- 2 min read
- Find out your state's consumer debt protection laws and exemptions.
- Review FDCPA rules and collection exemptions for homesteads, autos, bank accounts, and wages.
- Find links to learn more about your state's rules.
Collection laws protect you from being harassed by bill collectors and debt collection agencies, and they also stipulate how, when, and where collectors can contact you.
Do you have debts that have gone to collections? Here’s what you need to know about these laws for collection agencies — and how to take action if a collector violates them.
U.S. debt collection laws
There are several laws for collection agencies in the U.S. The main one is the Fair Debt Collection Practices Act. There is also the Fair Credit Reporting Act and numerous state debt collection laws.
Here’s a little more about each — and what they protect you from as a consumer.
Fair Debt Collection Practices Act
The Fair Debt Collection Practices Act (FDCPA) provides the most protection. According to U.S. legal code, it is a response to “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” It also says, “Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.”
The FDCPA provides several protections for consumers against bill collectors and debt collection agencies, including:
- Limiting how and when collectors can contact you: Under the FDCPA, bill collectors can’t contact you before 8 a.m. or after 9 p.m. or at a time they know is inconvenient for you. They also cannot contact you at work if your employer doesn’t allow it, nor can they contact you more than seven times within a seven-day period. Finally, if you do speak to them by phone, they can’t reach out for at least another seven days after that.
- Outlawing harassment and abuse by debt collectors: A debt collector can’t harass or abuse you when seeking repayment. What constitutes harassment or abuse? According to the Federal Trade Commission, threats, profane language, repetitious phone calls intended to annoy you, and publicly revealing your debts are just a few examples. Bill collectors also can't lie or misrepresent themselves as an attorney or someone from the government.
- Giving you the right to have an attorney as your intermediary: If you hire legal representation, debt collection agencies must go through your attorney for all communication. They cannot contact you directly once they know you have hired a lawyer.
The FDCPA only applies to personal, family, and household debts. Business debts do not fall under this particular law's protections.
Fair Credit Reporting Act
The Fair Credit Reporting Act is another federal law that protects consumers. This one dictates what and how debt collection agencies and bill collectors can report your financial information to the three main credit bureaus (Experian, TransUnion, and Equifax).
While this law doesn't directly pertain to collections attempts against you, it does prevent creditors from reporting inaccurate information to bureaus, which could hurt your credit score and long-term financial opportunities). It also requires them to maintain good records of your debts and that they notify credit bureaus if you're disputing a debt (which we’ll go into later on).
State Laws for Collection Agencies
Many states also have their own laws governing debt collection practices or ones pertaining to unfair and deceptive acts, which also may provide additional protection. To find out if there are such laws in your state, contact your state attorney general’s office or consult a local legal professional.
|Collection Laws & Exemptions|
|FDCPA Applies to Original Creditors||Homestead Exemption||Vehicle Exemption||Bank Account||Wages|
|Alabama||$5,000 (can double)||None||$3,000||75%|
|Alaska||$70,200||$3,900||$1,820 or $2,860||$456-7161|
|Arkansas||Unlimited (<1/4 acre)||$1,200||$800 or $1250||75%|
|Connecticut||$75,000 (2x if married)||$1,500||$1,000||75%|
|Delaware||None (if both owe $)||None||$500||85%5|
|Georgia||$10,000 (can double)||$3,500 (2x)||$600||75%|
|Illinois||$15,000 (can double)||$1,200||$2,000||85%6|
|Indiana||$7500 (can double)||None||$4,000||75%|
|Maryland||Yes||None (if both owe $)||$5,000||$6,000||75%|
|Michigan||Yes||$35,300 or $52,925 if elderly or disabled||$3,250||None||75%|
|New Jersey||None (if both owe $)||$1,000||$1,000||90%7|
|New Mexico||Yes||$30,000 (may double)||$4,000||$2,000||75%|
