Consumer Guide to Debt Collection

April 6, 2012
Having financial problems is typically a very stressful and difficult situation. It can affect all aspects of your life- both personal and professional. If you are also dealing with debt collectors, you may feel overwhelmed by your circumstances. It is important to know your rights as a consumer. The Federal Trade Commission is the government agency in charge of enforcing the Fair Debt Collection Practices Act (FDCPA). This act gives consumers protection from unfair and deceptive collection methods.

The FDCPA defines a debt collector as someone who regularly collects debts owed to others. This includes actual collection agencies, but also lawyers who regularly collect debts and companies that buy delinquent debts and then attempt to collect them.

Following are some of the most frequently asked questions regarding debt collectors along with practical answers which can help you get through the serious financial situation you are experiencing.

What types of debts are covered?
The Act covers household, personal and family debts, including money owed on a mortgage, credit card accounts, car loans, and medical bills. It does not cover any bills owed to run a business.

Can a debt collector contact me any time or any place?
Unless you agree otherwise, a debt collector can only contact you between the hours of 8am and 9pm. Furthermore, if your employer does not allow calls to the workplace, a debt collector may not contact you at your place of employment. It is your responsibility to inform the debt collector about this policy, either verbally or in writing.

How can I stop a debt collector from contacting me?
You may want to speak with a debt collector initially to find out the specific details about why they are contacting you. You can try to resolve the matter during this initial conversation- even if you don’t think the debt is legitimate, can’t immediately repay it, or think that the collector is contacting you by mistake. If, after speaking with the debt collector, you decide you don’t want them to contact you again, inform the collector (in writing) to stop contacting you.

Make a copy of the letter and send it by certified mail (return receipt requested) to the debt collection agency. Once the agency receives your notification, they cannot contact you except to notify you and verify that they will not call you again. Be aware that sending this letter to the debt collection agency does not release you from what you owe. You can still be sued to collect the debt.

Can a debt collector contact anyone else about my debt?
If you have an attorney representing you about the debt, the debt collector must speak with the attorney, not you. If you have not retained the services of an attorney, a debt collector is allowed to contact other people (third parties) but only to find out your address, your home phone number, or your place of employment. Generally, a debt collector may contact a third party only once for this information. Other than trying to obtain this specific information, a debt collector is not permitted to speak with anyone else about your debt. (Your spouse and/or attorney are the only exceptions.)

What does the debt collector have to tell me about the debt?
Within five days of speaking with you, the debt collector must send you written notice stating how much money you owe, the name of the creditor seeking payment, and the steps you must take if you want to initiate a dispute. This is sometimes referred to as a “validation notice”.

Can a debt collector keep contacting me if I don’t think I owe any money?
If you send the debt collector a written statement saying that you don’t owe any or all of the money, or if you ask for verification of the debt, the collector is required to stop contacting you. You must send this letter within 30 days of receiving the validation notice from the debt collector. Once a collector sends you verification of the debt, such as a copy of the bill, they are permitted to begin contacting you again to try and collect the money owed.

