Frequently
Asked Questions about Debt Collection
1. Do debt collectors have to follow
any law?
2. A debt collector keeps calling for someone I do not know.
How can I make them stop calling?
3. I am a victim of identity theft. How can I get debt collectors
to stop calling?
4. Can a debt collector reveal information about my debt
to my family, friends or boss?
5. How long does a delinquent debt remain on my credit report?
6. If I pay a delinquent account, will that remove it from
my credit report?
7. I have a debt older than seven7 years. Should I pay it
off even through it no longer appears on my credit report?
8. A debt collector has violated my rights. Can I sue?
9. I have bad credit and am considering paying a company
to fix my credit Will this work?
10. I owe a debt and I am trying to come up with a way to
pay. But in calls to me the debt collector is threatening and rude. How
can I stop this harassment?
11. I was contacted about a 10-year-old debt. Isn’t
there a limit on the time for collections?
12. Can government agencies use private debt collectors?
13. I had huge medical bills last year and got behind. Can
medical bills be sent to a collection agency?
14. A debt collector says I owe fees that are almost as
much as the original debt. Is this allowed?
15. May a debt collectorcollection agency access my credit
report?
16. I got a call from an attorney about an old debt. Is
this person subject to the FDCPA?
17. As a small business owner, am I protected by the FDCPA?
18. I had an account sent to collections. Now the original
account and the collection both appear on my credit report. Is this wrong?
1. Do debt collectors have
to follow any law?
Yes. The federal Fair Debt Collection Practices Act (FDCPA), 15 USC §1692-1692o,
says collectors cannot use abusive and deceptive practices. (For more
on prohibited practices identified by the FDCPA, see Question 10.)
In addition to the federal law, many states have adopted laws that provide
more protection against abusive collection practices. For example, the
federal FDCPA applies only to third-party collectors, but not to creditors
attempting to settle their own accounts. State laws may, however, apply
whether the debt is being collected by an outside collector or the creditor.
For additional information on the FDCPA as well as a list of state laws
and publications, see PRC Fact Sheet 27, Debt Collection Practices: When
Hardball Tactics Go Too Far, www.privacyrights.org/fs/fs27-debtcoll.htm
.
Debt collectors may also be subject to other laws. For example, the Fair
Credit Reporting Act, 15 USC §1681, prohibits the sale or transfer
of a debt caused by identity theft. For more on debt collectors and identity
theft, go to Question 3.
2. A
debt collector keeps calling for someone I do not know. How can I make
them stop calling?
Write to the debt collector. Send your letter
certified, return receipt requested. For an example of what to say, see
these sample letters,
www.privacyrights.org/Letters/letters.htm#Debt:
- if you are the alleged debtor and want
to cease calls to you, see Sample Letter 4
- if the debt is someone else's and a collector
is contacting you about it, see Sample Letter 6.
3. I am a victim
of identity theft. How can I get debt collectors to stop calling?
Send the debt collector evidence that you are
a victim of identity theft. Examples are:
- police report
- fraud affidavit
- letters form companiew acknowledging the debt
is not yours
Once you provide information that you are an identity
theft victim, the collector must:
- stop collecting on the debt and investigate
- notify the original creditor about the fraud
or identity theft
- give you information about the debt, such as
account applications and statements
The PRC has a sample letter available at:
http://www.privacyrights.org/Letters/debt3.htm
4.
Can a debt collector reveal information about my debt to my family, friends
or boss?
No. Under the Fair Debt Collection Practices Act
(FDCPA) discussions about the debt can only be held with (1) the individual,
(2) the creditor, (3) an attorney representing one of the parties, and
(4) a credit bureau. Public airing of your business intended to shame
you into paying a debt is not allowed. Debt collectors cannot:
- exchange (with other agencies) information about
individuals who allegedly owe a debt
- distribute a list of alleged debtors to its creditor
subscribers
- advertise a debt for sale
- compile a list of debtors for sale to others
- leave messages with third parties, asking them
to have the debtor call the collector
If a debt collector does not know your name and
telephone number, family members or neighbors may be contacted to find
out how to locate you, but the collector
- may not tell others you owe a debt or discuss
details of the account
- must identify himself (by name, but not necessarily
as a debt collector)
- must identify the name of the collection agency
only if asked
- can only contact the party once unless the collection
agency has reason to believe the person has new information
- cannot leave information about a debt on a third
party’s answering machine or voice mail
Please note that contacts with a spouse, the parent
of a minor, a guardian, co-signer, executor, or administrator are considered
the same as contacts with the debtor under the FDCPA.
