What can debt collectors do?

What legal action can debt collectors take

When you have an unpaid debt, a creditor may solicit the help of a debt collector to resolve the balance due. However, debt collectors are limited by what they can and cannot do.

First, validation information must be provided within five days of the first contact. This details the specifics of your debt, including:

• The debt collector’s contact information, including their name and mailing address
• The name of the creditor to which you are indebted
• The balance due, itemizing any interest, fees, credits and payments
• How to dispute the debt
• Details regarding your debt collection rights

If you do not believe this is a valid debt belonging to you, you can dispute it with the debt collection agency within 30 days. This prevents them from contacting you until written verification, such as an original invoice, is provided. Be sure to send your letter via certified mail — and keep a copy for your records.

How debt collectors can contact you

Debt collectors may contact you in several ways, including by phone, email, letter or social media. A debt collector typically is not allowed to divulge information about your debt to anyone but you, your spouse and your lawyer (if you have one). That includes notifying others that you have an outstanding debt.

However, debt collectors can contact family members or others to solicit your contact information, such as an address, home phone number or place of employment. They are usually limited to one contact per party. There are additional rules, according to the Federal Trade Commission:

• Debt collectors can’t contact you between 8 a.m. and 9 p.m. (unless granted your permission).
• Debt collectors can’t contact you more than seven times within one week or within one week of speaking with you by phone about your debt.
• Debt collectors can’t contact you at your place of employment if you notify them that you are not allowed to take personal calls.
• Debt collectors can’t text, email or message you on social media if you request they stop.

Your rights when dealing with debt collectors

Borrowers are protected by federal law under the Fair Debt Collection Practices Act (FDCPA), which limits how debt collectors can treat the debt collection process.

Business debt is not included under the FDCPA, but credit card debt, mortgage loans, auto loans, medical bills and student loans are. The FDCPA also details how debt collectors can treat you:

• They cannot harass or threaten you.
• They cannot lie about your debt or pretend to be another party.
• They cannot collect extra money beyond the amount you owe unless granted by law or contract.
• They cannot cash post-dated checks prematurely.
• They cannot publicly reveal information about your debt (on an envelope or postcard, for example).

If you feel you have been treated unfairly, you have options. You can file a complaint with the Consumer Financial Protection Bureau or Federal Trade Commission. You can also contact your state attorney general’s office, which might have more details about additional regulations and restrictions that apply to you.

Consequences of ignoring debt collectors

If a debt collector contacts you, you should speak with them at least once to obtain the details of your debt.

Sometimes, the debt collector may take you to court to recoup the balance owed. You should never ignore the court summons. Instead, consult an attorney regarding the lawsuit. Be sure to respond by the date noted in the lawsuit, whether you contact the debt collector or have your attorney handle it.

Not responding to a lawsuit could have serious consequences. You could have the court rule against you, even if the debt has been resolved or doesn’t belong to you. With a lawsuit, you could end up having your wages garnished or a lien placed on property, such as a home or car.

» MORE: Can my Social Security be garnished?

What to do if a debt collector contacts you

There are certain steps you should take when handling debt collectors. Be sure to document all communications with the debt collector in case you need those details later.

1. Do your research: Take the time to confirm it through past bills and payments. It is possible that your debt collector may not have updated records that include all of the payments you have made. It is also important to first validate the debt so you don’t fall victim to scammers. You should receive the validation letter within five business days of first contact.

2. Don’t immediately make payments: Wait to receive the details of your debt so you can confirm it actually belongs to you. Otherwise, a payment is considered an admission of guilt, and you can’t dispute it later. Also, never give your payment information unless you are sure of the debt and are ready to make payment.

3. Hire an attorney: A good lawyer can ensure the best possible outcome for debt collection. If you cannot afford one, consider getting help through a legal aid office. There are also options based on more specific requirements, such as the Eldercare Locator for seniors and JAG offices for servicemembers.

4. Resolve the debt: If you choose to pay the debt, you have options. You can pay the debt outright. If you have multiple debts, you might qualify for a debt consolidation loan to lower your monthly payments.

5. Negotiate a settlement: Another option is to negotiate a debt settlement with the collector. They may lower the amount due or set up a payment plan that allows you to pay off the debt over time. Either way, get the agreement in writing for your records.