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70 Debt Collection Questions and Answers

If I tell a debt collector to stop contacting me, can it still report my debt to the credit reporting bureaus?

Yes, if it is has a legal right to do so. Telling a debt collector to stop contacting you does not make the debt go away if the debt is yours. The collector may still report your debt as an unpaid collection item to the credit bureaus. Any information the debt collector provides must be accurate. If you dispute the debt, the debt collector must also include information about the dispute when giving information to the credit reporting agency.

Can a debt collector call me if I am listed on the Federal Trade Commission’s National Do Not Call Registry?

Yes. Companies you have business relationships with can still call you under the Do Not Call law. If you tell a debt collector in writing to stop contacting you, the collector may not contact you again except to say there will be no further contact, or to notify you that the debt collector or the creditor may take some specific action it is legally allowed to take, such as filing a lawsuit against you. However, telling a debt collector to stop contacting you does not stop the debt collector or creditor from using other legal ways to collect the debt from you if you owe it, including filing a lawsuit against you.

A debt collector has contacted me regarding multiple accounts currently in collections. Do I have any control over which debt my payments are applied to?

Yes. If you owe money on more than one debt with a debt collector, you can direct the debt collector to apply any payment you make to the debt you choose.

Any debt collector who contacts you claiming you owe payment on one or more debts is required by law to tell you certain information about the debts. That information includes the names of the creditors, the amounts owed, and how you can dispute the debts or seek verification of the debts.  If the debt collector doesn’t provide that information in the initial contact with you, the debt collector is required to send you a written notice including that information within five days of the initial contact. It is generally a good idea to get this written notice before you pay the debt collector.

If you owe on more than one debt and are disputing one or more of those debts, the debt collector may not apply a payment to a debt you are disputing.

TIP: Keep good records of your communications with a debt collector.

It is a good idea to keep a file of all letters or documents a debt collector sends you and copies of anything you send to a debt collector. Also, write down dates and times of conversations along with notes about what you discussed. These records can help you if you have a dispute with a debt collector, meet with a lawyer, or go to court.

Am I responsible to pay off the debts of my deceased spouse?

In most cases you will not be responsible to pay off your spouse’s debts.  There are some exceptions and these vary by state. For example, you may be responsible for a debt if you co-signed the loan or credit agreement of if you live in a community property state.

If you have questions about whether you are legally obligated to pay a deceased person's debts from your own assets, you should talk to a lawyer familiar with your state’s probate laws.

Are all debt settlement services legitimate?

The debt settlement industry is relatively new. There are several different business models, and not all of them may operate in your best interest or even legally under state or federal law. A 2010 US Government Accountability Office report has found that some debt settlement companies engage in fraudulent, deceptive, or abusive practices that pose risk to consumers. It  also found that most of the time, debt settlement companies do not eliminate all or most of the client’s debt. This creates problems for their clients, because the unsettled debts grow larger through late fees, penalty interest and other charges. Also, debt settlement often prompts creditors to speed up collection efforts.

Can a debt collector try to deceive me to collect on a debt?

No. Debt collectors are prohibited from deceiving you while trying to collect a debt.  For example, a debt collector may not:

  • Falsely claim that the debt collector or its employees are attorneys or government representatives
  • Falsely say you have committed a crime
  • Falsely say they operate or work for a credit reporting company
  • Making false threats, such as arrest
  • Lie about the amount you owe
  • Lie about documents, saying forms are legal documents when they aren't, for example.
  • Lie about how much you owe or to whom you owe the money
  • Threaten to garnish your paycheck if it is not allowed in your state
  • Threaten to tell your security manager about your debt and have your security clearance revoked

If you believe a debt collector has given you false or misleading information, contact the CFPB, the FTC, or your state's attorney general. You can also sue the debt collector for this or other violations of the Fair Debt Collection Practices Act (FDCPA).  If you sue under the FDCPA and win, the debt collector must generally pay your attorney’s fees, and may also have to pay you damages.

TIP: Keep good records of your communications with a debt collector.
 
It is a good idea to keep a file of all letters or documents a debt collector sends you and copies of anything you send to a debt collector. Also, write down dates and times of conversations along with notes about what you discussed. These records can help you if you have a dispute with a debt collector, meet with a lawyer, or go to court.

Can a collection agency try to have me arrested over a debt collection?

You cannot be arrested for not paying a debt collector. Collections agencies do not have the legal authority to issue arrest warrants. Nevertheless, if a collector has obtained a judgment against you and you ignore an order to appear in court, a judge may issue a warrant for your arrest. You should never ignore a court order. If you get a court order to appear, you should go to court and provide any required information. You may want to consult with an attorney to help you with your court appearance.

Can a creditor or debt collector sue me if I am making regular payments, but not paying the full amount or not paying on time?

Yes, unless you have an agreement with the creditor or debt collector that it will not sue you while you are making regular payments. You should be sure to get any agreement in writing.

Can a debt collector call my military supervisor or Commander if I am delinquent in paying my credit card or other debt?

Servicemembers have the same rights under the Fair Debt Collection Practices Act as civilian consumers do. A debt collector may contact your supervisor or Commander but only to find out where you live, what your phone number is, and where you work. A debt collector may not tell your supervisor or Commander that you owe a debt. Typically, they may only contact your supervisor or Commander once. Consult your local JAG attorney before making payments to a debt collector and to find out more about your rights.

Can a debt collector contact me about a deceased person’s debt when it was in that person's name only?

Sometimes a debt collector will contact third parties (such as relatives) to get the name, address, and telephone number of the deceased person's spouse, parent (if the deceased person was a minor), executor, or administrator. Debt collectors usually are permitted to contact such third parties only once to get this information, unless the collector reasonably believes that the information provided initially was inaccurate or incomplete, and that the third party now has more accurate or complete information. But, collectors cannot say anything about the debt to the third party.

Can a debt collector garnish my bank account or my wages?

In some states, maybe. Some states do not allow wage garnishments for certain kinds of debt. In other states, debt collectors who sue you in court and win may be able to freeze and take funds from  your bank account or garnish wages. The court's judgment will state the amount of money you owe. A later court order may also state how much may be taken from your bank account or garnished wages. State laws have limits on wage garnishment, to make sure you have something left to live on.

If federal benefits are directly deposited into your bank account, there are additional protections under federal law for some of the funds in your account. It is a good idea to seek legal advice if your wages are garnished or funds are frozen or removed from your bank account.

The amount of money you owe could include the original debt as well as other fees or costs as determined by the court.

TIP: If you are having problems paying a debt, don't wait. You may want to consult a credit counselor  before a debt collector takes an action liking suing you. Credit counselors are organizations that can advise you on managing your money and debts, help you develop a budget, and usually offer free educational materials and workshops. Credit counselors are usually non-profit organizations.

TIP: If possible, consult an attorney if you are sued.

An attorney can represent you if you are sued. Don’t wait until your case has gone to court to get legal help. Once a court has issued a judgment against you it will be much harder and more costly to try to reverse a garnishment order. Your legal costs may end up being less overall if you engage an attorney at the start of the case than if you hire an attorney to help you after an order of garnishment has already been entered against you.

To find an attorney, you can contact a lawyer referral service in your area and ask for an attorney with experience in consumer law, debt collection defense, or the FDCPA. Some attorneys may offer free services, or charge a reduced fee. There may also be legal aid offices or legal clinics in your area who will offer their services for free if you meet their criteria. Servicemembers should consult their local JAG office.

Can a debt collector increase the interest rate on a debt I owe?

A debt collector may not collect any interest or fee not authorized by the agreement or by law. The interest rate or fees charged on your debt may be raised if your original loan or credit agreement permits it. Some state laws and some contracts allow interest to be charged and costs to be added. If you still have the contract, it may say what interest rate can be charged or how much it can increase. State law may also limit the amount of interest charged.   

Can a debt collector put a lien on my house if I am not paying my debt?

