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What Debt Collectors Can and Can’t Do

Written by
Alex Huntsberger
Alex Huntsberger is a personal finance writer who covered online lending, credit scores, and employment for OppU. His work has been cited by, Business Insider, and The Motley Fool.
Read time: 6 min
Updated on July 27, 2023
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You've heard of calling collect, but being called by collections?!

If you’re applying for a loan—any loan—it’s important that you figure out whether you can afford to make your payments. Because if you can’t, you’re going to end up dealing with a debt collector.

Sometimes these collectors work for the lender that gave you the loan, but many times they are actually a second company. The lender sells the debt at a discount to a debt collection agency, who then starts contacting you to try and collect on the money that you owe.

While there are many, many debt collectors that do everything above board, there are also companies that try to bend the rules in order to get people to pay. If you’re past due on a debt and dealing with a debt collector, it’s good to know what rights you have.

“The main statute on debt collection is the Fair Debt Collection Practices Act (FDCPA),” says Braden Perry, a regulatory and government investigations attorney with Kennyhertz Perry, LLC.

Perry says, “It’s important to remember that FDCPA applies to only 3rd party collection firms, and not first parties collecting on their own behalf. But many companies don’t know that even if you are collecting first party, you are subject generally to the same fundamentals of the FDCPA through the Consumer Financial Protection Bureau (CFPB) via unlawful, deceptive and abusive acts and practices."

Keeping that in mind, here’s a quick guide to what debt collectors can and can’t do.

They Can: Contact you by phone, mail, email and text message

“According to the FDCPA, a debt collector can contact you by phone, or postal mail,” says business author Michelle Dunn. “Some debt collectors also contact using cell phones, email or text, though the law does not cover that.”

The reason that the law does not cover cell phones, email, and text, is because it was written in 1978. The ways that people communicate have changed a lot since then.  And if you prefer to communicate with a debt collector through email, it’s a good idea to use your personal email address.

The reason for this is because your work email is usually not confidential. Your employer can search through your email at any time. Since your correspondence with a debt collector is supposed to be confidential, this can make your work email a no-go.

They Can’t: Contact you any time or place

The FDCPA clearly states that a debt collector cannot contact you before 8 A.M in the morning or after 9 p.m. at night.

Of course, if you’re someone who works a non-traditional schedule, those late nights and early mornings might actually be the most convenient times for you. In cases like that, you can request that the debt collector contact you outside those standard hours. They simply require your permission in order to do so.

Debt collectors also cannot call you at work if you have told them that you’re not allowed to discuss this issue while at your job. If you tell a debt collector that you cannot speak to them at work and they continue to contact you there, that’s a sign that you should be wary.

They Can: Call people other than you

According to Dunn, debt collectors are allowed to contact your spouse and speak to them about your debt. If you have an attorney who is representing you regarding the debt, the collector is also allowed to speak to them.

Other than that, debt collectors cannot talk to anyone else about your debt. (Remember when we said that these communications were confidential?) However, they can speak to other people in order to obtain your contact information, phone number, address, etc.

A debt collector can call your employer to verify that you work there and to find the best way to reach you. But if a debt collector calls your employer and tells them about the debt, they are breaking the law.

They Can’t: Threaten or harass you

This is a big one. And while it does not happen a lot, it’s one of the practices that have led to debt collectors having a not-so-great reputation.

Plainly put, a debt collector cannot threaten or harass you in any way, shape, or form in order to get you to pay your debt.

These practices include:

  • Threatening to harm your reputation
  • Threatening to make your debt public
  • Threatening violence or physical harm
  • Using obscene or profane language
  • Calling you repeatedly to annoy you
  • Threatening to garnish your wages or seize your property without a court order
  • Threatening legal action if they do not intend to do so
  • Threatening to add false information to your credit report
  • Telling you that you will be arrested if you don’t pay

As Dunn puts it, “threatening to put someone in jail is different than asking someone to pay in full or by a certain date.”

They Can: Take you to court

According to Dunn, a debt collector can actually sue you and go to court to collect your debt at any time.

“They can take you to court immediately,” she says, “but most try to collect the debt by traditional means before going to court.  No one wants to go to court, so hopefully the debtor pays before that action has to be taken.”

This makes sense, as taking someone to court can be expensive and time-consuming. But if you are unresponsive to a debt collector or refuse to acknowledge that you owe them a debt, most of them will sue you in order to recoup what you owe.

Do your best to settle your debt before it gets to that. If the collector sues you and wins their case, the court will issue a judgment authorizing a garnishment. This means that the debt collector can take part of your wages out of every paycheck until the debt is fully repaid.

They Can’t: Lie and pretend they’re someone else

If a debt collector calls you and pretends that they are someone else, that is illegal. Full stop.

The reason collectors do this is because it can make debtors seem like they are in more trouble than they actually are. A call from the government saying that you owe money, for example, is going to freak you out a bit more than a call from a regular debt collector.

Some debt collectors will claim that they are attorneys or representatives from a credit bureau. Others will send what appear to be official-looking documents that seem like they are from a court or government agency.

No matter what, any debt collector who claims they are anything other than a debt collector is breaking the law.

If you have a debt collector that is using illegal methods to try and collect on your debt, you should contact one or all of the following:

Note: Some people think that taking out a payday loan won't hurt their credit. And while payday lenders don't report your information to the credit bureaus, debt collection agencies do. Failing to pay back your payday loan and having it sent to collections will end up hurting your credit even further. The easiest solution is also the best: Avoid taking out payday loans at all costs!

To learn more about debt collection, check out this article from the FTC.

Article contributors
Michelle Dunn

Michelle Dunn, has worked in the credit and debt collections industry for over 30 years.  She started and ran her own third party collection agency and eventually sold her business in order to write full time.  Michelle is the author of many books on the topic of credit, debt collection and starting a collection agency.  Michelle is now a consultant and presenter for the credit and collections industry.

Braden Perry

Braden Perry, is a regulatory and government investigations attorney with Kansas City-based Kennyhertz Perry, LLC. Mr. Perry has the unique tripartite experience of a white-collar criminal-defense-and-government-compliance, investigations attorney at a national law firm; a senior enforcement attorney at a federal regulatory agency; and the Chief Compliance Officer of a global financial institution.

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