5.
How long does a delinquent debt remain on my credit report?
Delinquent debts remain on credit reports for seven7
years. Chapter 7 bankruptcies remain on credit reports for 10 years.
6.
If I pay a delinquent account, will that remove it from my credit report?
No. Payment will not automatically
remove the debt. You may be able to negotiate removal of the negative
information as part of the payment agreement with a third-party collection
agency. The original creditor is not as likely to negotiate removal of
the negative information.
If you do attempt to negotiate removal of the negative information from
your credit report, make absolutely sure to get the terms of the agreement
in writing and signed by someone with the authority to request removal
of the information. This is essential because if the collection agency
does not follow through with its promise to contact the credit bureaus
you can send the written agreement to the credit bureaus yourself.
A good resource for help with re-establishing good credit is a member
agency of the National Foundation for Consumer Credit, such as the Consumer
Credit Counseling Service. These nonprofit groups have offices in most
cities. To find the office nearest you, call or write:
National Foundation for Consumer Credit, Inc.
8611 Second Avenue, Suite 100
Silver Spring, MD 20910
(800) 388-2227
www.nfcc.org
Beware of other credit repair services. Generally they promise a lot,
charge a lot and, deliver little. For more information about credit repair
services see www.ftc.gov/bcp/conline/pubs/credit/repair.htm
.
7. I
have a debt older than 7 years. Should I pay it off even though it no
longer appears on my credit report?
If you are still being contacted about a debt that
is this old, quite likely this account has been sold and perhaps resold
a number of times. There is a thriving business in debt reselling. Some
companies buy old debt for pennies on the dollar. Companies then stand
to reap huge profits if you agree to pay the original amount owed. As
we have said, there is no statute of limitations on how long a collection
effort can go on, but your state may have a statute of limitations on
how long a creditor or collector has to sue you.
You may feel you have a moral obligation to pay all debts, no matter how
old. Some experts recommend not paying the debt that is very old. In many
states, paying an old debt may reactivate the statute of limitations on
how long a creditor can sue to recover the debt. If this results in a
court judgment, the negative judgment will stay on your credit report
for seven years.
This is a complicated decision and you would benefit from consulting a
member agency of the National Foundation for Consumer Credit, such as
the Consumer Credit Counseling Service. These nonprofit groups have offices
in most cities. To find the office nearest you, call or write:
National Foundation for Consumer Credit, Inc.
8611 Second Avenue, Suite 100
Silver Spring, MD 20910
(800) 388-2227
www.nfcc.org
8. A debt collector has
violated my rights. Can I sue?
Yes. The Fair Debt Collection Practices Act (FDCPA) allows individuals
and class action plaintiffs to sue in federal or state court within a
year of the violation. Under the FDCPA, if you win, you may recover actual
damages plus up to $1,000. Attorney fees and court costs may also be recovered.
Members of a class action may recover actual damages plus a total of $500,000
or one percent of the net worth of the debt collector.
Attachment A to this guide, www.privacyrights.org/fs/fs27plus.htm,
may have information about collection laws in your state.
There are many private practice attorneys who specialize in assisting
consumers who have experienced violations of state and federal debt collection
laws. The web site of the National Association of Consumer Advocates,
www.naca.net, provides a directory of member attorneys. The search
process enables you to find attorneys near you and to specify those with
debt collection experience, www.naca.net/db.php3.
9. I have bad credit and
am considering paying a company to fix my credit. Will this work?
No. Companies or individuals promising quick fixes are almost always fraudulent.
The important thing to remember is that no one can have accurate information
removed from the credit file. The law offers some small protection to
consumers who deal with so-called "credit doctors" or "credit
repair clinics." Such companies are prohibited from charging a fee
before completing a promised service.
