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How to Handle a Debt Collector's Threats
Just because you may owe a delinquent debt does not mean it is legal for a debt collector to make threats against you. A federal law, called the Fair Debt Collection Practices Act (FDCPA), prohibits debt collectors from making the 14 specific behaviors outlined below. Chief among these is use of abusive or threatening language, and threats of arrest.
Debt collectors can find themselves in hot water for breaking the law. We discuss the penalties below. It is illegal for a debt collector to take these 14 actions:
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Threaten Arrest or an Illegal Lawsuit
A debt collector may not threaten a consumer with arrest or criminal charges. Only a district attorney or prosecutor is permitted to file criminal charges in court. A debt collector is free to — like you and me — file a complaint with the district attorney or local prosecutor and claim a crime was committed. However, it is up to the DA or prosecutor to decide whether it has sufficient evidence to charge someone with a crime.
Debt collector may not threaten legal action that is either not permitted nor actually contemplated. A collection agent may not imply future judicial remedies are a virtual certainty (Schimmel v. Slaughter, 975 F.Supp. 1357 (M.D.Ga. 1997)).
Debt Collectors May Not File a Lawsuit After the Statute of Limitations Has Passed
It is a violation of the FDCPA for a collection agent to pursue a debt collection lawsuit against a consumer after the statute of limitation expired (Kimber v. Federal Financial Corp. 668 F.Supp. 1480 (1987) and Basile v. Blatt, Hasenmiller, Liebsker & Moore LLC, 632 F. Supp. 2d 842, 845 (2009)). Some collection agents still sue in hopes the consumer will not know this rule.
A debt collector may seek voluntary payment on a time-barred debt, as long as there is no threat of legal action. Just because a letter is on law firm letterhead is not enough to create FDCPA liability.
Misrepresent Him or Herself As Anything But a Debt Collector
A debt collector may not misrepresent himself as an attorney or law enforcement officer (Taylor v. Perrin, Landry, deLaunay & Durand, 103 F.3d 1232 (5th Cir. 1997); Russey v. Rankin, 911 F.Supp. 1449 (D.N.M. 1995)).
Use the Telephone to Annoy or Harass
A debt collector may not cause a telephone to ring or engage any person in telephone conversation repeatedly or continuously with the intent to annoy, abuse, or harass anyone at the number called.
Use Abusive or Threatening Language
A debt collector may not use abusive or profane language communicating about the debt.
Publish a Bad Debt List
Publishing the consumer's name or address on a "bad debt" list is prohibited.
Contact In An Embarrassing Manner
A debt collector may not communicate with a consumer by post card. It may not use any language or symbol, other than the debt collector's address, on any envelope when communicating with a consumer by use of the mails. A debt collector may use its business name if such name does not indicate it is in the debt collection business.
Contact a Consumer at Work
A debt collector may not communicate with consumers at their place of employment after being told the employer prohibits it.
Seek Unjustifiable Amounts
A debt collector may not demand any amounts not permitted under an applicable contract or as provided under law. What this means is a debt collector may not add fees or interest to a collection account, unless the fees or interest are mentioned in the contract the consumer signed with the original creditor.
Because most collection agents cannot produce a copy of the original contract the consumer signed, courts usually do not allow debt collectors to add fees to their collection accounts. In other words, just because a debt collector adds mystery fees to an account doesn't mean you must pay them.
Contact a Consumer Represented by an Attorney
A debt collector may not contact a consumer after it learns the consumer is represented by a lawyer.
Communicate With a Consumer After Receiving a Debt Validation Request
If a consumer sends a written §1692g debt validation response within 30 days, the debt collector may not communicate with the consumer until it mails the consumer the requested verification of the original creditor's name and address, and a statement from the original creditor the debt is valid.
If the debt collector is reporting the debt in question to the consumer credit reporting agencies, it must amend the information to indicate the debt is disputed (Brady v. Credit Recovery Company, Inc., 160 F.3d 64 (1st Cir. 1998)).