A debt collector generally cannot put a lien on your house without first filing a lawsuit and winning a judgment by the court. Some states limit liens on homes, even if a debt collector has obtained a judgment. If a debt collector is threatening to put a lien on your home, you may want to consult an attorney to learn your rights under your state’s laws.

To find an attorney, you can contact a lawyer referral service in your area and ask for an attorney with experience in consumer law, debt collection defense, or the FDCPA. Some attorneys may offer free services, or charge a reduced fee. There may also be legal aid offices or legal clinics in your area who will offer their services for free if you meet their criteria. Servicemembers should consult their local JAG office.

Can a debt collector try to collect on a debt that was discharged in bankruptcy?

No. If you have filed for bankruptcy, a debt collector cannot try to collect debts included in the bankruptcy. Also, if you file for bankruptcy, debt collectors are not allowed to continue collection activities while the bankruptcy case is in being heard by the court.

If a debt collector calls, tell the debt collector that you filed for bankruptcy. You should also be sure the debt is in your list of debts and creditors filed with the bankruptcy court. If you are represented by an attorney for your bankruptcy, you should advise the debt collector of this. Then the debt collector must contact the attorney instead of you.

However, it is important to recognize that lenders often have a right to repossess the collateral (for example, in many auto loans lenders have a right to repossess the car). If so, then the creditor may still have that right after bankruptcy, if your debt is unpaid. If you have a bankruptcy lawyer, you might want to get advice from your lawyer about repossession.

Can debt collectors call me anytime they want, day or night, about my debt?

No. Debt collectors may not harass you or anyone else, over the phone or through any other form of contact. Debt collectors cannot call you at times they know are inconvenient (or should know are inconvenient), such as before 8 a.m. or after 9 p.m., unless you specifically agree to it. Also, if a debt collector knows that you are not allowed to receive the debt collector’s calls at work then the debt collector is not allowed to call you there. If your employer does not allow you to receive personal calls at work you should let the debt collector know that.

Can debt collectors call my employer and tell them they are calling about my debts?

No. A debt collector generally may not contact your employer or other third-parties about the debt.  Debt collectors may ask your employer to verify your employment, or ask for your address or telephone number. Generally, a debt collector is only permitted to discuss your debt with you, your spouse, or your attorney. Also, if a debt collector knows that you are not allowed to receive the debt collector’s calls at work then the debt collector is not allowed to call you there. If your employer does not allow you to receive personal calls at work you should let the debt collector know that.

Can debt collectors tell other people about my debt?

No. Under federal law, a debt collector may contact other people but generally only to find out where you live, what your phone number is, and where you work. Debt collectors are generally prohibited from contacting people you know more than once, and they may not say they are trying to collect on a debt.

Generally, a debt collector may not discuss your debt with anyone other than you, your spouse, your parents (if you are a minor), your guardian, or your attorney. If the debt collector knows an attorney is representing you about the debt, the debt collector must contact the attorney instead of you.

Can I tell a debt collector to stop contacting me about the debts of my deceased relative?

Yes. If you don't want a debt collector to contact you again, write a letter to the debt collector saying so. You should make a copy of your letter, and you may want to send the original by certified mail, and pay for a “return receipt” so you will be able to document what the collector received and when. Once the debt collector receives your letter, they may not contact you again, with two exceptions: a debt collector can contact you to tell you there will be no further contact, and a debt collector can contact you to let you know that they or the creditor may take other specific actions it is legally allowed to take, such as filing a lawsuit against you. Remember that even though the debt collector is prohibited from contacting you again, they still may sue the estate of your relative or a person legally responsible person to pay the debt. However, you have no obligation to pay debts you do not owe.

Can my account be referred to a collection agency before my debt is due?

Sometimes collection agencies manage the entire receivables process for a creditor, so this can happen. However, it is rare that you would receive collection calls before a debt is due. It is possible that if the collection agency is managing the receivables for a creditor, they may call to advise you of payment terms, due dates, etc., but they should not ask you for early payment. You should receive a statement before you are asked to make a payment.

Can my federal benefits be garnished?

In most cases, debt collectors may not garnish federal benefits to repay consumer debt.
Also, your bank account balance has some protections if these types of payments are directly deposited to your bank account. Even if your account only contains federal benefits that may not be garnished, you should respond to any action seeking a garnishment to ensure your benefits are protected.

Federal benefits include:

  • Social Security benefits
  • Supplemental Security Income (SSI) benefits
  • Veteran’s benefits
  • Civil service and federal retirement and disability benefits
  • Servicemember pay
  • Military annuities and survivor benefits
  • Federal student aid
  • Railroad retirement benefits

However, these benefits may be garnished if your debt is for federal taxes or you have defaulted on a federal student loan.

Click here for more information about garnishment of federal benefits.

A debt collector has told me it is going to have my security clearance revoked because of being delinquent on my credit card bill. Can they do that?

The debt collector cannot influence the security manager about granting or extending your clearance.  A bad debt on your credit report can, however, lower your credit score, which may be considered when your security clearance is up for review. Servicemembers are expected to pay their just financial obligations in a proper and timely manner. Failure to pay a just obligation may result in disciplinary action under the UCMJ.

Consult your local JAG attorney before making payments to a debt collector and to find out more about your rights.

Do I have a right to dispute the debt if a creditor or debt collector sues me?

Yes. You can challenge the debt or the amount when you answer the lawsuit in court. 

Does a creditor have to inform you of the debt before turning it over to collections?

Generally speaking, the creditor does not have to tell you before it sends your debt to a debt collector. Usually, a creditor will try to collect the debt from you before sending it to collections. 

Does a debt collector have to verify for me how much I owe? When?

Yes, any debt collector who contacts you claiming you owe payment on a debt is required by law to tell you certain information about the debt. That information includes the name of the creditor, the amount owed, and how you can dispute the debt or seek verification of the debt. If the debt collector doesn’t provide that information in the initial contact with you, the debt collector is required to send you a written notice including that information within five days of the initial contact.

You can dispute the debt or ask for more information if you are unsure you owe money to a creditor, or how much you might owe.

If you dispute a debt (or part of a debt) in writing within 30 days of when you receive the required information from the debt collector, the debt collector cannot call or contact you until after your dispute has been investigated and the debt collector has provided the verification of the debt in writing to you.

You can also request that the creditor give you the name and address of the original creditor. If you make that request in writing within 30 days, the debt collector has to stop all debt collection activities until the debt collector provides you that information.

When you get the requested information or the response to your dispute from the debt collector, see if you own records agree with the information the debt collector provided. If you don’t recognize the name of the creditor, ask if it might have purchased the debt from another company that first made the loan or gave you credit and, if so, what the name of that company is. 

TIP: Keep proof that you sent your letter to the debt collector.

You should make a copy of your letter and send the original to the debt collector. It is generally a good idea to send the letter by certified mail. If you pay for a “return receipt,” you also will have proof that the debt collector received your letter. You may also send the letter by fax, just be sure to keep a copy of the fax receipt.

Even if I am the executor or administrator authorized to pay a deceased person's debt from his or her estate, can I stop a debt collector from contacting me about the debt?

Yes. To exercise this right, you must send a letter to the debt collector stating that you do not want the debt collector to contact you again. A request during the telephone call is not enough. Make a copy of your letter for your files, and consider sending the original by certified mail, and paying for a “return receipt” so you can document what the collector received and when. Once a debt collector receives your letter, it may not contact you again except to:

  • Tell you there will be no further contact
  • Advise you that it or the creditor may take other specific actions it is legally allowed to take, such as a lawsuit against you

Keep in mind that even if you stop debt collectors from communicating with you, the decedent’s estate may still be responsible for the debt. The debt collector may file a claim against the estate like any other creditor.

How can I stop debt collectors from contacting me?