A better alternative for help with re-establishing good credit is to contact
a member agency of the National Foundation for Consumer Credit, such as
the Consumer Credit Counseling Service. These nonprofit groups have offices
in most cities. To find the office nearest you, call or write:
National Foundation for Consumer Credit, Inc.
8611 Second Avenue, Suite 100
Silver Spring, MD 20910
(800) 388-2227
www.nfcc.org
Beware of other credit repair services. Generally they promise a lot,
charge a lot and, deliver little. For more information about credit repair
services see www.ftc.gov/bcp/conline/pubs/credit/repair.htm.
10. I owe a debt and
I am trying to come up with a way to pay. But in calls to me, the debt
collector is threatening and rude. How can I stop this harassment?
This is a very unpleasant situation. Certainly, abusive, threatening,
and obscene language is more likely to be part of a telephone call than
a written communication. Collectors know the rules of the game about such
conduct. When this happens, ask for the caller’s name and the name
of his or her employer. Make notes recording the content of the call as
best as you can.Then send a written letter requesting that the debt collector
only contact you in writing. In your letter explain the abusive behavior.
Send this request certified with return receipt requested.
We have sample letters available at www.privacyrights.org/Letters/letters.htm#Debt.
You should also request in writing that the debt collector not contact
you at work.
The following practices by a debt collector are
in violation of the Fair Debt Collection Practices Act:
- claiming to be an attorney or government employee
when it is not
- sending you documents that look like legal papers
when they are not
- stating that forms sent to you are not legal
documents when they are
- saying that you committed a crime
- saying it will garnish your wages or sell your
property if it is not legal to do that
- saying it will sue you, if the collector doesn't
intend to sue
- not being truthful about the amount of money
you owe
- saying you will be arrested if you don't pay
the debt
- threatening you with violence
You may file a complaint with the Federal Trade
Commission (FTC), sue or both. For more information see section 7 of our
Fact Sheet 27, available at www.privacyrights.org/fs/fs27-debtcoll.htm#7.
Even if you decide to sue, it is still a good idea to complain to the
FTC about abusive practices. The FDCPA requires the FTC to report to Congress
every year about complaints the agency has received about abusive and
deceptive collection practices and the actions the FTC has taken against
violators of the law. Although the FTC will not assist you in your personal
claim against a collector, consumer complaints are the primary source
of information the agency needs to bring an enforcement action.
To read the FTC’s most recent report to Congress on FDCPA complaints
and enforcement actions, visit the agency’s Web site at www.ftc.gov/os/2006/04/P0648042006FDCPAReport.pdf.
Abusive debt collection practices should also be reported to your state
Attorney General. The FDCPA allows state authorities to file an action
against a debt collector. Abusive collection practices may also be a violation
of state laws. To find the contact information for the Attorney General’s
office in your state, visit www.naag.org.
11. I was contacted
about a 10-year-old debt. Isn't there a limit on the time for collections?
There may be a limit on the time a collector has
to sue you to collect the debt. The statute of limitations may vary from
state to state. However, there is generally no limit on how long a company
can attempt to collect on a debt.
12. Can government agencies
use private debt collectors?
Yes. One example is the Internal Revenue Service
(IRS). In 2006 the IRS made a rather controversial announcement when the
agency said it would contract with private collectors to recover some
delinquent tax accounts. For more on the IRS’s use of private debt
collectors, visit the agency’s Web site at
www.irs.gov/newsroom/article/0,,id=155065,00.html .
Another example is the U.S. Department of Education. If you are in arrears
on a student loan guaranteed by the federal government, you may hear from
a private collection agency. More on the Department’s use of private
debt collectors can be found at www.ed.gov/offices/OSFAP/DCS/faqs.html#CAs
.
Both the IRS and the Department of Education state that collections by
private firms are subject to the FDCPA as well as the Privacy Act. Debt
collections by private debt agencies are not limited to the federal government.
For example, a city may contract with a private debt collector to recover
overdue parking fines. If you are contacted by a debt collector that claims
to be under contract with any government agency, it is a good idea to
verify the collector’s authority by contacting the agency directly.
