Collection agencies: understand your rights as a consumer

Over the past couple of years and now that the holiday season is in full swing, many people have fallen behind in everything from credit cards and car loans to mortgage payments. When this happens, companies often sell their bad debts to a collection company.

While it can be frustrating and scary to fall behind on payments, when collection agency calls start it adds a new level of stress. Do not panic. Instead, understand what rights you have as a consumer, learn what collection agencies can and can’t do, and then take action to fix the problem.

Debt collection process rules in place to protect consumers

The Federal Trade Commission (FTC) enforces the Fair Debt Collection Practices Act (FDCPA) in the USA. The FDCPA prohibits debt collectors from engaging in abusive, unfair or deceptive practices when attempting to collect debts.

The FDCPA considers anyone who regularly collects debts owed to others as a debt collector. This means that collection agencies, lawyers who collect debts, and businesses who buy debts and then try to collect them are all covered.

The FDCPA applies to personal, family, and household debt, including money you owe on credit cards, car loans, medical bills, and your mortgage. It does not apply to debts incurred for the operation of a business.

When a debt collector calls, they should follow up within five days with a written “validation notice”. This notice should state the name of the creditor to whom you owe money, how much you owe, and what to do if you think you don’t owe the money.

You must respond in writing within thirty days of receiving the debt notice to avoid any further action or contact by the collector. If you have proof that the debt has been paid, you must provide it as well. Your letter and any evidence disputing the debt must arrival to the establishment of the collector within thirty days. It is always a good idea, when disputing a debt, to send your letter by registered mail and require a signature acknowledging receipt from the collector.

You may want to talk to the debt collector at least once to see if you can resolve the issue, but if you decide you don’t want the collector to contact you back, document it in writing. Sending a letter does not resolve the debt and will not stop the action to collect the debt, but it can affect how the collector communicates with you. If a lawyer represents you about the debt, the debt collector should deal with the lawyer rather than with you.

The Consumer Financial Protection Bureau (CFPB) updated the practices used by bill collectors when communicating with consumers and what people can do.

What collectors CAN and CANNOT do:

  • MAY contact you by phone, letter, email, SMS or Social media as long as they identify themselves as debt collectors
  • CANNOT pretend to be someone else, such as a government agency or credit reporting company, or use a false company name
  • MAY contact you at work unless you tell them that you are not authorized to receive calls there
  • CANNOT call before 8 a.m. or after 9 p.m. (unless you agree)
  • MAY contact other people about you to find your address, phone number and place of work, but CANNOT contact them more than once or discuss your debts with them (except your spouse or your lawyer).

the FDCPA details more of the practices prohibited for debt collectors, including harassment, misrepresentation and unfair practices. Some specific things they can’t do include:

  • Using threats of violence or harm or using obscene or profane language
  • Publish a list of names of people who do not pay their debts
  • Falsely claiming that you have committed a crime
  • Distort the amount of money you owe
  • Lying to know if the papers they send you are legal forms or give you something that looks like an official document if they are not
  • Tell you that you will be arrested if you do not pay your debt or say that they will seize, seize, seize or sell your property unless they are authorized by law to do so
  • Threatening you with legal action if it would be illegal or if they have no intention of doing so
  • Try to charge interest, fees, or other charges in addition to the amount you owe, unless the contract that created your debt – or your state’s law – allows the charges.
  • Early deposit of a post-dated check
  • Contact you by postcard or any other means that can be externally identified as coming from a debt collector

When to do business with a collection agency

Keep track of all the calls you receive from a collection agency and save all written statements. Do not give out personal or financial information until you have confirmed that the collection agency is legitimate. If you can make a deal to pay monthly or reduce your debt, get the details in writing. When paying off your debt, be sure to obtain and keep documentation of the resolved debt.

What should you do if you are sued by debt collection?

Don’t ignore a court summons. A debt collector can sue you to collect a debt, and a court order can cause third parties like your bank or employer to remit funds to pay off your debt. If you don’t go to court, you lose your chance to fight garnishment. Make sure that you or your lawyer respond to a lawsuit before the date stated in the court documents.

What if a debt collector breaks the law?

If you believe a debt collector has broken the law in their dealings with you, you have one year from the breach to prosecute. Remember, even if the debt collector breaks the law, a legitimate debt doesn’t go away.

You can file complaints and reviews of collection agencies at and if the collection seems suspicious to you or if you have no debt, report it to

There are also government agencies you can turn to for help: In the United States, your State Attorney General’s Office, the FTC, and the CFPB can help. Many states have their own laws on the debt collection process, and the Attorney General’s office can help.

Debt collection is also an opportunity for crooks to collect personal information by masquerading as credit or debt relief services. Learn more about detecting and reporting this type of scam by visiting If you’ve been the target of a potential scam, help others avoid the same issue by reporting your experience to

Sources:, CFPB, FTC: United States Federal Trade Commission, – not subject to copyright protection. 17 USC 403.

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