covers

The Fair Debt Collection Practices Act, or FDCPA, is the main federal law governing debt collection. It applies to third-party debt collectors, collection agencies and debt buyers that collect personal, family and household debts, such as credit cards, medical bills, auto loans, student loans and mortgages.

The law generally doesn’t cover the original creditor collecting its own debt, though some state laws do. The Consumer Financial Protection Bureau’s Regulation F, which implements the FDCPA, adds more detailed rules about how collectors can communicate with you, including through email, text messages and social media.

Verify the debt first

Before you pay anything, make sure the debt is actually yours and the amount is correct. Debts are often sold and resold, and errors can creep in along the way. Identity theft can also result in collection attempts for debts you never owed.

Collectors are generally required to give you a validation notice, either in their first communication or shortly after. It includes information about the debt, such as the amount owed, the name of the creditor and how to dispute it.

If you dispute the debt in writing within the time stated in the notice, typically 30 days, the collector generally must pause collection until it provides verification. Send your dispute by a method that gives you proof, such as certified mail, and keep copies of everything.

What collectors can’t do

Debt collectors aren’t allowed to harass, threaten or use abusive or profane language. They can’t threaten violence or arrest, and they can’t threaten actions they don’t intend to take or legally can’t take.

They generally can’t call at unusual or inconvenient times, typically before 8 a.m. or after 9 p.m. your local time, unless you agree. They also can’t contact you at work if they know your employer prohibits it.

Collectors can’t lie about the amount you owe or falsely claim to be attorneys or government officials. And they generally can’t discuss your debt with most other people, such as your employer, neighbors or relatives, though they may contact others to find your address or phone number.

How to stop the contact

You have the right to tell a collector in writing to stop contacting you. Once they receive your letter, they generally must stop, except to confirm that they’ll stop or to notify you of specific actions, such as filing a lawsuit.

Keep in mind that stopping contact doesn’t erase the debt. The collector or creditor may still pursue other remedies, including legal action, and the debt may still appear on your credit report.

You can also ask a collector to contact you only in certain ways, such as by mail, or not at certain times or places.

Understand old debts

Each state has a statute of limitations for lawsuits over debts, typically a few years, though it varies by state and type of debt. Once that period passes, the debt is considered time-barred, and collectors generally can’t sue you to collect it, though they may still ask you to pay.

Be careful with old debts. In some states, making even a small payment or acknowledging the debt in writing may restart the clock, giving the collector a new opportunity to sue. Check your state’s rules before paying on an old debt.

The statute of limitations for lawsuits is separate from how long a debt can appear on your credit report. Most negative information, including collection accounts, can remain for up to seven years.

Never ignore a lawsuit

If a collector sues you, respond by the deadline on the court summons. If you don’t respond, the court may enter a default judgment against you, which can allow the creditor to garnish your wages or freeze your bank account, depending on state law. Even if you believe you don’t owe the debt, show up and present your case. Legal aid organizations may offer free help if you can’t afford a lawyer.

Negotiating a payment

If the debt is valid and you want to resolve it, you may be able to negotiate a payment plan or a reduced lump-sum settlement. Get any agreement in writing before you pay, and avoid giving collectors direct access to your bank account. Paying by a method that leaves a record, such as a money order or a one-time card payment, gives you more control.

Report problems

If a collector violates your rights, you can submit a complaint to the Consumer Financial Protection Bureau at consumerfinance.gov, to the Federal Trade Commission or to your state attorney general. You may also have the right to sue a collector that breaks the law, and in some cases recover damages and attorney’s fees.

Dealing with collectors is never pleasant, but you don’t have to feel powerless. Verify the debt, know your rights and respond in writing, and you’ll be in a much stronger position to resolve it on fair terms.