Communicate With Third Parties
A debt collector may not reveal or discuss the nature of a consumer's debts with third parties other than the consumer’s spouse or attorney. A collection agent may contact neighbors or co-workers one time to obtain the consumer's location or contact information only. It may contact a third party again if it has reason to believe the information the party provided previously was false.
State Laws May Apply
The FDCPA regulates the behavior of collection agents. In some states, the FDCPA also regulates how original creditors may act. Learn your state's laws because you may have other protections beyond those offered by the FDCPA.
The Debt Collector Will Not Stop Calling When You Tell Them Not To
A debt collector must cease communications in any manner after receiving written notice from you that you want no further communication, or that you refuse to pay the alleged debt. There are two exceptions to this rule. First, the collection agent may notify the consumer of a pending lawsuit or similar remedies, which is required by state and federal civil procedure rules. Second, the collection agent may notify the consumer it is ceasing collecting the debt.
What If A Debt Collector Threatens You?
As you can see from the rules summarized above, it is illegal for a debt collector to threaten or harrass you. But what can you do if one doesn't play by the rules? Take these four steps:
- File a complaint with your state attorney general's office
- File a complaint with the Consumer Finance Protection Bureau
- File a complaint with the Better Business Bureau in the city where the debt collector is headquartered
- Consult with a lawyer who has experience filing FDCPA lawsuits against debt collectors
File complaints when you have a legitimate beef against the debt collector for violating of one of the 14 rules spelled out above. When you file a complaint, be precise. See the table below for examples of good and bad complaints.
|Bad Complaint||Good Complaint|
|"The debt collector called a lot"||"The debt collector called me 7 times within an hour after I spoke to them."|
|"The debt collector called me when I told them not to."||"The debt collector continued to telephone me after I sent it a written notice to cease communications."|
|"The debt collector called me a name."||"The debt collector called me a ______ and a _____ because I would not pay it what it wanted."|
|"He said he was a cop."||"The caller said he was a Springfield County sheriff's deputy."|
|"The collection agent said I might go to jail."||"The collection agent said I would be arrested on _______ if I did not send a payment of $___ by _____."|
|"I don't know what this debt is about."||"The collection agent failed to respond to my written debt validation, which I sent Certified Mail."|
|"The collection agent called my neighbor."||"The collection agent called my neighbor and told them I owed them $____ and that I needed to call them to settle the debt."|
|"The collection agent called me at work."||"The collection agent called me at work on or about _____, and when I informed them I was not allowed to accept personal calls at work, the agent called again on _____ and _____ and ______."|
|"The collection agent sued me."||"The collection agent filed a lawsuit against me on ______, which is after my state's statute of limitations, which ran out on _______."|
Examples of actionable, precise good complaints, and non-actionable bad complaints. Source: Bills.com
Bills Action Plan
Take these action when a debt collector threatens you:
- Review the Fair Debt Collection Practices Act (FDCPA), the law that protects all US residents.
- Learn what state consumer protection laws may apply to residents in your state.
- File complaints with federal and local authorities, and the BBB if the collection agent violates the law.
- Use precise explanations of the violations, which will get more attention than vague complaints.
- Consult with a lawyer that specializes in FDCPA violations.
If you are struggling with debt, you are not alone. According to the NY Federal Reserve total household debt as of Quarter Q4 2022 was $16.91 trillion. Student loan debt was $1.60 trillion and credit card debt was $0.99 trillion.
A significant percentage of people in the US are struggling with monthly payments and about 26% of households in the United States have debt in collections. According to data gathered by Urban.org from a sample of credit reports, the median debt in collections is $1,739. Credit card debt is prevalent and 3% have delinquent or derogatory card debt. The median debt in collections is $422.
Collection and delinquency rates vary by state. For example, in Illinois, 16% have student loan debt. Of those holding student loan debt, 7% are in default. Auto/retail loan delinquency rate is 5%.
Avoiding collections isn’t always possible. A sudden loss of employment, death in the family, or sickness can lead to financial hardship. Fortunately, there are many ways to deal with debt including an aggressive payment plan, debt consolidation loan, or a negotiated settlement.