Debt Collection Laws: Know Your Rights


When money gets tight, sometimes financial obligations don’t get met. After a certain amount of time passes without payment, a lender may engage a debt collection agency to collect past due amounts.

If you’ve ever been contacted by one of these agencies, then you’ve experienced the stress that comes with being unable to pay your bills, and the added stress that arises when a debt collector agency contacts you for payment.

You may not know that you have rights that are laid out by the Fair Debt Collection Practices Act (FDCPA). It’s important to know what these rights are to protect yourself from unfair or unscrupulous debt collection agencies.

What Debt Collectors Can and Can’t Do

Debt collection agencies are allowed to contact you regarding personal debts but not business-related debts. Personal debts can include credit card bills, student loan debts, and medical bills.

They are allowed to use the following methods to contact you:

  • phone calls
  • letters
  • emails
  • text messages

Debt collection laws prevent agencies from legally contacting you before 8 a.m. or after 9 p.m. unless you’ve given them permission to do so. If you inform them that you can’t accept calls at work, they’re no longer allowed to call you there.

When you’re contacted by a debt collector, the agency is required to send you a validation notice in writing within five days of the first time you’ve been contacted by them. This written notice must include:

  • the amount of money you owe
  • to whom you owe the money
  • how you should respond if you don’t believe you owe this debt

In general, the agency is not allowed to tell anyone else about this debt, other than you or your spouse. They are allowed to contact other people to ask for your address, phone number and place of employment, but typically can only contact other people one time each for this purpose. If you hire an attorney to represent you, the debt collector will need to deal with the attorney, rather than directly with you.

Unfair Practices of Debt Collectors

If you’re feeling harassed or threatened by someone attempting to collect money from you for a debt, the agency may be crossing a legal line. Specifically, the Federal Trade Commission (FTC) states that collectors aren’t allowed to:

  • threaten you with violence or harm
  • use obscene or profane language
  • repeatedly use the phone to annoy you

Note that the italicized text is taken directly from the FTC website so you can see the exact language. The FDC also states that debt collectors are not allowed to lie to you. Specifically, its website says that collectors cannot:

  • misrepresent the amount you owe
  • lie about being attorneys or government representatives
  • falsely claim you’ll be arrested, or claim legal action will be taken against you if it’s not true

We’ll also quote the FTC one more time, doing so because we want to be crystal-clear in sharing what is not allowed. Unfair practices include if they:

  • try to collect interest, fees, or other charges on top of the amount you owe, unless the original contract or your state law allows it
  • deposit a post-dated check early
  • take or threaten to take your property unless it can be done legally

You have the right to request that calls stop, and you need to do so in writing. This does not mean you no longer owe the money, but it does mean that debt collectors are not allowed to call you anymore about that debt.  

You are also entitled to get free copies of written information about your rights and, if you’d like to file a complaint about how a debt collector treated you, you can do so with the federal Consumer Financial Protection Bureau.

What You Might Expect With Debt Collection Agencies

The process will likely be different if you owe a debt secured by collateral (a mortgage loan secured by your house, for example, or a car loan secured by your vehicle) versus debts that are unsecured. The latter includes credit card debt, unsecured personal loans, or a cell phone bill.

With a secured debt, the legal encyclopedia at Nolo.com explains, the lender can repossess or foreclose upon the property involved and it probably won’t use a debt collector in this process. For certain unsecured loans, though, the lender probably will; and, if its attempts at collection don’t work, lenders may file a lawsuit. If the lender wins, then it will likely be able to take money out of (or “garnish”) your paycheck or bank account.

How You Can Respond

If you don’t owe the debt:

In this case, Nolo.com says you’ll typically want to dispute it. You have 30 days after receiving a written collection notice to dispute it, and must do so in writing. Then, the FDCPA will require the collector to communicate with the original lender and verify whether or not you owe the money. If it still believes you do, it must send you proof.

If the debt appears in a negative way on your credit report, you can dispute it with the credit bureaus and the lender will have a certain time to verify its claim.

This situation can get complicated, especially if you end up getting sued. So, it makes sense to consider hiring an attorney to represent you.

If you do owe the debt:

If you do owe the money, it can be costly to try to fight any collection efforts in court. You can try to negotiate a lower payoff amount if you can’t pay it off in full or a repayment plan that fits within your current budget. If you can’t afford to repay the debt in either of those ways (or if the creditor won’t offer those terms to you), then you might need to explore filing for bankruptcy.

Again, it often makes sense to consult with an attorney about your options. Each situation is unique, and debt collection attorneys can help you to understand your choices and do what’s best for your legal and financial circumstances.

Seeking Legal Assistance

When you’re already struggling financially, you can be reluctant to hire an attorney to help you navigate debt collection challenges. And that concern can be understandable.

But, an experienced debt collection attorney can help you:

  • clearly understand what creditors and debt collectors can and can’t do to collect payments
  • negotiate a repayment plan
  • negotiate a reduced lump sum repayment
  • understand wage garnishment, including what can and can’t happen
  • attempt to avoid foreclosure or repossession of assets, or to navigate this process
  • file for bankruptcy, if that is the best route

Our Legal Benefits Plans Can Help

At U.S. Legal Services, we understand how financial and legal challenges can be closely tied together. And, we also understand how you might be reluctant to consult with an attorney when you’re already struggling with financial difficulties. That’s why we’ve created legal benefits plans that provide you with easy, affordable access to a network attorney in your local area—and the cost of that initial consultation for members is covered in full.

Here are overviews of two plans we offer.

Family Defender™ Legal Insurance Plan

The Family Defender™ plan is a comprehensive legal insurance plan that gives members ready, affordable access to attorneys and financial planners. You’ll have access to the legal help you need to navigate your current debt collection challenges while also being able to create a financial wellness plan for your family going forward.

Plus, you’ll have access to a wide range of additional legal services, including family law, traffic law, estate planning and more, as well as identity theft protection services with our Identity Defender™ plan enhancement. This legal benefits plan empowers members, protects them, and offers them peace of mind and a way to move forward with expert legal and financial guidance.

CDL Defender™ Legal Insurance Plan

The CDL Defender™ plan is specifically tailored to meet the financial and legal needs of commercial truck drivers and their spouses. Members are provided with a wide range of legal services, ranging from job-specific ones to personal legal issues, with the same financial coaching and identity theft protection services available to them as with the Family Defenderplan.

We’ve offered these plans to employers for more than 40 years, and legal benefits plans are our only business.

Contact U.S. Legal Services Today

If you are an employer and would like to offer one of these voluntary benefits plans to protect your employees, we invite you to contact us online or call us at 1.800.356.LAWS.

Our plans are the most comprehensive in the industry, making legal representation more accessible and affordable to everyone. The plans are easy for you to manage and cost-neutral for your company, you’ll receive outstanding customer service, and it’s easy to get started. We look forward to speaking with you!