You have the right to tell a debt collector, in writing, to stop communicating with you. Once a debt collector receives your letter, it may not contact you again except to:

  • Tell you there will be no further contact
  • Tell you that it or the creditor may take other specific actions it is legally allowed to take, such as filing a lawsuit against you

However, telling a debt collector to stop contacting you does not stop the debt collector or creditor from using other legal ways to collect the debt from you if you owe it, including a lawsuit against you. The creditor or the debt collector also may make a negative report to a Consumer Reporting Agency, affecting your credit report and credit score. (In some cases, the debt may be too old to affect your credit report or credit score.)

If the collector continues to call after receiving the letter, it may be violating the Fair Debt Collection Practices Act (FDCPA).

TIP: Keep proof that you sent your letter to the debt collector.

You should make a copy of your letter and send the original to the debt collector. It is generally a good idea to send the letter by certified mail. If you pay for a “return receipt,” you also will have proof the debt collector received your letter. You may also send the letter by fax, just be sure to keep a copy of the fax receipt.

TIP: Keep good records of your communications with a debt collector.

It is a good idea to keep a file of all letters or documents a debt collector sends you and copies of anything you send to a debt collector. Also, write down dates and times of conversations along with notes about what you discussed. These records can help you if you have a dispute with a debt collector, meet with a lawyer, or go to court.

Report any problems you have with a debt collector to the CFPB , the FTC, or your state's attorney general. You can also sue the debt collector violating the Fair Debt Collection Practices Act (FDCPA). If you sue under the FDCPA and win, the debt collector must generally pay your attorney’s fees, and may also have to pay you damages.

How can I verify whether or not a debt collector is legitimate?

The Federal Trade Commission reports that scam debt collections are a growing problem, so you are smart to be on your guard. Unfortunately, it’s often hard to tell the difference between a scam and somebody who is legitimately trying to collect on a real debt. Here are a few warning signs that could signal a scam:

  • The debt collector threatens you, claiming they will have you arrested; tries to scare you into paying; or claims that the debt collector or its employees are law enforcement. It is a violation of federal law for a debt collector to threaten physical harm, criminal action, or government authority.
  • The debt collector refuses to give you information about your debt or is trying to collect a debt you do not recognize. You have certain rights to ask a debt collector to verify the debt. You can use our sample letter to request this information. Ask for an explanation in writing before you pay.
  • The debt collector refuses to give you a mailing address or phone number.
  • The debt collector asks you for sensitive personal financial information. You should never provide anyone with your personal financial information unless you are sure they are legitimate.

If you think that a caller may be a fake debt collector:

  • Ask the caller for his name, company, street address, telephone number, and professional license number. Many states require debt collectors to be licensed.  Check the information the caller provides you with your state officials, and/or the state in which the debt collector holds a license.  If the caller refuses or is unable to provide you with information about his company, or if you can’t verify the information he provides, do not give money to the caller or company.
  • Tell the caller that you refuse to discuss any debt until you get a written "validation notice." The notice must include the amount of the debt, the name of the creditor you owe, and a description of certain rights under the federal Fair Debt Collection Practices Act. If a caller refuses to give you all of this information, consider requesting this information in writing or seeking assistance before paying the debt to make sure the debt and the company are valid.  You can also submit a complaint to us or you can contact your state Attorney General’s office.
  • Do not give the caller personal financial or other sensitive information. Never give out or confirm personal financial or other sensitive information like your bank account, credit card, or Social Security number unless you know the company or person you are talking with is legitimate. Scam artists, like fake debt collectors, can use your information to commit identity theft – charging your existing credit cards, opening new credit card, checking, or savings accounts, writing fraudulent checks, or taking out loans in your name.
  • Contact your creditor. If the debt is legitimate – but you think the collector may not be – contact your creditor about the calls. Share the information you have about the suspicious calls and find out who, if anyone, the creditor has authorized to collect the debt.
  • Report the call. Contact the FTC, or submit a complaint to us , and get in touch with your state Attorney General's office with information about suspicious callers.
  • Stop speaking with the caller. If nothing else works and you believe the calls are fraudulent, send a letter demanding that the caller stop contacting you, and keep a copy for your files.

How do I find an attorney to represent me in a lawsuit by a creditor or debt collector?

There are several ways to find an experienced attorney:

  • Contact a lawyer referral service in your area and ask for an attorney with experience in consumer law, debt collection defense, or the FDCPA. Low income consumers may qualify for legal aid. The Legal Services Corporation  maintains a list of legal aid programs in each state. 
  • Ask people you know to suggest attorneys they have worked with in the past. 
  • An attorney you know or have worked with before may be able to refer you to an attorney who has experience in consumer law. Bankruptcy attorneys may be particularly helpful in many contexts.

TIP: You may be able to find a link to lawyer referral services on the website of the state or local bar organization in your area. 

TIP: Bring copies of your records about the debt and your records of communication with the debt collector with you when you meet with a lawyer. Never leave your originals with anyone.

It will be helpful for your attorney to review copies of letters you have received from the debt collector, as well as any copes of records you have kept of phone calls, letters you wrote to the debt collector, or other communications.

How do I get a debt collector to stop calling me if it's not my debt?

You have the right to tell a debt collector to stop communicating with you. Write a letter to the debt collector and keep a copy of the letter yourself. Once a debt collector receives your letter, it may not contact you again except to:

  • Tell you there will be no further contact
  • Advise you that it or the creditor may take other specific actions it is legally allowed to take, such as a lawsuit against you

You can also tell the debt collector that you do not believe the debt is yours. If you have evidence that the debt isn’t yours, you might choose to send copies of that information with the letter.

Keep a copy of your letter for your records. It’s generally a good idea to send the letter by certified mail and purchase a return receipt so you have proof it was received (keep this in your records, too). You may also send the letter by fax, just be sure to keep a copy of the fax receipt.

It is against the law for a debt collector to use unfair, deceptive or abusive practices in an attempt to collect debt from you.

TIP: Don’t ignore debt collectors.

Ignoring or avoiding a debt collector is unlikely to make the collector stop contacting you or trying to collect the debt. If you believe you do not owe the debt, or that the debt is not yours, you should tell the debt collector. Even if the debt is yours, you still have the right not to talk to the debt collector and you can tell the debt collector to stop calling you. However, telling a debt collector to stop contacting you does not stop the debt collector or creditor from using other legal ways to collect the debt from you if you owe it, including filing a lawsuit against you or reporting negative information to a credit reporting company.

If the debt collector continues contacting you after receiving a written notice to stop, or is harassing or abusive, it may be violating the law.
 

I am divorced and getting calls about a credit card that is no longer my responsibility under our divorce decree. Can a debt collector try to collect this debt from me?

Yes, a debt collector may be permitted to contact you to collect the debt. Divorce decrees generally do not change the original loan agreement. Unless you were contractually released by the creditor, you still owe the debt and the creditor may still hold you responsible. The same is true for other jointly held credit such as car loans, mortgages and personal loans. However, being an authorized user on someone’s account generally does not make you responsible for the amount owed.

If you do not believe you owe the debt, it will be the duty of the creditor to prove to a court that you are legally responsible for paying it.

I am the executor/administrator of my deceased relative’s estate. Can a debt collector contact me about my deceased relative’s debts?

Yes. Under the Fair Debt Collection Protection Act, collectors can contact and discuss the deceased person’s debts with that person’s executor or administrator.

I have been sued over a debt that I think is past the statute of limitations in my state. Should I still go to court?

Yes. You should never ignore a lawsuit.

In most states, it is the responsibility of the person being sued to prove to the court that the statute of limitations has expired. For example, you may need to show that there has been no activity on the account for a certain number of years. 

Even though a debt collector is not supposed to sue you after the statute of limitations has expired, it does happen.

You should consult an attorney in your state if you are sued over a debt. Your legal aid office may also have information for you in their office or on their website. People with low income may qualify for free legal services through legal aid depending on household income and where you live.

