When you’re facing off against a debt collector, it’s important to know the rules the collector must follow. Just understanding your rights, isn’t enough, however. Debt problems need a game plan, and yours will likely depend on whether you’re dealing with a case of misidentification, or if you just can’t pay the bill.
When you first fall behind on a bill, your creditor will likely contact you and ask you to bring your account current. After some time, the account will get transferred to a debt collector.
That’s when the federal Fair Debt Collections Practices Act (FDCPA) will apply. Under the FDCPA, a collector cannot:
You should be aware that a collector can contact others to try to find you (but still can’t discuss your actual debt). To prevent this type of skip tracing activity, consider giving the collector your contact information.
A creditor that violates the FDCPA and causes you harm is subject to paying you monetary compensation and fines if you sue civilly and win. (For more, read Illegal Debt Collection Practices.)
When you fall behind on a debt that’s secured by collateral—property, such as your house or car, that you pledge against the debt—your creditor can use foreclosure or repossession tactics to recover the property, sell it, and apply the funds to your balance. In such a case, the caller will likely be the original creditor, not a bill collector, and you’ll need to look into options other than those offered in this article. (To learn about the different types of debt, read Dealing With Debt: An Overview of Your Options.)
If you didn’t put up collateral—for instance, if the debt in question is a credit card payment or a cell phone bill—the collector can call or write to you, but that’s about it. A creditor can’t take the following actions until it files a lawsuit and gets a money judgment against you:
There are exceptions, however. For instance, the government has the right to take these types of steps if you owe taxes or student loan debt. (Learn more in If Your Wages Are Garnished: Your Rights.)
Your options will depend on whether you owe the debt. For instance, it might (or might not) be worth fighting a legitimate debt in court. When making the decision, consider the amount of money and time you have to spend on the case, as well as whether you have a defense.
If you don’t owe it, however, you’ll likely want to take action.
If you owe a debt, paying it in full, or negotiating it down to a lower amount might be your best bet. If you don’t have the funds, you have other options:
Understand that a creditor might sue you even if the statute of limitations has run; however, it’s less likely. In such a case, you’ll want to file a motion with the court objecting to the lawsuit (consult with a local attorney).
If it isn’t your debt, you’ll likely want to dispute it. Here are a few suggestions that might work in your favor:
You can file a complaint with the federal Consumer Financial Protection Bureau or through a consumer protection office in your state. (Many states have more stringent laws governing debt collectors.) For help finding federal or state agencies, go to USA.gov.
This general information does not address all aspects of the collection process and is not legal advice. You should meet with a lawyer for an evaluation of your particular case.