13. I had huge medical bills last year and got
behind. Can medical bills be sent to a private debt collector?
Yes. HIPAA, the federal medical privacy regulation adopted by the U.S.
Department of Health and Human Services, allows certain information to
be shared with a collection agency or credit bureau. The following statement
about medical information and collection agencies is from PRC Fact Sheet
8a, HIPAA Basics: Medical Privacy in the Electronic Age, www.privacyrights.org/fs/fs8a-hipaa.htm:
An unpaid bill, like any other debt claimed to be owed, may be reported
to a collection agency. What's more, an unpaid medical bill can appear
as a negative entry on your credit report. Information that can be disclosed
to a collection agency about you includes:
- Your name and address
- Date of birth
- Social Security number
- Payment history
- Account number
- Name and address of the health care provider
or health plan that says you owe the money.
A study by the Federal Reserve found that over half
of all collections noted on credit reports were for unpaid medical bills,
www.federalreserve.gov/pubs/bulletin/2003/0203lead.pdf.
14. A debt collector
says I owe fees that are almost as much as the original debt. Is this
allowed?
The FDCPA says a collector may not collect any amount
greater than your debt, unless your state law permits such a charge. PRC
Fact Sheet 27 includes a list of states with debt collection laws and
publications. www.privacyrights.org/fs/fs27plus.htm.
You should also contact your state Attorney General for information on
fees and other collection issues. You may connect to your state Attorney
General through the web site for the National Associate of Attorneys General,
www.naag.org.
15. May a debt collector access my credit report?
Access to your credit report is limited to certain “permissible
purposes” that are listed in the Fair Credit Reporting Act (FCRA).
One of the purposes listed in the FCRA is “collection of an account.”
A collection agency may also report to a credit bureau, but the FDCPA
prohibits giving false information to anyone, including a credit bureau.
16. I got a call from an attorney about an old debt.
Is this person subject to the FDCPA?
Attorneys who collect debts for third parties on a regular basis are “debt
collectors” under the FDCPA. Many attorneys as well as non-attorney
collection firms are often members of the debt collector’s trade
association, ACA International (the American Association of Credit and
Collection Professionals.) The ACA’s Web site includes a member
look-up service, www.acainternational.org/default.aspx?cid=174,
as well as an online complaint form to register problems with members.
www.acainternational.org/default.aspx?cid=101
A complaint filed with a trade association is not a substitute for complaining
to a government agency such as the FTC or your state Attorney General.
Nor is a complaint to the ACA a substitute for filing your own lawsuit
in egregious cases. However, members of organizations such as the ACA
have agreed to follow certain professional guidelines.
17. As a small business owner, am I protected
by the FDCPA?
Probably not for business debts. The practices prohibited by the FDCPA
apply to personal, family and household debts, including medical care
and the purchase of an automobile.
18. I had an account sent to collections. Now
the original account and the collection both appear on my credit report.
Is this wrong?
According to Experian both entries are considered part of your credit
history, and once the collection action is entered, that becomes the active
account. However, the delinquency date reported by the original creditor
should be the same as that reported by the collector. The delinquency
date dictates the establishment of the seven-year period. And that is
how long the account will remain on your credit report.
The delinquency date that triggers the removal of negative information
from your credit report should remain the same no matter how many times
the debt is sold. Once the seven- year period has run its course, all
entries involving the account should be removed from your credit report.
This includes the original creditor’s charge-off and any collectors
that have subsequently bought or sold the account.
If you have had an account sent to collections, this is yet another good
reason to check your credit report carefully to make sure all entries
have been deleted at the appropriate time. And, during the time the negative
account remains active, check your report to be sure the original delinquency
date is the one consistently reported on entries by the original creditor
and all collectors. Add this to your checklist of things to review when
you order your free annual credit reports through the FTC’s homepage,
www.ftc.gov/bcp/conline/edcams/freereports/index.html .
For further discussion of this “dual” reporting, read the
“Ask Max” question and answer on the Experian Web site.
www.experian.com/ask_max/max012506c.html
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