I was an authorized user on my deceased relative’s credit card account. Am I liable to repay the debt?

No, being an authorized user generally does not obligate you to pay the debt.  If a debt collector insists that you co-signed the account but you believe you did not, you may request that the collector provide evidence, such as a copy of a contract that you signed. Credit card issuers usually report authorized users’ status to the credit bureaus. So you may be able to satisfy the debt collector that you were just an authorized user by showing the collector the relevant portion of your credit report. You can obtain a free copy of your credit report once each year at each of the three nationwide credit bureaus at www.annualcreditreport.com, by calling 1-877-322-8228, or by mailing a request.

If I dispute a debt that is being collected, can a debt collector still try to collect the debt from me?

The effect of a dispute depends on how soon you dispute the debt with the debt collector.

Any debt collector who contacts you claiming you owe payment on a debt is required by law to tell you certain information about the debt. That information must include the name of the creditor, the amount owed, and how you can dispute the debt or seek verification of the debt. If they don’t provide that information in the initial contact with you, they are required to send you a written notice including that information within five days of the initial contact.

Tip: You lose valuable rights if you do not dispute a debt in writing within 30 days

If you dispute a debt (or part of a debt) within 30 days from when you first receive the required information from the debt collector, the debt collector cannot call or contact you until after your dispute has been investigated and the debt collector has provided the verification of the debt in writing to you.

If you dispute the debt after those 30 days have passed, the debt collector can continue to contact you while it investigates your dispute. However, if the debt collector reports information about the account to anyone – such as a credit reporting company – it must also report that the debt is disputed. If the investigation shows it is not your account, the debt collector may not continue collection activities.

If I don't pay my deceased spouse's debts using my own funds, will it affect my credit?

Generally, no. For example, if you were an authorized user on your spouse’s credit card account but did not co-sign, guarantee, or otherwise agree to be responsible for it, the collector or creditor generally cannot hold you responsible for paying. If a debt collector reports your spouse’s debts under your name to a credit bureau, unless you were a co-signer to the debt and were jointly responsible for paying it, a credit bureau will generally remove the item at your request. The creditor, such as a credit card company, may ask if you would like to assume responsibility for the account and have the account put under your name. You are not obligated to do this and the creditor cannot use unfair, deceptive, or abusive practices to get you to assume responsibility. The creditor would need your agreement to assume responsibility for making payments on the account.

If someone dies owing a debt, does the debt go away when they die?

Generally, no one else is legally obligated to repay the debt of a person who has died, but there are exceptions to this rule. For example, if there was a co-signer, the co-signer owes the debt. If there was no co-signer or other exception, the estate of the deceased person owes the debt; if there isn't enough money in the estate to cover the debt, it typically goes unpaid.

You may want also to talk to a lawyer. To find an attorney, you can contact a lawyer referral service in your area and ask for an attorney with experience in consumer law, debt collection defense, or the FDCPA. Some attorneys may offer free services, or charge a reduced fee. There may also be legal aid offices or legal clinics in your area who will offer their services for free if you meet their criteria. Servicemembers should consult their local JAG office.

I'm getting called day and night by a debt collector who is threatening to call my military chain of command, too. What can I do about this?

Servicemembers have the same rights under the Fair Debt Collection Practices Act as civilian consumers do. A debt collector may not use threats of violence or harm, use obscene or profane language, or repeatedly use the telephone to annoy you. A debt collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree to such times. A debt collector may not contact you at work if the debt collector knows that your employer does not allow you to accept personal calls at work.

You should keep a log with the time and number of who called and what was said. If you tell a debt collector in writing to stop contacting you, generally the debt collector may not contact you again except to:

  • Tell you there will be no further contact
  • Tell you that it or the creditor may take other specific actions it is legally allowed to take, such as filing a lawsuit against you

However, telling a debt collector to stop contacting you does not stop the debt collector or creditor from using other legal ways to collect the debt from you if you owe it, including a lawsuit against you. The creditor or the debt collector also may make a negative report to a Consumer Reporting Agency, affecting your credit report and credit score. (In some cases, the debt may be too old to affect your credit report or credit score.)

A debt collector may contact your supervisor or Commander, but only to find out where you live, what your phone number is, and where you work. A debt collector may not contact your supervisor or Commander if it already has that information. A debt collector may not tell your supervisor or Commander that you owe a debt. 

Consult your local JAG attorney before making payments to a debt collector and to find out more about your rights.

I’ve been contacted by a debt collector and need help responding. How do I reply?

Depending on your situation, there are many different ways to respond appropriately. You can consider using the following sample letters if you’re experiencing common problems that may come up with debt collectors and you need help responding.

If you use any of these letters, it’s important to do so as soon as possible after you’re contacted, and to keep copies of any letters you send. In certain situations, you only have 30 days after you’re contacted to ask for certain information, but even if more than 30 days pass, it’s still a good idea to ask for what you need.

These letters are not legal advice.  If you’re being sued or think you will be sued, contact a lawyer.

These letters should not be used with a credit card company or your original lender. These letters are written to be used with debt collection companies or companies that purchased your debt from the original lender in order to collect it from you.

My debt is several years old. Can debt collectors still collect?

In most states, if the debt is yours, the amount is correct, and the debt collector is entitled to collect, the debt itself does not expire or disappear until you pay it. Under the Fair Credit Reporting Act, the credit bureaus can report debts on your credit report generally for seven years and in a few cases, longer than that.

Under state laws, if you are sued about a debt and the debt is too old, you may have a defense to the lawsuit. These state laws are called “statutes of limitation.” These can be two years or longer; statutes of limitation  vary depending on the type of debt and the state where you live or the state law named in your credit agreement. The statute of limitations may also be affected by terms in the contract with your creditor and, if you’ve moved, by laws in the state where you are sued. You may want to consult a lawyer to learn long how this period is calculated in your state and when the period may have started with respect to your debt.

In some states, a partial payment on an old account may restart the time period during which you can be sued.

If a debt collector sues over a debt that has gone unpaid for longer than the statute of limitations period, you can challenge the lawsuit. If you are sued and you think the statute of limitations has passed, you may want to consult an attorney. It is a violation of the Fair Debt Collection Practice Act for a debt collector to threaten to sue you if it knows the statute of limitations has passed.


 

My spouse died leaving debts. My relative is the executor of the estate. Can a debt collector contact me about the debt?

Sometimes a debt collector will contact the decedent’s spouse looking for the person authorized to pay your late spouse’s debts. You may wish to tell the debt collector who is the executor for the estate, but you are not obligated to do so. Neither you nor the executor of the estate is under any    obligation to pay the bills from personal funds.

My spouse died leaving debts but no assets and we are not filing any probate papers. Can a debt collector contact me about the debts?

Sometimes a debt collector will contact the decedent’s spouse looking for the person authorized to pay your late spouse’s debts. Although the debt collector may contact you, it does not mean you have to pay the debt out of your own money if you do not owe the debt.

Should I use a debt settlement service to help me deal with my debt and debt collectors?

Dealing with debt settlement companies can be risky. Some debt settlement companies promise more than they can deliver. Some of your creditors may also refuse to work with the debt settlement company you choose. In many cases, the debt settlement company will be unable to settle all of your debts.

Debt settlement companies often claim they can negotiate with your creditors to reduce the amount you owe. They often charge expensive fees. They typically encourage you to stop paying your credit card bills. If you stop paying your bills, you will incur late fees, penalty interest and other charges, and creditors will likely step up their collection efforts against you. Unless the debt settlement company settles all or most of your debts, the built up penalties and fees on the unsettled debts may wipe out any savings the debt settlement company achieves on the debts it settles. Using their services can also have a negative impact on your credit score and your ability to get credit in the future.

TIP: There could be tax consequences for debt forgiveness. If a portion of your debt is forgiven by the creditor, it could be counted as taxable income on your federal income taxes. You may want to consult a tax advisor or tax attorney to learn how forgiven debt affects your federal income tax.