|New York||Yes||Varies by county See CVP § 5206||$4,000||$2,5008||90%|
|North Carolina||Yes||$10,000 (may double)||$1,500||$500||100%|
|Oregon||Yes||$25,000 ($30K couple)||$1,700 (2x)||$400||75%|
|Pennsylvania||Yes||None (if both owe $)||None||$300||100%|
|South Carolina||Yes||$50,000 (can double)||$5,000||$5,000||100%|
|Tennessee||$5,000 ($7.5K cpl)||$4,000 wildcard9||75%|
|Utah||$20,000 (can double)||$2,500 or $3,500||None||75%|
|Vermont||Yes||$75,000 (can double)||$2,500||$1,100||75%|
|Virginia||$5,000 (+$500/kid 2x)||$2,000||None||75%|
|West Virginia||Yes||$25,000 (can double)||$2,400||$800+||75%|
|Wyoming||$10,000 (can double)||$2,400||None||75%|
|Notes||1. Alaska: $716/wk (head of family) or $456/wk (non-head of family) 2. Florida: 100% (head of family only) or 75% for non-head of household 3. Iowa: 75%, but yearly total limited 4. California: $50k (single), $75k (married), $125K (65 or disabled) 5. Delaware: 85% of disposable 6. Illinois: 85% of gross 7. New Jersey: 90% of gross, unless judgment-debtor earns more that 250% of federal poverty level, then court has discretion to use federal 25% exemption. 8. New York: Account contains directly deposited exempt benefits, including Social Security, SSI, Veterans benefits, disability, pensions, child support, spousal maintenance, workers compensation, unemployment insurance, Public Assistance, Railroad Retirement benefits, and Black Lung benefits. Otherwise, $1,740 on all other accounts. See the New York LawHelp Consortium Consortium for more information. 9. Tennessee: Up to $4,000 of any personal property, including a financial account, can be exempted. See Tennessee § 26-2-103 for details.|
State-by-state collection laws. Source: Bills.com
The amounts listed in the chart’s columns are what is protected from collection, what you will be left with should a collector pursue a particular asset or your income. Pay attention to the footnotes, where listed.
- FDCPA Applies refers to the Fair Debt Collection Practices Act, which customarily applies to collection agents/debt collectors. In the states indicated, the FDCPA applies to original creditors, too.
- The Homestead Exemption shows the amount of equity in your primary residence that even a judgment-creditors cannot pursue. The exact amount you can protect depends on the exemption in your state of residence. Some states have no exemption whatsoever. Some states have unlimited exemptions, where all the equity in an expensive mansion is completely protected.
- The Vehicle Exemption protects equity in one vehicle up to the amount listed for your state. If you owe money on the vehicle, subtract what you owe from what it is worth, to see if your vehicle is totally exempt or not. In some states, a vehicle that is worth more than the exempt amount can be seized and sold, with the exempt amount returned to the owner.
- The Bank Account Exemption lists how much is safe from a judgment-creditor’s collection efforts. Some states offer no protections; anything in your account can be levied.
- The Wage Exemption shows what part of your wages are protected from wage garnishment, and is the amount that most creditors cannot pursue.
Although we believe this information to be accurate as of the date of its posting, we cannot guarantee the accuracy of the information provided. Consult with an attorney in your state for specific information regarding the laws and exemptions that apply to you in your circumstances.
Who do debt collection laws protect you from?
Most collection laws protect you from debt collection agencies only — meaning third parties hired to collect debts owed to other businesses. Unfortunately, they usually don’t protect you from the original creditor (the business your debt originated with).
Debt buyers — or businesses that purchase unpaid debts from creditors — are often viewed as “original” creditors too. Because of this, they often don’t fall under the purview of FDCPA and other debt collection laws.
Some states are an exception, though. If a debt buyer or original creditor is harassing you or committing some other activity you feel may be illegal, talk to a local attorney about your state’s specific debt collection laws.
How can I report bill collectors for violating debt collection laws?
If you suspect a third-party bill collector has violated any of the above laws for collection agencies, then you have some options.
