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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 March 15, 2024
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You've heard of calling collect, but what about being called by collections?

If you apply for a loan, it is important to know if you can afford to make your payments because if you can’t, you may end up dealing with a debt collector.

Sometimes debt collectors work for the lender that funded the loan, but many times they are independent. The lender sells the debt at a discount to a debt collection agency, which then contacts you to recover the money you owe.

While many debt collectors operate legitimately, some companies bend the rules to get people to pay. If your debt is past due and you have to deal with a debt collector, it’s good to know your rights.

“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."

With that in mind, here are a few things 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. If you prefer to communicate with a debt collector through email, it’s a good idea to use your personal email address, to ensure confidentiality. Work email is usually not considered confidential since your employer can search through your email at any time.

They Can’t: Contact you any time or place

The Fair Debt Collection Practices Act (FDCPA) clearly states that a debt collector cannot contact you before 8 A.M in the morning or after 9 p.m. at night.

However, if you’re work a non-traditional schedule, and late nights and early mornings might be the most convenient times for you, you can request that the debt collector to contact you outside those standard hours. They simply require your permission to do so.

Moreover, debt collectors cannot call you at work if you tell them you are not allowed to discuss the issue while at your job. If they still contact you at your work despite your request, it is a sign that you should proceed with caution.

They Can: Call people other than you

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

Other than your spouse and attorney, debt collectors cannot talk to anyone about your debt. However, they can speak to other people to obtain your contact information.

Additionally, a debt collector can call your employer to verify your employment and to find the best way to reach you. However, if a debt collector calls your employer and discloses information about your debt, they are breaking the law.

They Can’t: Threaten or harass you

This is a big one. While it does not happen often, it is a practice that contributes to giving debt collectors a bad reputation.

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

Debt collectors cannot:

  • Threaten to harm your reputation
  • Threaten to make your debt public
  • Threaten violence or physical harm
  • Use obscene or profane language
  • Call you repeatedly to annoy you
  • Threaten to garnish your wages or seize your property without a court order
  • Threaten legal action if they do not intend to do so
  • Threaten to add false information to your credit report
  • Tell 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 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. However, if you are unresponsive to a debt collector or refuse to acknowledge that you owe them a debt, it can lead to a lawsuit.

Do your best to settle your debt before it comes to that. If the collector sues you and wins, the court will issue a judgment and may authorize wage garnishment. This means that the debt collector can take a portion of your wages from your paycheck until the debt is repaid in full.

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

It is illegal if a debt collector calls you and pretends to be someone else. Collectors may do this to make debtors seem like they are in more trouble than they are. For instance, a call from the government saying that you owe money, will carry more weight than a call from a regular debt collector.

Some debt collectors may claim they are attorneys or representatives from a credit bureau. Others may send what appear to be official-looking documents 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 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 these FAQs 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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