TIP : Debt settlement may well leave you deeper in debt than you were when you started. Most debt settlement companies will ask you to stop paying your debts in order to get creditors to negotiate and to collect the funds required for a settlement. This can have a negative effect on your credit score and may result in the creditor or debt collector filing a lawsuit while you are collecting settlement funds. And if you stop making payments on a credit card, late fees and interest will be added to the debt each month. If you exceed your credit limit, additional fees and charges may apply. This can cause your original debt to increase.

TIP: Avoid doing business with any company that promises to settle your debt if the company:

  • Charges any fees before it settles your debts
  • Touts a "new government program" to bail out personal credit card debt
  • Guarantees it can make your debt go away
  • Tells you to stop communicating with your creditors
  • Tells you it can stop debt collection calls and lawsuits
  • Guarantees that your unsecured debts can be paid off

If you do business with a for-profit debt relief company, the company may tell you to put money in a dedicated bank account, which will be managed by a third party. You may be charged fees for using this account. See the FTC’s page on Settling Your Credit Card Debts for more information. The Federal Trade Commission’s Telemarketing Sales Rule prohibits companies that engage in telemarketing of debt settlement services from charging or collecting a fee unless they first settle, reduce or alter a debt.

An alternative to a debt settlement company is a non-profit, consumer credit counseling service. These non-profits will attempt to work with you and your creditors to develop a debt management plan that you can afford, and that can help get you out of debt. They usually will also help you develop a budget and provide other financial counseling.

Also, you may want to consider consulting a bankruptcy attorney, who may be able to provide you with your options under the law. Some bankruptcy attorneys will speak to you initially free of charge.

Is there a limit to how many times a debt collector can call me?

A debt collector may not call you repeatedly or continuously to annoy, abuse, or harass you or others who share the number. Federal law doesn’t give a specific limit on the number of calls.

You do have a right to tell the debt collector to stop calling you. If you tell a debt collector in writing to stop contacting you, it may not contact you again except to say there will be no further contact, or to notify you that the debt collector or the creditor may take some specific action it is legally allowed to take, such as a lawsuit against you.

However, telling a debt collector to stop contacting you does not stop the debt collector or creditor from using other legal ways to collect the debt from you if you owe it, including a lawsuit against you. The creditor or the debt collector also may make a negative report to a Consumer Reporting Agency, affecting your credit report and credit score. (In some cases, the debt may be too old to affect your credit report or credit score.)

What are debt settlement/debt relief services?

Debt settlement companies and debt relief companies are companies that say they can renegotiate, settle, or in some way change the terms of a person’s debt to a creditor or debt collector. That includes reducing the balance, interest rates or fees a person owes. You can try to do this yourself by contacting your creditors. Debt settlement and debt relief companies often charge expensive fees.

TIP: Avoid doing business with any company that promises to settle your debt if the company:

  • Charges any fees before it settles your debts
  • Touts a "new government program" to bail out personal credit card debt
  • Guarantees it can make your debt go away
  • Tells you to stop communicating with your creditors
  • Tells you it can stop all debt collection calls and lawsuits
  • Guarantees that your unsecured debts can be paid off

What is the best way to negotiate a settlement with a debt collector?

Be prepared by knowing your monthly expenses and income so you are aware of how much you can afford to repay each month.

Any debt collector who contacts you claiming you owe payment on a debt is required to give you a written notice that includes the amount owed and the name of the creditor, unless the debt collector gave you that information the first time you had contact. It is a generally good idea to get this written notice before you pay the debt collector or try to negotiate.

You may want to consult a credit counselor. Credit counselors are organizations that can advise you on managing your money and debts, help you develop a budget, and usually offer free educational materials and workshops. Credit counselors are usually non-profit organizations.

When you talk to the debt collector, explain your financial situation, and see if you can come to an agreeable plan. You may have more room to negotiate with a collector than you did with the original creditor. You might also wish to work through a consumer credit counselor or attorney to come to an agreement.

If you agree to a repayment plan, get the plan – and any promise to end the debt if you comply with the plan – in writing before you make a payment or pay a fee. Be wary of companies that charge up-front money to settle your debts for you.

TIP: Figure out what you are able to pay before negotiating with a creditor or debt collector.

It will help you to know your income and expenses before negotiating a settlement with a creditor that will allow you to pay off your debt. Try to summarize your monthly take-home pay and all of your monthly expenses (including payment amounts you are able to make) on a piece of paper.  Try to be sure there’s some income left over to cover unexpected expenses and emergencies. Then see how much you can pay each month towards the debt.

TIP: Learn when the statute of limitations on your debt expires.

Under state laws, if you are sued about a debt and the debt is too old, you may have a defense to the lawsuit. These state laws are called “statutes of limitation.” These can be two years or longer; you may want to consult a lawyer to learn long how this period is calculated in your state and when the period may have started with respect to your debt. If the statute of limitations is close to expiring, a creditor or debt collector is more likely to negotiate with you on favorable terms.

In some states, a partial payment on an old account may restart the time in which you can be sued.

Tip: Don't make a partial payment on an old debt until you talk to an attorney.

Partial payment can restart the time periods for when you can be sued and also restart the time period for how long the negative information continues on your credit report. To find an attorney, you can contact a lawyer referral service in your area and ask for an attorney with experience in consumer law, debt collection defense, or the FDCPA. Some attorneys may offer free services, or charge a reduced fee. There may also be legal aid offices or legal clinics in your area who will offer their services for free if you meet their criteria. Servicemembers should consult their local JAG office.

What can I do if I believe a debt collector has violated the law?

Report any problems you have with a debt collector to the Federal Trade Commission’s website or call 1-877-FTC-HELP (1-877-382-4357), or contact your state Attorney General’s office. You also have the right to sue a collector in a state or federal court within one year from the date the law was violated (some state laws allow more time). Many states have their own debt collection laws that are different from the federal Fair Debt Collection Practices Act.

What constitutes harassment by a debt collector?

The Fair Debt Collection Practices Act (FDCPA) says debt collectors may not harass, oppress, or abuse you or any other people they contact. Some examples of harassment are: 

  • Repetitious phone calls that are intended to annoy, abuse, or harass you or any person answering the phone
  • Obscene or profane language
  • Threats of violence or harm
  • Publishing lists of people who refuse to pay their debts (this does not include reporting information to a credit reporting company)
  • Calling you without telling you who they are

If you believe a debt collector is harassing you, contact the CFPB, the FTC, or your state's attorney general. You can also sue the debt collector for violations of the FDCPA.  If you sue under the FDCPA and win, the debt collector must generally pay your attorney’s fees and may also have to pay you damages.

The FDCPA also says debt collectors cannot use false, deceptive, or misleading practices.  This includes misrepresentations about the debt, including the amount owed, that the person is an attorney, threats to have you arrested, threats to do things that cannot legally be done, or threats to do things that the debt collector has no intention of doing. Debt collectors also are not allowed to use certain practices that are considered unfair.

TIP: Keep good records of your communications with a debt collector.

It is a good idea to keep a file of all letters or documents a debt collector sends you and copies of anything you send to a debt collector. Also, write down dates and times of conversations along with notes about what you discussed. These records can help you if you have a dispute with a debt collector, meet with a lawyer, or go to court.

What constitutes an "unfair" practice by a debt collector?

The Fair Debt Collection Practices Act (FDCPA) says that a debt collector is not allowed to use unfair practices in trying to collect a debt.  For example, a debt collector may not: 

  • Try to collect charges in addition to the debt unless they are allowed by the contract or state law
  • Deposit a post-dated check early
  • Contact you by postcard
  • Use any language or symbol on an envelope for correspondence with you (other than its address) that indicates it is a debt collector

TIP: Keep good records of your communications with a debt collector.

