What Debt Collectors Can and Can't Do
Debt collectors have things that they can and cannot do regarding a debt. The Federal Trade Commission has laid a neat guideline that states debtor's rights for fair debt collection. If you think a debt collector violated a law, you can sue them for damages brought upon by the said violation.
One of the biggest nuisances in owing a debt is dealing with debt collectors. They can (and will) try any means to make you pay your debts (whether it's via scare tactics or just being annoying.) As a debtor, you should know your rights and use them properly.
Debt collectors are also limited in what they can and cannot do while collecting payments. In this article, we will discuss the scope of what debt collectors can and can't do legally.
Things Debt Collectors Are Allowed To Do
1. Contact You with Phone Calls and Letters
According to the FTC, the primary contact method is emails, text messages, letters, and calls. But recently, debt collectors are also allowed to contact you via social media. The Consumer Financial Protection Bureau or CFPB passed the rule to allow collectors to use social media sites as long as no misleading representation occurred.
2. Make a Legal Claim
If you stopped handing in your monthly dues, the debt collectors can default your loan and sue you. Filing a lawsuit is usually the last resort and usually results in court orders for garnishment or bank levies.
FTC recommends to anyone being sued to respond in court hearings. By responding, you can avoid losing the case via defaulting.
3. Contact Your Spouse or Parents
Debt collectors can contact your spouse, your attorney (if any), and your legal guardians or parents (for minors) regarding your contact information or any related debt information.
However, collectors can only contact each person once; they cannot pester them with constant calls. Other family members cannot be forced to give any information about your debt.
4. Sell Your Debts
Collectors can sell your debt if they aren't successful in collecting any payments. You might one day get a call from a different collector while the old one completely stops making contact.
Hence, instead of owing money to the original creditor, you now owe the money to the debt purchaser. The same debt term still applies even, but you now owe money to a different creditor.
5. Can Ask for Home Visit
If your creditors cannot get you on the phone or other contact options, they will likely send a debt collector to your home. Debt collectors might or might not inform you of their arrival.
However, take note that debt collectors cannot take anything from you. They don't have a bailiff's power and can only "ask" you to arrange payment.
6. Nudge Your Patience
Using threatening language, harassing statements, or misleading words to collect debt payments is illegal. Any debt collector who tried to "force" you into paying by harassment is subject to violation, as per FTC.
However, they can (and will) nudge your patience and pressure you by calling you daily, sending you letters, and more annoying legal methods.
Things Debt Collectors Aren't Allowed To Do
1. Make Unsolicited Calls
Debt collectors are only permitted to call their debtors from 8 AM to 9 PM. As a debtor, you can ask your collector not to contact you while you're at work.
You can also try to set a different time when they're allowed to call, especially if your work schedule isn't the standard 9-5.
A better option is to ask your collector to stop calling (might require a written request.)
2. Act as a Government Worker
Pretending to be a government worker or any other law enforcement member is not allowed by the FDCPA. Additionally, they cannot represent any consumer reporting agency if they are not officially authorized.
Debt collectors can receive punishments for misrepresentation violations, especially if they intend to force payment arrangements.
3. Have You Arrested
The only time a debt collector can have you arrested is when you openly resist a court order. These orders are issued when the debt collector already sued you for your debt, and you ignored the summons from the court.
If your collector pays for a visit, he or she cannot demand or falsely claim for your arrest.
4. Refuse Debt Verification
As a debtor, you have the right to ask for a debt verification if you doubt the alleged debt's validity. Your collectors will have to send a response letter within 30 days after receiving your request.
While a verification request is ongoing, your debt collector cannot try to obtain payment from you.
Collection can only resume once they sent you a written verification document, such as a copy of the debt bill.
5. Collect Additional Interest
Debt purchasers cannot change the terms stated in your debt contract with the previous creditor. The only right transferred after buying debt is the rights of payments.
However, the debt collector can add interest fees if the state laws or the original debt contract allows it. You can file a dispute if the added expense is unreasonable.
6. Make the Debt Information Public
Debt shaming is not allowed by FTC. If a collector tries to shame you for non-payment of debt, you can sue them for any damages that it had caused.
Additionally, they cannot disclose your debt information publicly. Debt collectors can only discuss your debt information with you, your spouse, or your legal guardian.
7. Pay More Than You Owe
Unfair payment can happen when the collector tried to:
- Demand additional fees or interest.
- Threaten to take your property.
For example, if you owe $1000, they cannot threaten to take your whole house or car for a payment. Take note: this debtor right might not apply if the takeover is done legally.
8. Harm or Harass You
Any attempt to use violence or offensive language is illegal, as per FTC. A debt collector is also not allowed to make non-stop calls just to annoy the debtor.
If you experienced any form of harassment or false representation from any debt collector, you are free to report them to the authority.
9. Take Your Paychecks Without Court Order
Paying with your future paychecks is called "garnishment." The debt collector is allowed to take a portion of your salary as payment.
Do note that garnishment arrangements are only valid under court orders. Your debt collector cannot force you to give a part of your paycheck without any court order.
10. Sue You for Time-Barred Debts
Time-barred debts are unpaid debts that are already beyond the statute of limitations. You still owe the debt to your collectors, so they can still ask you to pay for it.
However, they cannot sue you for payment anymore. Statutes of limitations can vary from state to state and on the debt type.
What Should I Do if Debt Collectors Broke the Law?
Debt collector violations can be reported to your state attorney general, FTC, and the Consumer Financial Protection Bureau. Before doing anything, you must have evidence of the breach.
Reports without evidence can still get up to $1,000 pay for damages-no more than this amount is allowed. Class action lawsuits can receive up to $500,000 as payment for damages.