Dealing with debt collectors can be nerve-racking, especially if you fell behind on your bills because you’re struggling with unemployment, illness or other setbacks. Though the number of debt collections listed on credit reports has declined in recent years, millions of Americans still struggle with this problem.
A pushy debt collector may make you feel like you have to pay immediately, but it’s important to remember that you have rights, no matter how much you owe or how overdue your payments are. The Fair Debt Collection Practices Act (FDCPA) is a federal law that limits how a debt collector can talk to you and prohibits them from using deceptive or abusive tactics against you.
So what can debt collectors do? Here’s how the process works and what’s legally allowed.
What is a debt collector?
Debt collectors, or debt collection agencies, are companies that try to recover overdue debt from consumers. Sometimes debt collectors work on behalf of the original creditor, but often a debt collection agency will purchase debt from the original creditor. In those cases, the agencies usually buy the debt for cheap — sometimes for pennies on the dollar — so that anything they recover is profit.
When debt collectors contact you, their goal is to try to get you to pay as much as possible as quickly as possible so they can resolve the account they’re working on. But you should not feel pressured to make a payment you can’t afford, even if the debt collector is persistent.
What are debt collectors allowed to do?
The federal law that governs debt collection is quite specific when detailing what is allowed, but the law is very broad when it comes to limiting debt collectors’ powers.
One important distinction to note, though, is that the federal law applies exclusively to debt collectors, not to original creditors such as your mortgage lender or credit card issuer. This means you can report a violation of the Fair Debt Collection Practices Ace if, and only if, it’s committed by a debt collector.
Here are six things a debt collector is not legally allowed to do.
1. Harass, insult or demean you
Debt collectors cannot behave in a way that constitutes harassment. This includes repeat calls, showing up at your workplace, calling you names, belittling you or using profane language. This provision also applies to behaviors meant to annoy you such as calling and hanging up or letting the phone ring indefinitely.
2. Call you at inconvenient times
Federal law limits how and when a debt collector can contact you. They can’t call you before 8 a.m. or after 9 p.m. and they can’t call you more than seven times within a seven-day period. More importantly, they must stop if you send them a written request to do so. (You can write the request using a free “stop contact” letter template from the National Consumer Law Center.)
A debt collector can also contact you on social media or via email or text message, but like with phone calls, they must follow the seven-day rule and stop if you request it in writing. And if you get an attorney, you can ask the debt collector to direct all communications to your legal representative.
It’s important to note that these limitations apply to each individual debt, not each borrower. This means that if you have, for example, a credit card debt and a medical debt in collections, a debt collector can contact you for each one.
3. Publicly disclose your debt
Debt collectors aren’t allowed to publicly shame you as a form of pressure. For instance, they can’t publish something that says you owe money or advertise that they’re selling your debt if you don’t pay soon.
In fact, to protect your right to privacy at work and in your community, a debt collector can’t actually discuss your debt with anyone other than you, your spouse or your legal guardian, if you’re a minor.
That said, the law does allow debt collectors to call your family or friends to get your phone number, address or other location information. But they’re only allowed to contact an individual once. They may identify themselves and, if asked, share the name of their employer. However, they can’t say that you’re in debt or discuss anything regarding debt collection.
4. Threaten you
As unsettling as they may be, you can consider threats issued by debt collectors to be empty threats: The law explicitly prohibits this behavior. If a debt collector says that they will have you arrested or deported, ignore them and report them. (More on that below.) Debt collection is a civil matter — not criminal — and it doesn’t involve the police. You won’t go to jail if you can’t pay your debts.
Another illegal practice is threatening to seize your assets or sue you. Threats to sue are typically used to coerce you into making a payment, which is different from a one-time courtesy phone call to notify you that the debt collector is filing a lawsuit.
Can a debt collector sue you? Yes they can, but to file a lawsuit, a debt collector has to follow a legal procedure that typically takes months. With a legitimate debt collector, there may also be room to negotiate the debt and reach a settlement that works for both parties.