It is a good idea to keep a file of all letters or documents a debt collector sends you and copies of anything you send to a debt collector. Also, write down dates and times of conversations along with notes about what you discussed. These records can help you if you have a dispute with a debt collector, meet with a lawyer, or go to court.

The FDCPA also prohibits debt collectors from using false, deceptive, or misleading practices. This includes misrepresentations about the debt, including the amount owed. It also includes falsely claiming that the person is an attorney.  Other prohibited practices include threats to have you arrested, threats to do things that cannot legally be done, or threats to do things that the debt collector has no intention of doing. A debt collector is also not allowed to harass you. In addition, there are state and other federal laws that generally prohibit practices that might be considered unfair, deceptive, or abusive acts or practices.

If you believe a debt collector is being unfair to you, contact the CFPB, the FTC, or your state's attorney general. You can also sue the debt collector for this or other violations of the Fair Debt Collection Practices Act (FDCPA). If you sue under the FDCPA and win, the debt collector must generally pay your attorney’s fees, and may also have to pay you damages.

What is credit counseling?

Credit counseling organizations advise you on managing your money and debts, help you develop a budget, and usually offer free educational materials and workshops. Typically, their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting.  Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

Credit counseling organizations are usually non-profit organizations. If you are having trouble making payments on your debts a credit counselor may be able to help you with advice or by organizing a “debt management plan” for all your debts. 

Typically, under a debt management plan you make a single payment to the credit counselor each month or pay period and the credit counselor makes monthly payments to each of your creditors. Under debt management plans credit counselors usually do not negotiate any reduction in the amounts you owe – instead, they can lower your overall monthly payment. They do so by negotiating extensions of the periods over which you can repay a loan (for example, 5 years) and by getting creditors to lower the interest rates (for example, as low as zero percent) and waive certain account fees.

Although most of them are non-profits, credit counselors may charge fees for their services that they take out of the payments you make to them.

What does a debt collector need to verify that I owe the debt?

It is up to the debt collector to verify for you that you are responsible for the debt. This verification can be a copy of your statement showing the balance you owe or a copy of the original credit agreement. You can also ask for additional information.

What if I believe I do not owe the debt or I want proof of the debt?

If you believe you do not owe the debt, or want verification that it is your debt, send a written request to the debt collector and ask it to verify the debt.

Any debt collector who contacts you claiming you owe payment on a debt is required by law to tell you certain information about the debt. That information must include the name of the creditor, the amount owed, and how you can dispute the debt or seek verification of the debt. If they don’t provide that information in the initial contact with you, they are required to send you a written notice including that information within five days of the initial contact.

If you dispute a debt (or part of a debt) within 30 days of when you receive the required information from the debt collector, the debt collector cannot call or contact you until after your dispute has been investigated and the debt collector has provided the verification of the debt in writing to you.

You can also request that the creditor give you the name and address of the original creditor. If you make that request in writing within 30 days, the debt collector has to stop all debt collection activities until the debt collector provides you that information.

TIP: Keep proof that you sent your letter asking the debt collector to verify the debt.

Make sure your letter is dated. Then make a copy of your letter and send the original to the debt collector. It’s generally a good idea to send the letter by certified mail. If you pay for a “return receipt,” you also will have proof the debt collector received your letter. You can also send it with a fax machine, just be sure to keep the confirmation receipt.

What if I have already paid the debt?

If you have already paid the debt, you are not required to do anything. If you choose to, you may provide the debt collector with confirmation of your payments (such as copies of cancelled checks or credit card statements) and copies of any correspondence about your paying off the debt. But only send copies. Keep the originals.

If you don’t have documentation of your payments or letters saying you’ve paid off the debt, you can contact the creditor to obtain this information. You are not obligated to do so, but you may choose to if you want to make sure the debt collector know you’ve paid off the debt.

Any debt collector who contacts you claiming you owe payment on a debt is required by law to tell you certain information about the debt. That information must include the name of the creditor, the amount owed, and how you can dispute the debt or seek verification of the debt. If the debt collector doesn’t provide that information in the initial contact with you, the debt collector is required to send you a written notice including that information within five days of the initial contact.

If you believe you have paid off the debt, you can dispute that you owe it. If you dispute a debt (or part of a debt) within 30 days of when you receive the required information from the debt collector, the debt collector cannot call or contact you until after your dispute has been investigated and the debt collector has provided the verification of the debt in writing to you.

It is also against the law for a debt collector to use unfair, deceptive or abusive practices in an attempt to collect debt from you.

TIP: Keep good records of your communications with a debt collector.

It is a good idea to keep a file of all letters or documents a debt collector sends you and copies of anything you send to a debt collector. Also, write down dates and times of conversations along with notes about what you discussed. These records can help you if you have a dispute with a debt collector, meet with a lawyer, or go to court.

TIP: Keep proof that you sent your request for verification to the debt collector.

Make a copy of your letter and send the original to the debt collector. It’s generally a good idea to send the letter by certified mail. Also, if you pay for a “return receipt,” you’ll have proof the debt collector received your letter. You can also fax the verification request to the debt collector and save the fax receipt as proof.

What if I have an attorney? Can a debt collector keep calling me?

No. If the debt collector knows that an attorney is representing you about the debt, the debt collector must contact your attorney and cannot contact you. This is only true if the debt collector knows, or can easily find out, the name and contact information of your attorney. If an attorney is representing you and a debt collector calls, tell them which attorney is representing you and that they should contact the attorney, not you. It is generally a good idea to tell the debt collector in writing that you have an attorney.

Note that if your attorney fails to respond to the debt collector within a reasonable period of time or your attorney says that the debt collector may get in touch with you directly, the debt collector may contact you.

TIP: Keep good records of your communications with a debt collector.

It is a good idea to keep a file of all letters or documents a debt collector sends you and copies of anything you send to a debt collector. Also, write down dates and times of conversations along with notes about what you discussed. These records can help you if you have a dispute with a debt collector, meet with a lawyer, or go to court.

What information does a debt collector have to give me about the debt?

Any debt collector who contacts you claiming you owe payment on a debt is required by law to tell you certain information about the debt. That information includes the name of the creditor, the amount owed, and how you can dispute the debt or seek verification of the debt.  If the debt collector doesn’t provide that information in the initial contact with you, the debt collector is required to send you a written notice including that information within five days of the initial contact.

TIP: If you have questions about the information provided to you by a debt collector, request formal verification of the debt in writing.

You can dispute the debt or ask for more information if you are unsure you owe money to a creditor, or how much you might owe.

If you dispute a debt (or part of a debt) in writing within 30 days of when you receive the required information from the debt collector, the debt collector cannot call or contact you until after your dispute has been investigated and the debt collector has provided the verification of the debt in writing to you.

You can also request that the creditor give you the name and address of the original creditor. If you make that request in writing within 30 days, the debt collector has to stop all debt collection activities until the debt collector provides you that information.

When you get the requested information or the response to your dispute from the debt collector, see if you own records agree with the information the debt collector provided. If you don’t recognize the name of the creditor, ask if it might have purchased the debt from another company that first made the loan and, if so, what the name of that company is.

What is a debt collector?

Under the federal Fair Debt Collection Practice Act, a debt collector generally is a person or a company that regularly collects debts owed to others, usually when those debts are past-due. Debt collectors include collection agencies or lawyers who collect debts as part of their business. There are also companies that buy past-due debts from creditors or other businesses and then try to collect them. These debt collectors are also called debt collection agencies, debt collection companies, or debt buyers.

 

What is a garnishment?

A wage garnishment occurs when a creditor takes a portion of your paycheck to collect money you owe. Garnishments generally require a court order that results from a judgment.

Some states do not allow wage garnishments for certain kinds of debt. It is also a violation of the Fair Debt Collection Practices Act (FDCPA) for a debt collector to threaten that your wages will be garnished if your wages cannot legally be garnished.

What is a judgement?

