One of the most important features of the U.S. debt collection process is that debtors—and creditors, too—have well-defined rights. The Fair Debt Collection Practices Act (FDCPA) was first signed into law way back in 1977 (and most recently updated in 2010), precisely because Congress found “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.”
Eliminate abusive debt collection practices by debt collectors.Ensure that debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged.Promote consistent actions by U.S. states to protect consumers against debt collection abuses.If you’re wondering about your rights during the debt collection process, here are 10 things to expect.
1. Debt collectors must communicate appropriatelyThe first thing to know about communicating with a debt collector is that a debt collector is prohibited from contacting you at any unusual time or place without your prior consent. Debt collectors have restricted rights to contact you at work, for example, and the hours before 9 a.m. and after 8 p.m. (in your local time zone) are off limits.
You can even require that a debt collector stop contacting you by letting them know in writing that you wish to cease any further communication or that you refuse to pay the debt. After that, the debt collector can only notify you of an intent to pursue a further remedy, such as legal action.
You can also hire an attorney and direct the debt collector to only contact them. Your attorney then becomes responsible for responding promptly to the debt collector’s requests.
2. Debt collectors may ask others only about your locationDebt collectors may communicate with people other than you to attempt to learn your home address, your telephone number, and where you work. The rules governing this outreach include:
Debt collectors must identify themselves and their purpose without mentioning that an individual owes any debt. A debt collector’s employer must only be disclosed upon request. This outreach to other persons must happen only once (unless a debt collector has reason to believe that a person’s first response was a mistake, incomplete, or they have new information). Any physical mailings must preserve the privacy of the individual owing the debt.The same rule about legal representation applies here, too. If you hire an attorney to represent you, then the debt collector is prohibited from contacting any other third parties unless your attorney fails to respond in a timely manner.
3. You can request debt verificationIf you’re just at the start of dealing with a debt collector, know that you can require the debt to be verified. Within 30 days of initial contact by a debt collector, you may dispute the debt and request in writing that the debt (or any portion of it) be verified.
To verify a debt, the collector must provide documentation to prove that the debt is yours. The debt collector must also furnish additional information, including:
The current amount of the debt, accounting for any penalties or credits. The names of all original and secondary creditors. Information about individuals’ rights during the debt collection process.Debts that are disputed cannot be collected while they’re being verified. Verification slows down the debt collection process and ensures that the information you receive is credible.
4. Harassment and abuse are prohibitedHarassing, oppressing, or abusing any person in connection with the collection of a debt is expressly prohibited. Here’s what that means specifically for debt collectors:
No using or threatening to use violence or other criminal means to harm the debtor’s physical person, reputation, or property. Obscene, profane, or otherwise abusive language is not allowed. No publicizing lists of consumers who allegedly refuse to pay their debts. No advertising the sale of a debt as a coercion tactic to repay the debt. Phone calls may not be used to annoy, abuse, or harass—and debt collectors must disclose their identities.5. False and misleading representations are prohibitedDebt collectors are also banned from using any representations that are false, misleading, or otherwise deceptive. A debt collector may not:
Use deceptive practices to collect or attempt to collect any debt, or to obtain information about a debtor. Falsely imply that the debt collector is vouched for, bonded by, or affiliated with the federal government or any U.S. state. Wrongly claim that any individual debt collector is an attorney or that any communication is from an attorney. Falsely represent the character, amount, or legal status of a debt. Mislead a debtor to believe that documents are not legal process forms or do not require action by the debtor. Threaten any action that is illegal or that the debt collector does not intend to take. Cause a debtor to believe that nonpayment of any debt will result in arrest or imprisonment. Falsely represent that the debtor has committed a crime.6. Unfair practices are bannedThe Fair Debt Collection Practices Act also addresses unfair practices by debt collectors. The following are explicitly banned:
Debt collectors may not collect any amount—including any interest, fee, charge, or other expense—unless the amount is permitted by law or expressly authorized by the agreement that created the debt. Post-dated checks may not be solicited by debt collectors by any threatening means. Debt collectors may not deposit post-dated checks without providing appropriate advance notice. Taking, or threatening to take, nonjudicial action to cause the dispossession of property is not allowed, unless the terms of the debt agreement explicitly permit such action.7. You get to decide how your payment is appliedWhen it rains, it pours—right? In the realm of debt collection, that may mean that you have more than one debt.
If this sounds like your situation, then it’s important to realize that you control how any payment is applied to your debts. Individuals working with a single debt collector to resolve more than one debt are empowered to choose how every payment is used. In addition to obeying your instructions, debt collectors may not apply a payment to any debt that is currently being disputed.
8. Jurisdiction matters for debt collectors’ legal actionsLegal proceedings can be stressful for debtors, especially if travel is involved. The Fair Debt Collection Practices Act prevents a debt collector from pursuing legal proceedings in inconvenient or irrelevant jurisdictions.
The jurisdiction where an individual signed the debt contract. The location where the individual resides at the start of the legal action. For debt collections involving property, the jurisdiction where the property is located.9. Debt collectors may incur civil liabilitiesIn order to establish a strong incentive for compliance, the Fair Debt Collection Practices Act creates the potential for debt collectors to incur civil liabilities. The act states that “any debt collector who fails to comply with any provision … with respect to any person is liable” to pay for “any actual damage sustained by [that] person as a result of such failure.”
If that sounds like legalese that would require you to get a lawyer—you’re right. But if you take a debt collector to court for violating the FDCPA and your action is successful, then the debt collector can be required to reimburse your “reasonable” attorney’s fees. What exactly is quantified as reasonable is determined by the court.
Although debt collectors may be held responsible for damages, they also enjoy some protections against civil penalties. A debt collector may avoid liability if they show enough evidence that a violation was not intentional and resulted from an honest mistake. Debt collectors who receive advisory opinions from the Consumer Financial Protection Bureau, which oversees the FDCPA, may also be shielded from civil liability.
10. State laws may afford greater protections to debtorsThe final important aspect of the Fair Debt Collection Practices Act that you should understand is how it relates to U.S. state laws on debt collection.
The FDCPA explicitly states that no provision in the act annuls, alters, or affects the obligations of debtors to comply with state laws, unless those state laws are inconsistent. (Even then, noncompliance is limited to the extent of the inconsistency.) In an effort to maximize the protections afforded to debtors, the FDCPA also clarifies that a state law isn’t inconsistent if it provides more protection.
The state laws on debt collection vary by where you live. Research the specific laws in your state to learn how they may augment your rights during the debt collection process.
The bottom lineThe Fair Debt Collection Practices Act is chock-full of rights for debtors, and it clarifies some of the rights of debt collectors, too. If you want to learn more about your rights, you can read the Fair Debt Collection Practices Act in its entirety. It’s fairly streamlined and readable in one sitting (and without a law degree).
Anyone may encounter an unexpected (or expected) run-in with a debt collector. Knowing your rights in advance is crucial for your own protection.