Unless you actually get served legal papers, you shouldn’t stress too much about the threat of a lawsuit. However, if a debt collector does sue you, it’s very important that you don’t ignore the lawsuit and respond in a timely manner. This typically means filing what’s known as an answer letter to the court (written by yourself or a lawyer) to admit or deny the allegation or demand additional information. After sending this letter, you’ll have time to organize your defense and get your day in court. If you don’t respond, the courts may issue a default judgment in favor of the debt collector, in which case they may have the right to garnish your wages or seize your bank account.
5. Collect money you don’t actually owe
An illegitimate debt collector may try to squeeze more money out of you by charging interest, convenience fees and other service charges. Convenience fees are also called “pay-to-pay” fees because they are charged for things like being able to submit payment online or by phone.
This is illegal. Debt collectors can only recoup the amount of money stated in the debt validation letter, a document they’re legally required to share with you when they first contact you. This letter includes details such as the original debt amount plus any fees charged by the original creditor. Any fees or interest charges must be clearly stated in the debt validation letter, or permitted by law. If you have doubts, you can send what’s called a debt verification letter to request additional details or dispute the debt.
“Permitted by law” has a very narrow definition — unless there is a state law that expressly authorizes the debt collector to charge convenience fees, it is illegal to do so. In other words, a debt collector can’t charge convenience fees and argue that it’s ok simply because there isn’t a law against it yet. There have been instances where consumers paid a convenience fee and the courts ruled it was allowed because it was a third-party payment processing fee (for a credit card payment, for example). But for this defense to hold up, the debt collector can’t retain a cent of that fee nor can they get a kickback from the payment processor.
6. Misrepresent who they are or mislead you
Under federal law, a debt collector can’t use a false name (or say they work for a fake company) nor can they lie about how much you owe. The law also applies to written notices. For example, a debt collection notice can’t contain any words or symbols to make you think it’s a legal document (such as a lawsuit, for example).
You should also be on the lookout for what are sometimes called phantom debt collectors. These are scammers who pretend to be debt collectors and contact people who don’t owe any money at all. They may call you from an unknown number without identifying themselves, and yell or threaten you regarding a debt that’s not real or a debt that’s already been paid. They may also contact you by email and other electronic means and trick you into clicking on a link or downloading an attachment.
Anytime you’re contacted by someone claiming to be a debt collector, ask them for their license number, their name, their employer’s name and business address. These questions are often enough to discourage fake debt collectors from calling you again.
Even if the debt collector’s identity checks out, you should ask for proof of your debt and take as much time as you need to verify whether you really owe money and whether the amount they’re asking for is correct.
Do you have to pay debt collectors? If they are legitimate, your debt is real, and you have verified the debt, the simple answer is that if you are liable for the debt. If you can afford to pay the debt, then, yes, you should pay the debt collector and clear the account. But if you are struggling to make ends meet, you do not need to prioritize paying a debt collector over more immediate needs like housing or food.
How do I file a complaint against a debt collector?
If you believe a debt collector has acted illegally, you have more than one way to report them. You can escalate a complaint with your state’s attorney general office, the Federal Trade Commission and the Consumer Financial Protection Bureau. Be prepared to share as much as you recall about the incident — for example, what the debt collector said, whether you paid any money as well as any identifying information about the person who contacted you. Even if you’re not sure you understand exactly what a debt collector can and cannot do, you should make a report if you have concerns about the way you’re being treated.
You can also sue a debt collector for violating the Fair Debt Collecting Practices Act. If the court rules in your favor, you can get up to $1,000 in remuneration as well as covered expenses for attorney fees and court costs. If the collector’s actions caused you further harm (for example, lost wages or medical bills related to physical or emotional distress), you may be entitled to additional compensation. It’s important to note, however, that this judgment won’t overturn the original debt (if there is one) and you may still be liable for that, even if a court finds that the debt collector violated the law.
If you talked to a debt collector and their style raised some alarms, you can also check out the FTC’s list of Banned Debt Collectors that are prohibited from engaging in debt collecting, as well as every other debt collection case brought to the FTC (including those that didn’t result in a ban).
More from Money:
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A 4-Step Guide to Negotiating Credit Card Debt
What Is Debt Relief and How Does It Work?
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