A judgment is an official result of a lawsuit in court. In debt collection lawsuits, the judge may award the creditor or debt collector a judgment against you. If you don’t respond to a legal complaint, you will lose your chance to defend yourself and you may find that a judgment is entered against you.

If someone sues you, or if someone has obtained a judgment against you and you are unsure of what to do, talk to an attorney. Some attorneys may offer free services or charge a reduced fee. There may also be legal aid offices or legal clinics in your area who will offer their services for free if you meet certain criteria. Servicemembers should consult their local JAG office.

Are there laws that limit what debt collectors can say or do?

Yes. There are both federal and state laws that govern debt collection practices.

The Fair Debt Collection Practices Act (FDCPA) is the main federal law that governs debt collection practices. The FDCPA prohibits debt collection companies from using abusive, unfair or deceptive practices to collect past due debts from you.

If you believe a debt collector has violated the FDCPA, contact the CFPB, the FTC, or your state's attorney general. You also may be able to sue a debt collector in state or federal court.

The FDCPA covers the collection of mortgages, credit cards, medical debts, and other debts mainly for personal, family, or household purposes. It covers personal debt, not debts for business purposes. It also does not generally cover collection by the person from whom you first borrowed money.

Generally speaking, debt collectors may not contact you at an unusual time  or place, or at a time or place they know is inconvenient to you. If a debt collector knows that you are not allowed to receive the debt collector’s calls at work then the debt collector is not allowed to call you there.

If a debt collector knows that an attorney is representing you about the debt, the debt collector generally must stop contacting you, and must contact the attorney instead. This is only true if the debt collector knows, or can easily find out, the name and contact information of your attorney. If an attorney is representing you and a debt collector calls, tell them which attorney is representing you and that the debt collector should contact the attorney, not you.

If you tell a debt collector in writing to stop contacting you, the debt collector may not contact you again except to:

  • Say there will be no further contact, or
  • Notify you that the debt collector or the creditor may take certain specific action it is legally allowed to take, such as a lawsuit against you.

However, telling a debt collector to stop contacting you does not prevent the debt collector from pursuing other legal ways to collect the debt from you if you owe it, including a lawsuit against you or reporting negative information to a credit reporting company.

Any debt collector who contacts you claiming you owe payment on a debt is required by law to tell you certain information about the debt. That information includes the name of the creditor, the amount owed, and how you can dispute the debt or seek verification of the debt. If the debt collector doesn’t provide that information in the initial contact with you, the debt collector is required to send you a written notice including that information within five days of the initial contact.

TIP: If you have questions about the information provided to you by a debt collector, request formal verification of the debt in writing.

You can dispute the debt or ask for more information if you are unsure you owe money to a creditor, or how much you might owe.

If you dispute a debt (or part of a debt) in writing within 30 days of when you receive the required information from the debt collector, the debt collector cannot call or contact you until after your dispute has been investigated and the debt collector has provided the verification of the debt in writing to you.

You can also request that the creditor give you the name and address of the original creditor. If you make that request in writing within 30 days, the debt collector has to stop all debt collection activities until the debt collector provides you that information.

When you get the requested information or the response to your dispute from the debt collector, see if you own records agree with the information the debt collector provided. If you don’t recognize the name of the creditor, ask if it might have purchased the debt from another company that first made the loan and, if so, what the name of that company is.

A number of states also have laws about debt collection practices, which are similar to the FDCPA. Contact your state attorney general’s office to learn more about the laws in your state.

There are other important federal laws as well. The federal Fair Credit Reporting Act covers how debt collections can be reported on your credit report.  There are also federal consumer financial protection laws that prohibit unfair, deceptive, or abusive acts or practices that apply to debt collectors, as well as creditors.

TIP: Put it in writing. A good rule of thumb is to confirm your requests with the debt collector by mailing a written letter. Keep a copy of your letter, showing the date you wrote it, so that you have a record of your request.

What may happen if I ignore or avoid a debt collector?

Ignoring or avoiding a debt collector is unlikely to make the debt collector stop contacting you. If you believe you do not owe the debt, you should tell the debt collector. If the debt is yours and you can’t afford to pay it, you may be able to make arrangements with the debt collector. You can also ask the debt collector in writing to stop calling you, which will stop the phone calls.

You might also consider consulting a credit counselor. Credit counselors are organizations that can advise you on managing your money and debts, help you develop a budget, and usually offer free educational materials and workshops. Credit counselors are usually non-profit organizations.

Ignoring or avoiding the debt collector may cause the debt collector to use other methods to try to collect the debt, including a lawsuit against you. If you are unable to come to an agreement with a debt collector, you may want to contact an attorney who can provide you with legal advice about your situation. Your legal aid office may have information for you in their office or on their website. You also may qualify for free legal services through legal aid or legal clinics, depending on your income and where you live.

What questions should I ask before I hire an attorney to represent me?

Ask questions that would help you determine whether the attorney has a good understanding of consumer law. Also make sure you understand how you will be expected to pay for the services. Questions could include:

  • How much of your work involves consumer law and representing consumers?
  • How many cases like mine have you handled before?
  • Do you charge an up-front fee?
  • Will I have to pay even if I lose my case in court?
  • If I can’t afford to hire you, can you refer me to consumer law attorney who may not charge up-front fees?

TIP:  See if your attorney has been disciplined.

Before hiring an attorney, it is a good idea to make sure he or she is in good standing with the state bar organization. You can also see if he or she has a disciplinary record. You can find this information by searching the attorney’s name on the state bar website where the attorney is licensed, or by calling the state bar organization. Some states may have more than one bar organization. Be sure you contact the “mandatory” bar association, and not a “voluntary” bar association.

Some attorneys may also offer free services, or charge a reduced fee. There may also be legal aid offices or legal clinics in your area who will offer their services for free if you meet certain criteria.

 

What should I do if a creditor or debt collector sues me?

If you are sued, you should respond to the lawsuit. You can respond personally or through an attorney, but you must do so by the date specified in the court papers. 

When you answer the lawsuit, the debt collector will have to produce evidence that proves to the court you owe the debt in order to get a judgment against you. If you dispute the debt or the amount owed, you should do that in the court action before the court makes a judgment.

In many states, lawyers who are suing you will provide notice of the suit to you by certified mail.  You won’t be able to stop the lawsuit by refusing to accept the letter or by refusing to sign the receipt that shows you got the letter. By doing these things you’ll essentially be ignoring the lawsuit.

If you ignore a court action, it is likely that a judgment will be entered against you for the amount the creditor or debt collector claims you owe. Often the court also will award additional fees against you to cover collections costs or fees for attorneys. Judgments give debt collectors much stronger tools to collect the debt from you. Depending on your state’s laws, the creditor may be able to garnish your wages, place a lien against your property, or move to freeze all or part of the funds in your bank account. You also may lose the ability to dispute that you owe the debt.

A judgment is a court order. Only the court can change it. It is very difficult to get a judgment changed or set aside once the case is over. You have a much better chance in court if you defend the case than if you wait until a judgment is entered against you.

Consult an attorney in your state to learn more about your rights if you are sued on a debt. Some attorneys may also offer free services, or charge a reduced fee. You may wish to find an attorney who has experience in the Fair Debt Collection Practices Act and debt collection issues. There may also be legal aid offices or legal clinics in your area who will offer their services for free if you meet their criteria. Servicemembers should consult their local JAG office.

What is a statute of limitations?

A statute of limitations is the limited period of time creditors or debt collectors have to file a lawsuit to recover a debt. These periods of time can be two years or longer; the period of time varies by state and by the type of debt. Under statutes of limitation, if you are sued about a debt and the debt is too old, you may have a defense to the lawsuit.

In some states the statute of limitations period begins when you failed to make a required payment on a debt. In other states it is counted from when you made your most recent payment, even if it was late. In some states, even a partial payment on the debt will restart the time period. You may want to consult an attorney or the applicable law in your state before making a partial payment on a debt.