First, you can hire an attorney and seek legal action. You can also file an online complaint with the Consumer Financial Protection Bureau or Federal Trade Commission or call the CFPB directly at 855-411-CFPB (2372). Finally, you can contact your state's attorney general. If other consumers have reported similar behaviors, they may investigate the company and seek legal recourse against it.
Can I stop debt collectors from contacting me?
Under the FDCPA, you have the right not to be contacted during certain hours, at work, or via methods you request them not to. If a bill collector violates this law, you can write a letter and request the communication to stop. Make sure to keep a copy for yourself, and consider sending it via certified mail, which gives you a return receipt once the collector receives it.
The Consumer Financial Protection Bureau has sample letters you can use as a starting point, but generally, you want to include:
Your name, address, and the date
The name and address of the debt collector
The number on the account, if there is one
The date, time, and method of contact they used during your last communication
You can ask the collector to stop contacting you entirely (though this doesn’t dismiss the debt or excuse you from legal action regarding it), or you can use the letter to stipulate how and when you’re willing to be contacted.
If you ask the debt collector to stop contacting you altogether, you’ll only hear from them again to say there will be no further contact or if they are legally required to contact you (like to serve you a lawsuit).
How can I dispute a debt if I don’t think it’s mine?
If you don’t believe the debt is yours — or you think you’ve paid it off already, you can dispute all or part of the debt. To do this, you’d need to dispute it in writing within 30 days of learning about the perceived debt. The CFPB also has sample letters for doing this.
After the collector has received your dispute, it can no longer try to collect on the debt until it has sent you some sort of written proof that it is, indeed, yours. This might include an original bill from the creditor, a physical receipt, or some other documentation.
Again, make sure you send the letter via certified mail, which will ensure you’re notified once the collection company has received it.
What should I do when a debt collector contacts me?
When a debt collector contacts you, avoid revealing any information about yourself or your finances.
You should also ask for some basic details about the debt, including:
The name of the original creditor
The balance of the debt (and any added fees or interest they’re trying to charge)
When the debt was accrued
Who the collector believes owes the debt
Finally, ask that the collector communicates with you in writing moving forward to ensure you have a paper trail.
Can bill collectors call someone else about my debt?
Generally speaking, collection laws stipulate that only you, your spouse, or your attorney can receive information about your debts. A debt collector can contact other people in an attempt to gather your contact information (address, phone number, etc.), but they may not reveal the reason for the call or anything about your debts. They typically can’t contact someone more than once either.
Can I be contacted on social media about my debt?
Yes, debt collectors can contact you on social media — but not publicly. Collection agencies may only contact you privately so that the general public or your social connections cannot see. They also must identify themselves as a debt collector and provide a way for you to opt-out of their messages — at least on that particular social platform.
What are my options for handling my debt?
If you don’t have the funds to pay off your debts outright, there are other options. First, you can talk to a credit counseling agency. They can get you on a debt management plan to help you pay off your debts within a certain timeframe (usually a couple of years).
You might also talk to a debt relief company. They can offer services like debt settlement, which entails negotiating with your creditors for a reduced payoff. Refinancing or consolidating your debt might also be an option depending on your credit.
Did you know?
Debt is used to buy a home, pay for bills, buy a car, or pay for a college education. According to the NY Federal Reserve total household debt as of Q2 2022 was $16.15 trillion. Auto loan debt was $1.50 trillion and credit card was $0.89 trillion.
According to data gathered by Urban.org from a sample of credit reports, about 26% of people in the US have some kind of debt in collections. The median debt in collections is $1.739. Student loans and auto loans are common types of debt. Of people holding student debt, approximately 10% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
Each state has its rate of delinquency and share of debts in collections. For example, in Massachusetts credit card delinquency rate was 3%, and the median credit card debt was $417.
While many households can comfortably pay off their debt, it is clear that many people are struggling with debt. Make sure that you analyze your situation and find the best debt payoff solutions to match your situation.