Debt Collection Laws: Know Your Rights
Millions of Americans struggling with unemployment or pay reductions, large medical bills, and other financial challenges may experience even more stress if they fall behind on their and debt collectors start calling them.
The Federal Trade Commission reports it receives more complaints about debt collectors than about any other single industry.
You do have rights when you're dealing with debt collectors, though, and it is important to understand how debt collection laws can protect you against unfair collection tactics. There is a strong federal debt collection law called the federal Fair Debt Collection Practices Act (FDCPA) which offers you the following protections, among others:
Harassment by Debt Collectors is Against the Law.
Collectors can't threaten violence; use profanity, or racial or ethnic slurs when they talk with you; call you repeatedly to annoy you; or threaten to take legal action they can't legally take. Whenever you talk with a debt collector, take notes of your discussion, and keep them in a file with copies of any letters you receive from them. You can use this free worksheet as a guide.
You Can Stop Debt Collectors from Contacting You at Work.
If you tell a debt collector that your employer does not allow you to take collection calls at work, he must stop contacting you there immediately.
Your Debt is a Private Matter.
Other than a co-signer, your spouse, or your attorney, debt collectors cannot discuss your debt with third parties. That means they can't tell your neighbors or coworkers about your debt. While they can contact others to try to locate you (without disclosing they are collecting a debt), once they've found you, those outside contacts must stop.
In addition to the federal law, states have their own laws related to debts and debt collection. For example:
- State debt collection laws put a time limit on collecting debts. Each state has a "statute of limitations" that essentially determines how long a debt collector can sue to collect. This time period is usually between 4 and 6 years from the time you stop paying on the debt. If a collection agency contacts you about a debt that is too old, you should write to them and ask them not to contact you again (see below). Keep in mind some debts, such as unpaid taxes, child support, or student loans, can often be collected indefinitely.
- You can tell a debt collector not to contact you again by sending it a "cease and desist letter." This is your right under the FDCPA After receiving your letter, the only reason a collector can contact you is to acknowledge your letter, or to let you know about legal action it will be taking against you. Keep in mind that sending a cease and desist letter may leave the collection agency with no other option than to sue you to collect. So you may want to use this strategy only if you don't believe you owe the debt, or if the debt is too old.
- If a debt collector breaks the law, talk with a consumer law attorney. If you successfully sue a debt collector you may be entitled to damages, as well as court costs and attorney fees. Working America members are eligible for a free 30-minute consultation with an attorney and a discount on subsequent fees through the Union Plus Legal Service.