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FAQs: How to Deal with Debt Collection Agencies

Can debt collection agencies contact me anytime of the day or night?

The federal Fair Debt Collection Practices Act (FDCPA, 15 U.S.C. 1692) restricts debt collectors from contacting debtors at unreasonable times, such as before 8 a.m. or after 9 p.m., unless the debtor agrees.

The FDCPA only applies to someone that collects personal, family, and household debt regularly. This includes debt collection agencies, companies that buy consumer debt, and lawyers that collect debt on a regular basis. The FDCPA does not apply to collectors that work for a creditor's debt collection department. It is important to check state laws for applicable regulations of in-house debt collection.

Should I talk to debt collection agencies about my debt?

Communicating with a debt collector may help resolve the situation, but the law does not require that the debtor speak with a collector. A debtor can prevent further contact by telling the debt collector in writing to end all communication. Debt collection agencies must cease contact after receiving the written request. From thereafter, a collector may only make contact under two circumstances: to inform the debtor that all contact will stop or to tell the debtor that the collector or the creditor intends to file a lawsuit.

Are debt collection agencies allowed to add interest to the original debt?

If the original agreement allows a debt collector to add interest during the debt collection process or if state law allows it, the FDCPA does not prohibit adding interest to the original debt. State law determines the maximum interest a collector may charge.

What type of behavior does the FDCPA bar a debt collector from engaging in?

The FDCPA prohibits debt collection agencies from using abusive, deceptive, or unfair tactics. Debt collectors may not engage in:

  • Harassing Behavior: A debt collector may not use profanity, threats of violence, or repeatedly call the debtor to cause annoyance.
  • Using False or Misleading Statements: A debt collector may not lie about the amount of a debt, claim to work for a credit reporting company, or claim to be an attorney or government representative.
  • Threatening Behavior: Debt collectors may not say that a debtor will be arrested for not paying debts or threaten to garnish a debtor's wages or sell their property, unless permitted by law.
  • Unfair Collection Practices: A collector may not add interest or fees that the original agreement disallows, contact a debtor by postcard, or deposit a posted-dated check early.

Can I sue a debt collector for violating the FDCPA?

Yes. A debtor has one year from the time the debt collector violated the law to sue for damages in state or federal court. A successful debtor can receive compensation for the actual damages caused by the illegal collection activity. Even if the debtor is unable to prove actual damages, a judge may still award damages of up to $1,000.

A debtor can also file a complaint with the Federal Trade Commission (FTC) or with the state agency in charge of regulating collection activities. However, a debt will remain valid even though the collector violated the law.

Am I required to wire a late payment through Western Union?

No. Some collectors will insist on receiving a delinquent payment through a wire transfer or through an overnight or express mail service. While the collector will receive the money quickly, the debtor will have to pay for this service. Neither federal nor state law requires a debtor to make a late payment through any of these services. It is acceptable to mail the payment or to use a debit card or checking account to make the payment.

Can debt collection agencies collect a debt by garnishing my wages or my bank account?

Yes. If the debt collector receives a court judgment after filing a lawsuit against the debtor, the collector can collect the debt by:

  • Garnishing up to 25 percent of a debtor's net wages
  • Taking the funds from the debtor's bank account
  • Recording a lien against the debtor's real property

In many states, even if the debtor has no assets at the time of the judgment, the collector can continue to try to collect the debt for up to 20 years.

Next Steps
Contact a qualified debt and bankruptcy attorney to find out your options
for navigating the best path forward.
(e.g., Chicago, IL or 60611)

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