Are you behind in paying your bills and being contacted by a debt collector? Did you know federal law prohibits third-party debt collectors from using unfair, deceptive, or abusive tactics to collect money from you?
The Fair Debt Collection Practices Act (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) (FDCPA) governs the actions of individuals and companies who regularly collect debts on behalf of other businesses. The FDCPA specifies how a collector can and cannot deal with you when collecting your personal debt.
Car loans, mortgage loans, student loans, credit card charges, and medical bills are examples of personal debts. The FDCPA applies when your financial obligations are being collected by someone other than the original creditor, such as where you received financing for your car loan.
Knowing your rights under the law can help to protect your dignity and well-being as you seek financial stability.
Debt Collection Toolbox for Consumers
This toolbox provides a variety of helpful considerations and resources for consumers to better understand their rights under federal law when being contacted by a third-party debt collector.
Prohibited Collection Practices
If one of your creditors uses a third-party company or lawyer to collect a debt, that organization or person is required to follow the federal FDCPA rules. Among many restrictions, these debt collectors cannot misrepresent their identity and amount of money you owe; call you before 8 o’clock in the morning or after 9 o’clock at night in your time zone (without your permission); or call you at work, if you tell the collector you’re not allowed to receive calls there.
Third-party debt collectors cannot harass, threaten, or deceive you; make false statements about you; falsely imply you committed a crime or will be arrested if you do not pay; use unfair tactics, such as depositing a post-dated check early; or ignore a written request from you to stop further contact.
Acceptable Communication Practices
If you don’t have an attorney, a third-party debt collector may contact other people only to find out your current address, phone number, and where you work. Other than to obtain this location information about you, a debt collector is generally prohibited from mentioning your debt to anyone but you, your spouse, or your attorney. If you’re a minor, the information can be discussed with your parent or guardian.
Written Notice Describing the Debt
Every third-party collector must send you a written validation notice telling you how much you owe. This notice must include the name of the creditor to whom you owe the money, and what action to take if you don’t think you owe the money. The collector must send the notice within five days after the initial communication with you.
If you send a letter to the debt collector asking for verification of the amount represented, or stating you don’t owe the debt, the collector must stop contacting you. Be sure to send the letter within 30 days after receiving the validation notice. Keep in mind, a collector may resume contacting you if it sends a written verification of the debt owed.
Unacceptable Communication Practices
Debt collectors are not allowed to communicate with you by postcard, or use any kind of symbol or language on an envelope identifying their purpose is collecting a debt. If you are represented by an attorney, and a debt collector has that person’s contact information, the collector cannot communicate with you directly. He or she must only communicate with your attorney.
Debt collectors cannot use any form of harassment or abuse while attempting to recover money from you. They cannot threaten violence against you, insult your reputation, or make frightening statements about your property. They cannot use offensive or indecent language when communicating with you by phone or through the mail. Further, collection companies and their employees cannot publish any kind of listing of consumers that have not paid a debt. They can, however, share this information with a consumer credit bureau.
The Federal Trade Commission’s webpage on Debt Collection (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) outlines many additional practices that are off limits for debt collectors.
Responding to a Debt Collector
If you are unable repay a debt immediately, or don’t think you owe the debt, you can tell the collector – in writing – to stop contacting you. Make a copy of your letter. Send the original by certified mail with “return receipt” requested, so you’ll be able to document your action.
The Consumer Financial Protection Bureau (CFPB) has prepared sample letters (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) you can use to respond to a debt collector who is trying to collect money from you. Included are tips on how to use the letters. They may help you obtain information, set limits, or stop any further communication.
If you truly do owe money, sending a letter will not get rid of the debt. The creditor or the collector can still file a lawsuit to collect the debt.
Failure to Pay Debt Owed
If you don’t pay a debt you owe, a creditor or its debt collector may file a lawsuit to collect the money. If the court enters a judgment against you, it will state the amount you owe, and allow the creditor or collector to get a garnishment order. This order will direct a third party, like your bank or credit union, to use funds from your account to pay the debt.
If ordered by the court, your wages can be garnished, which means your employer withholds part of your compensation to pay the debt. Federal benefits may be garnished only under certain circumstances, such as to pay “past due” taxes, alimony, child support, or student loans.
Alleged Violation of Your Rights
Report any problems you have with a third-party debt collector to the Consumer Financial Protection Bureau by using its online complaint form (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) or by calling (855) 411-2372.
If you think your rights under federal law have been violated, you can file a lawsuit against the debt collector. You have one year from the date of the violation to take this action. You could receive up to $1,000, plus attorney fees and court costs, even if you can’t prove you suffered actual damages.
You might be able to join others as part of a class action lawsuit against a debt collector, and recover money for damages up to the lesser of $500,000 or one percent of the collector’s net worth.
Many states also have their own debt collection laws that differ from the federal law. Contact your state Attorney General’s office (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) for help in determining your rights and steps to take for an alleged violation.