- 6 min read
- How the federal government defines a debt collector.
- Know the rules all collection agents must follow.
- What to do if a debt collector violates the rules.
Learn the Rules Debt Collectors Must Follow
A debt collector is anyone who collects debts owed to others. The definition of a debt collector can be found in the Fair Debt Collection Practices Act (FDCPA), a federal law setting the rules debt collectors must follow. Debt collectors covered by the FDCPA include collection agents, lawyers who collect debts on a regular basis, companies that buy delinquent debts and try to collect them, and original creditors who act like third-party debt collectors.
Debt collectors must follow the FDCPA’s rules, but some of the 4,908 collection agencies in the US do not. Here is a list of what is permitted:
Debt Collection Permitted Practices
A Debt Collector May Call Your Landline
Collection agents may call you from 8 in the morning until 9 at night, unless you agree to an earlier or later time. The 8 am to 9 pm time is for your time zone, and not the caller’s. You may, in writing, tell a collection agent to stop cease all contact with you is a cease communications notice.
A Debt Collector May Call You at Work
Collection agents may call you at work, unless you tell them orally or in writing not to call you there because you are not allowed to receive personal calls at work.
A Debt Collector May Call Your Cell Phone
Collection agents may call your cellphone, unless you tell them orally or in writing it is your cellphone and you do not wish to accept their calls on that number.
A Debt Collector May Call Someone Else to Learn How to Reach You
Collection agents may contact your employer, neighbors, and relatives only to ask for your address, home phone number, and where you work. Collection agents may not contact third parties more than once. Collection agents may not discuss your debt with anyone other than you, your spouse, or your attorney.
There are many areas off-limits to debt collectors, too, as we see below.
|Debt Collector Facts|
|Median Pay, 2010||$31,310 per year $15.05 per hour|
|Entry-Level Education||High school diploma or equivalent|
|Work Experience in a Related Occupation||None|
|On-the-job Training||Moderate-term on-the-job training|
|Number of Jobs, 2010||401,700|
|Third-party collection jobs, 2010||148,300|
|Job Outlook, 2010-20||14% (About as fast as average)|
|Employment Change, 2010-20||57,200|
|Debt recovered by third-party collectors, 2010||$54.9 billion|
|Commissions earned by third parties, 2010||$10.3 billion|
|Number of third-party collectors, 2010||4,908|
|Number of complaints to FTC about collection agents, 2010||140,036|
Sources: 2012 Bureau of Labor Statistics; Ernst & Young “Impact of Third-Party Debt Collection on the National and State Economies”; FTC
No Abusive, Unfair or Deceptive Practices
A debt collector may not use false statements, harass you, or use unfair or embarrassing practices to collect a debt. The list of actions the FDCPA prohibits fit in the following three areas:
Collection agents may not harass, oppress, or abuse you or any third parties they contact. They may not:
- Threaten violence or harm
- Publish your name as a person who refuses to pay their debts
- Use obscene or profane language
- Call a telephone repeatedly to annoy anyone
Conduct Unfair Practices
Collection agents may not take certain actions, including:
- Give false information about you to anyone, including a consumer credit reporting agency
- Send you something that looks like an official court or government document if it is not
- Use a false company name
- Contact you using a postcard or any envelope that indicates the contents contain delinquent debt information
- Take or threaten to take your property unless it can do so legally
- Deposit a post-dated check early
- Collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt, or your state law, allows the charge
Make False Statements
Collection agents may not lie when trying to collect a debt. They may not:
- Claim they are lawyers (unless they really are) or, police, or government representatives
- Claim you committed a crime
- Claim to work for a consumer credit reporting agency (such as Equifax, Experian, or TransUnion)
- Lie about the amount due
- Lie about their identity or employer
- Say the documents they are sending you are legal documents if they are not
- Say the documents they are sending you are not legal documents if they are
- Claim you will be arrested if you do not pay your debt
- Claim they will seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so
- Claim they will take legal action against you, if doing so would be illegal or if they do not intend to take the action.
Lawsuits & Wage Garnishment
It is common for collection agents to threaten to garnish a person’s wages, levy their bank account, or file a lien on their property. As mentioned above, it is illegal under the FDCPA for a collection agent to threaten an action they have no intention of taking. However, it is possible for a collection agent to garnish wages, levy a bank account, or file a lien if they get a judgment first.
When the borrower does not pay a debt a promised, the lender has a cause of action (a legal reason to file a lawsuit) against the borrower for breach of contract. If the borrower does not mount an effective defense, the court will award the borrower a judgment. A judgment-creditor must follow the judgment-debtor’s state rules when collecting a judgment. Most states allow account levy, liens on property, and wage garnishment. See the Bills.com resource Collection Laws & Exemptions by State to learn more about what your state allows.
The Bills.com Debt Coach will help you weigh your debt resolution options objectively using real numbers.
Debt Collector & FDCPA Violation
You can take three actions if a collection agent violates the FDCPA.
- File a complaint with your state attorney general.
- File a complaint with the Federal Trade Commission (FTC).
- Consult with a local lawyer who has consumer law experience.
|More About Collection Agents|
|• Midland Credit Management • MRS Associates • Northstar Location Services • Portfolio Recovery Associates • Zwicker & Associates|
|Always validate a debt.|
Filing a complaint with your state attorney general and the FTC will not result in you receiving relief. However, if enough consumers complain about a collection agent’s behavior, your attorney general and the FTC will launch an investigation of the collection agent.
Consumers have have the right to sue a collection agent in a state or federal court within one year from the date the law was violated. The judge can require the collection agent to pay the consumer for any damages he or she can prove were suffered because of the illegal collection practices, like lost wages, or medical bills. The judge can require the debt collector to pay up to $1,000, even if the consumer cannot prove he or she suffered actual damages. The consumer can be reimbursed for attorney’s fees and court costs. However, even if a debt collector violates the FDCPA in trying to collect a debt, the debt does not go away if owed.
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 Q3 2023 was $17.291 trillion. Auto loan debt was $1.595 trillion and credit card was $1.079 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 8% had student loans in collections. The national Auto/Retail debt delinquency rate was 4%.
The amount of debt and debt in collections vary by state. For example, in Wyoming, 24% have any kind of debt in collections and the median debt in collections is $2680. Medical debt is common and 17% have that in collections. The median medical debt in collections is $1515.
To maintain an excellent credit score it is vital to make timely payments. However, there are many circumstances that lead to late payments or debt in collections. The good news is that there are a lot of ways to deal with debt including debt consolidation and debt relief solutions.