What practices are off limits for debt collectors?
Harassment. Debt collectors are prohibited from harassing, oppressing, or abusing you or any third parties they contact. Specifically, they may not:
  • Make threats of violence or harm.
  • Use profane or obscene language.
  • Repeatedly make phone calls deliberately to annoy someone.
  • Publish a list of names of people who refuse to pay their debts. (however, this information can be given to credit bureaus)
False statements. Debt collectors must be truthful when attempting to collect a debt. For example, they may not:
  • Identify themselves as attorneys or government representatives.
  • Accuse you of having committed a crime.
  • Falsely claim that they work for a credit reporting company.
  • Indicate that the papers which they send you are legal documents, if they aren’t.
  • Indicate that the papers which they send you are not legal documents, if they are.
  • Misstate the actual amount you owe.
Debt collectors also are prohibited from saying that:
  • They will garnish, attach, seize, or sell your property or wages unless they are permitted to do this by law and intend to pursue this course of action.
  • You will be arrested if you refuse to pay your debt.
  • They will take any kind of legal action against you, unless they are permitted to do so under the law and fully intend to take this action.
Debt collectors may not:
  • Send you any paperwork that looks like an official document from a court or government agency, if it is not.
  • Falsify the name of the company they work for.
  • Release or give false credit information about you to anyone, including credit reporting bureaus.
Unfair practices. Debt collectors may not use underhanded means or unfair practices while attempting to collect a debt. They may not:
  • Contact you using a postcard.
  • Threaten to take or actually take your property unless they have the legal right to do so.
  • Deposit a post-dated check before the appropriate date written on the check.
  • Try to collect interest, fees, or other charges in addition to the amount you owe unless the contract that created your debt (or your State law) allows it.
Can I control which debts my payments apply to?
Yes. If a debt collector is attempting to collect more than one debt from you, you have every right to specify to which debt your payment will be applied. If there is a debt which you think you don’t owe, a debt collector is not allowed to apply any payment to the disputed debt account.

Can a debt collector garnish my bank account or my wages?
If you do not pay a debt which you rightfully owe, a debt collector can choose to sue you to collect the funds. If they successfully win in court, a judgment will be entered against you. This judgment will state the amount you owe (which can include court fees) and allows the debt collector or creditor to obtain a garnishment order against you. This directs a third party, such as a bank, to turn over funds from your account to satisfy the debt.

Under most circumstances, your wages can only be garnished as a result of a court order. When this happens, your employer is obligated to withhold part of your salary to pay your debts.

If you receive a lawsuit summons, do not ignore it. If you do, you lose the legal right to contest a wage garnishment.

Can federal benefits be garnished?
If you are receiving federal benefits, there is the possibility that they may be exempt from garnishment. Some of the exemptions include:
  • Merchant Seamen Wages
  • Student Assistance
  • Veterans’ Benefits
  • Social Security Benefits
  • Civil Service and Federal Retirement and Disability Benefits
  • Service Members’ Pay
  • Railroad Retirement Benefits
  • Supplemental Security Income (SSI) Benefits
  • Foreign Service Retirement and Disability Benefits
  • Federal Emergency Management Agency (FEMA) Disaster Assistance
  • Military Annuities and Survivors’ Benefits
  • Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Occurring Outside of the U.S.
Under certain circumstances, federal benefits may be subject to garnishment. This normally is the case when the debt involves delinquent taxes, child support, alimony, or student loans.

Do I have any recourse if I think a debt collector has violated the law?
As a consumer, you have the legal right to sue a debt collector in either a state or federal court within one year from the date the law was violated. If you are successful, the judge can order the collector to pay you for any and all damages that you can prove you suffered because of the illegal collection practices. This would include lost wages and medical bills. The judge can also order the collector to pay you up to $1000 even if you cannot prove that you suffered actual damages. The collector can also be required to reimburse you for your attorney fees and any court costs. A group of people may also sue a debt collector as part of a class action lawsuit. In this instance, money can be recovered for damages up to the amount of $500,000 or one percent of the collector’s net worth, whichever amount is lower.

If a debt collector violates the FDCPA, it does not release you from the debt if you legally owe it.

What should I do if a debt collector sues me?
If a debt collector files a lawsuit against you to collect the debt, you will receive a lawsuit summons. Do not ignore it. You must respond to the lawsuit, either personally or through your attorney, by the specified date on the court document. You must do this to preserve your legal rights.

Where do I report a debt collector for an alleged violation?
If you feel a debt collector has violate the FDCPA while attempting to collect a debt, contact your state Attorney General’s office ( and the Federal Trade Commission ( Many states have their own set of debt collection laws that may differ from the FDCPA. Your state Attorney General’s office can assist you in determining your rights under the state law.

For More Information
To learn more about debt collection and other credit-related issues, visit and, the U.S. government’s portal to financial education.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a video, How to File a Complaint, at to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.