The Law About Debt Collections Harassment
Janice M. asks:
“I’ve had a credit card for years that I always pay on time. But I keep receiving collections letters and phone calls saying that I owe a large debt on the account. How can I stop this harassment when I don’t owe a dime?”
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It’s never fun being hounded by a debt collector. In this episode I’ll tell you the best ways to deal with a collector no matter if it’s a mistake or you have a financial hardship. Knowing your rights is the best way to prevent debt collections harassment.
What is Debt Collections Harassment?
Many people don’t realize that there are federal and state laws that debt collectors—such as collections agencies and attorneys—have to follow. The main federal law for personal debt is called The Fair Debt Collections Practices Act (FDCPA). It prohibits debt collectors from harassing you, even when you owe money.
Illegal harassment includes the following:
- threatening harm or violence
- calling you repeatedly
- using obscene or profane language
- misrepresenting personal or company identity
- saying or doing anything deceptive or misleading
- threatening to contact your employer about a debt
Debt collectors also can’t contact you at unusual times or places. For instance, they can’t call you before 8:00 in the morning or after 9:00 at night. Nor can they call you at work if they’ve been informed that you’re not allowed to take calls there.
What Are Your Debt Collections Rights?
Here are 5 additional debt collections rights that everyone should know about:
Right #1: You Can Tell a Collector Not to Contact You
If you request in writing that a debt collector stop contacting you, then they must heed your request. However, simply telling a collector to back off doesn’t prevent them from reporting a delinquency to the credit bureaus or filing a lawsuit against you.
No matter what, a collector is allowed to contact you to send verification of your debt or to inform you about any specific legal action that they intend to take against you.
Right #2: You Can Dispute a Debt
If you don’t believe that you owe all or part of a debt, you can dispute it. However, you’ve got to put a dispute in writing within 30 days of receiving a collections notice.
Send a certified letter to the collector requesting more information and a formal verification of the debt. When you do this, the collector can’t contact you until they provide this information in writing.
Right #3: Collectors Can’t Tell Others About Your Debt
A debt collector generally isn’t allowed to discuss your debt with anyone else, except your spouse or attorney. And if you have an attorney, a collector must contact him or her about your debt, not you.
A collector can only contact other people to find out general information about you, like your phone number or address.
Right #4: You Control Which Debt a Collector Pays
If you owe more than one debt, a collector must apply your payments to the debt you choose. In other words, a collector can’t use your money to pay a debt that you don’t believe you owe.
Right #5: A Collector Can’t Inflate What You Owe
Debt collectors are prohibited from piling on additional interest, fees, or other charges to the amount you owe. However, if you signed a contract that permits additional charges, then they’re allowed. So be sure to do the math and verify amounts that a collector is trying to get from you, before you send any payments.
Debt Collection and Identity Theft
But what if you’re like Janice and don’t owe money that a collector is pestering you for? It could simply be an accounting error on your account. Or it could be a sign that you’ve become the victim of identity theft. A criminal may have used your personal information to open up a new account or to rack up credit card charges that you don’t know about.
Visit annualcreditreport.com where you can view or download your credit report for free every 12 months. Go over your report carefully to make sure that the balance shown on each account is correct, and look for unfamiliar accounts that you didn’t open.
Quick and dirty tip: Download the Credit Score Survival Kit for a free step-by-step video tutorial on how to check your credit report, correct errors, and raise your credit scores.
If you have been the victim of fraud, immediately place a security freeze on your credit file. Thi
s will prevent new credit accounts from being approved in your name without your consent. Then contact the creditor or collections agency and explain the situation.
Debt Collection and Lawsuits
When you begin communicating with a debt collector keep good records, like the date, time, notes of the conversation and anything you believe may be considered illegal harassment. This documentation will help you if you can’t resolve a dispute or end up going to court.
If a collector sues you, don’t ignore them—even if you know it’s a mistake. You must respond personally or through an attorney, by the date on the lawsuit paperwork in order to preserve your rights.
Likewise, if you’ve been harassed by a debt collector, you can sue them in state or federal court within one year. If you win the case, the collector may have to pay you for damages and court costs.
Even if you don’t sue a collector, be sure to report any illegal harassment to the Federal Trade Commission at ftc.gov and to your state Attorney General’s office at naag.org. That’s the best way to put a collector who’s breaking the law in their place.
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About the Author
Laura Adams received an MBA from the University of Florida. She’s an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura’s previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.
