What Debt Collectors Can and Can’t Do

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With pandemic-related government assistance programs coming to an end, many Americans are struggling with debt. Getting a call from a debt collector can be scary: Will they garnish your wages, contact your employer or throw you in jail? To deal with debts in collections appropriately, you need to understand how debt collection works and what debt collectors can and can't do.

Lenders typically try to collect on your debt themselves for several months. If they aren't successful, they may turn the debt over to a collection agency. At this point, your original account shows up on your credit report as a charge-off with a zero balance. A new collection account showing the balance you owe will appear on your credit report, and debt collectors will begin contacting you.

Both charge-offs and collection accounts are considered serious derogatory marks, and both stay on your credit report for seven years from the date of the first missed payment.

What Debt Collectors Can Do

The Fair Debt Collections Practices Act regulates what debt collectors are allowed to do. Under this law, debt collectors can:

  • Contact you via phone, letter, email or text message unless you ask them to stop in writing.
  • Leave you a voicemail message about your debt.
  • Contact you via social media: Effective November 30, 2021, debt collectors can send you a direct message or a friend request on social media, but must reveal that they're a debt collector.
  • Contact your friends, family or employer to find out where you live, where you work or what your phone number is.
  • File a lawsuit against you: If you don't respond to a suit filed by a debt collector, judges usually rule against you. This could allow the debt collector to garnish your wages, take money from or freeze your bank accounts, or put a lien on your property.

What Debt Collectors Can't Do

Under the Fair Debt Collections Practices Act, which was recently updated to add new protections for consumers, debt collectors can't:

  • Add interest or fees to your original debt (unless state law or your contract with the creditor allow this).
  • Deposit a postdated check early.
  • Take or threaten to take your property (unless state law or the contract allows it).
  • Abuse, threaten or lie to you. They can't curse, misrepresent how much you owe, pretend to be a lawyer or threaten to send you to jail, for instance.
  • Harass you or anyone else in any way.
  • Contact you if they know an attorney is representing you. If you have legal representation, the debt collector must contact the attorney, not you.
  • Call you before 8 a.m. or after 9 p.m. unless you give them permission to do so.
  • Call you at work if your job doesn't allow you to take phone calls.
  • Call you repeatedly. As of November 30, 2021, debt collectors can't make more than seven calls per week, per person, regarding a debt. This includes calls to you, your friends and your family.
  • Communicate with you on social media in a way visible to your friends or the public.
  • Communicate with you via postcard or use an envelope bearing any word or symbol indicating it comes from a debt collector.
  • Sue you after the statute of limitations runs out. Check with your state attorney general's office to see how long debt collectors have to bring a lawsuit.

File a complaint with your state attorney general's office or the Consumer Financial Protection Bureau if a debt collector breaks these rules.

What You Can Do to Deal With Debt Collectors

Within five days after first contacting you, debt collectors must send you a written validation notice detailing the amount you owe, to whom and what to do if you believe there has been an error. If you've already paid the debt or want to dispute it, request a "validation letter" from the debt collector. This letter verifies that the debt is still owed and within your state's statute of limitations.

The best way to deal with debt in collections is to pay it right away. If you can't afford to pay it, try to negotiate with the debt collector. You might arrange for lower monthly payments or agree to settle the debt for less than you owe, for instance. After a debt settlement, your credit report will show that the account was paid, but for less than the full balance. While this is still a negative mark on your credit history, most lenders consider it better than not paying at all. Before making any payments, get the agreement in writing.

A credit counselor can help you make a budget to get out of debt and can negotiate with debt collectors on your behalf if necessary. You can find reputable nonprofit credit counselors through the National Foundation for Credit Counseling. You may also want to contact an attorney or legal aid office for legal advice.

Stay on Top of Debt

Paying your bills on time is the best way to prevent accounts from going to collections. Worried that you're not going to be able to pay your debts? Contact your creditors immediately to see if you can negotiate lower payments, adjust your loan terms or otherwise make your bills more manageable.

Once a collection account is on your credit report, the only way to remove it is to wait seven years. The effect of a collection account on your credit score will lessen over time. To help improve your credit going forward, bring any late accounts current, pay down credit card balances and avoid applying for new credit. Then keep an eye on your credit by signing up for free credit monitoring from Experian.