In most states, debt collectors can still attempt to collect debts after the statute of limitations expires. They can try to get you to pay the debt by sending you letters or calling you as long as they do not violate the law while doing so.

Even if the statute of limitations has expired, a court may still award a judgment against you if you don’t show up and raise the statute of limitations as a defense. Ordinarily, it is the responsibility of the person being sued to point out that the statute of limitations has expired. For example, you may need to show that there has been no activity on the account for a certain number of years.

If you are sued, it is a good idea to talk to an attorney. It is important to know you can defend yourself if you believe the statute of limitations has expired on your debts.

What's the difference between a credit counselor and a debt settlement company?

Credit counseling services are different from debt settlement companies in a number of ways. Credit counselors are usually non-profit organizations. Debt settlement companies are for-profit companies, and sometimes they are law firms. Credit counseling organizations and debt settlement companies both offer services to help if you are having trouble making payments on your debts.

Credit counseling organizations advise you on managing your money and debts and may help you develop a budget. They usually offer free educational materials and workshops. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to address your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions. Although most of them are non-profits, credit counselors may charge fees for their services that they take out of the payments you make to them.

Some creditors and debt collectors will not negotiate with debt settlement companies at all. Once they learn you are working with a debt settlement firm, their collection efforts may become more intense. For example, the collector may file a lawsuit against you. Many debt settlement companies will instruct you to stop making payments to your creditors.  If you stop making payments, you may face collection efforts, late fees and penalty interest charges. These fees and charges will cause your debts to grow larger. In this way, debt settlement may cause your total debt-load to grow, even if the debt settlement company settles one or more of your debts.

This is a key difference between debt settlement and credit counseling: Credit counselors reach up-front agreements with your creditors to ensure that the creditors will not pursue collection efforts or charge late fees or penalty interest while you are in the credit counseling debt management program. Debt settlement companies often have  no such up-front agreements with creditors.

Typically, a credit counselor will help you with advice and education, and by organizing a “debt management plan” for all your debts. Under a debt management plan you make a single payment to the credit counselor each month or pay period and the credit counselor makes monthly payments to each of your creditors. Under debt management plans credit counselors usually do not negotiate any reduction in the amounts you owe – instead, they can lower your overall monthly payment. They may do so by getting the creditor to increase the time period over which you can repay a loan (for example, five years).  They may also get creditors to lower the interest rates. Although most credit counselors are non-profits, they may charge fees for their services that they take out of the payments you make to them.

Debt settlement is different than credit counseling. Debt settlement companies offer to arrange settlements of your debts with creditors or debt collectors, typically offering to pay off your debts with lump sum payments that are less than the full amounts you owe. For example, for  every $100 of a loan that a creditor agrees to forgive, the debt settlement company will charge you some portion in fees.

A debt settlement company generally will attempt to get creditors to agree to settlements by first getting you to stop making payments on the debts you owe. This can be risky for you. While some creditors and debt collectors will agree to settlements with debt settlement companies, many will not negotiate how much they will settle for. Instead, they will have standard policies about how much principal they will forgive when you haven’t made payments for a certain period of time. This means debt settlement companies usually can’t get better terms than you could get by talking to your creditors yourself.

TIP: Beware of debt settlement companies that charge up-front fees in return for promising to settle your debts.

In most circumstances, neither credit counselors nor debt settlement companies can erase all of your debts. If you simply do not have enough income to pay what you owe, filing for bankruptcy may be the best solution for you. Filing for bankruptcy can have long term consequences so consult a bankruptcy attorney to learn whether bankruptcy is a good solution for you.

The Federal Trade Commission’s Telemarketing Sales Rule prohibits for-profit companies that offer debt settlement that do not meet with you face-to-face from charging or collecting a fee unless they first settle, reduce, or alter your debt.

TIP: Most debt settlement companies require that you that you stop paying your creditors to succeed in a debt settlement program.

If you stop paying your debts, your creditors will likely begin collection efforts and will start charging you penalty fees and interest. Debt settlement companies say that law suits and debt collection efforts are key factors preventing clients from successfully completing a debt settlement program.

Who is responsible to pay my wife’s credit card debt after she has passed away?

Unless you and your wife had a joint credit card, her estate would owe the credit card debt. Therefore, the responsibility for paying the debt  would fall to the executor or administrator of the estate (also known as the personal representative). As a spouse, you are usually not personally responsible for these debts, even if you are the appointed executor or administrator of the estate. However, depending on state law, the executor or administrator may need to pay an outstanding bill out of property that was jointly owned with your deceased spouse.

You may want to check with a lawyer about your spouse’s credit card debt. To find an attorney, you can contact a lawyer referral service in your area and ask for an attorney with experience in probate law, consumer law, debt collection defense, or the Fair Debt Collection Practices Act (FDCPA). Some attorneys may offer free services, or charge a reduced fee. There may also be legal aid offices or legal clinics in your area who will offer their services for free if you meet their criteria. Servicemembers should consult their local JAG office.

Why is a debt collector trying to contact me?

A debt collector may be trying to contact you because a creditor believes you are past due on the payments you owe on a debt. Creditors may use their own in-house debt collectors, or may refer or sell your debt to an outside debt collector.

A collector also may be calling you to locate someone you know.


If the debt collector is contacting you for payment on a debt, you might also want to speak to an attorney or a credit counseling service.

You can ask a debt collector to stop contacting you, but you should do so in writing.

Ending contact does not cancel the debt. The creditor or the debt collector still may be able to sue you to collect the debt, if it has the legal right to do so. The creditor or the debt collector also may make a negative report to a Consumer Reporting Agency, affecting your credit report and credit score. (In some cases, the debt may be too old to affect your credit report or credit score.) If you don’t believe you owe the debt, you can dispute it or seek verification of the debt from the debt collector.

Why is the name of the debt collector different than the name of the company I owe money to?

Creditors will sometimes contract with outside companies to collect debts for them or will sell debts that are owed to them. In either case, the name of the company contacting you about an unpaid debt may be different than the original creditor who gave you the loan or credit.

Any debt collector who contacts you claiming you owe payment on a debt is required by law to tell you certain information about the debt. That information includes the name of the creditor, the amount owed, and how you can dispute the debt or seek verification of the debt. If the debt collector doesn’t provide that information in the initial contact with you, the debt collector is required to send you a written notice including that information within five days of the initial contact. It is generally a good idea to get this written notice before you pay the debt collector.

The Fair Debt Collection Practice Act requires a debt collector to inform you who currently owns the debt. If you don’t recognize the name of the creditor, ask if it might have purchased the debt from another company that first made the loan and, if so, what the name of that company is.

TIP: If you have questions about the information provided to you by a debt collector, request formal verification of the debt in writing.

If you receive a call from a debt collector about a debt you don’t recognize, you can dispute the debt or ask for more information.

If you dispute a debt (or part of a debt) in writing within 30 days of when you receive the required information from the debt collector, the debt collector cannot call or contact you until after your dispute has been investigated and the debt collector has provided the verification of the debt in writing to you.

You can also request that the creditor give you the name and address of the original creditor. If you make that request in writing within 30 days, the debt collector has to stop all debt collection activities until the debt collector provides you that information.

Will I have to pay an up-front fee to hire a lawyer to represent me in a suit involving a creditor or debt collector?

You may not have to pay for an attorney for help with a debt collection case. Some attorneys who frequently handle collections cases only charge if you win your case. If you bring a case against a debt collector under the federal Fair Debt Collection Practices Act,  the court has the power to order the debt collector pay for your attorney’s fees. Some attorneys will be willing to take a case involving a debt collector and wait until after the case is over to receive payment of their fees from the other side if you win. Some attorneys may also offer free services, or charge a reduced fee. There may also be legal aid offices or legal clinics in your area who will offer their services for free if you meet certain criteria.




Copyright © 2013 by Mark McCracken , All Rights Reserved