Dealing with a debt collector can be a difficult and upsetting experience. The main goal of collectors is to recover the debt because they get to keep a percentage of it. In the past, unscrupulous collectors threatened borrowers, called at all hours of the day and night, pretended to be someone else, and contacted the debtor's friends and family, hoping that constant harassment would lead to payment of the debt. Under federal law, those practices are now illegal—although that doesn't mean they never happen.

Key Takeaways

  • The federal Fair Debt Collection Practices Act protects consumers from abusive treatment by third-party debt collectors.
  • Some states also have their own, even more restrictive laws.
  • If a debt collector violates the rules, you can report them and even sue for damages.

What Debt Collectors Aren't Allowed to Do

In the United States, the Fair Debt Collection Practices Act (FDCPA) details the specific practices that are prohibited in third-party debt collection efforts. (It doesn't apply to a creditor's in-house collectors.) Many states have their own debt collection regulations, which may restrict collectors even more.

The FDCPA limits the ways that collectors can contact debtors. They can only call between 8 a.m. and 9 p.m., and not at times likely to be inconvenient to you, the consumer, unless you have given them permission to call you at those times. They cannot call repeatedly in a short period of time in order to harass you. Collectors cannot threaten that you will go to jail or that they will make the debts public. They also cannot call your employer about your debt, unless it represents unpaid child support. If you tell collectors not to call you again, they are not allowed to do so, but their collection efforts can continue by other means.

Debt collectors cannot imply that they can garnish your wages or take other personal property to satisfy the debt. In order for that to happen, they would have to sue you in a court of law and obtain a court judgment. The federal government is an exception, however, and it is allowed to garnish without such a judgment.

If you have provided a debt collector with postdated checks to satisfy the debt, they cannot try to cash the checks early, even though banks may allow them to do so. They also cannot charge you any fees, penalties, or interest that were not agreed to in the original contract with the creditor.

Protecting Your Personal Information

To guard against identity theft, experts advise never giving anyone, including a debt collector, personal or financial information over the telephone. Legitimate debt collectors will not ask you for bank or credit card account numbers.

Because scammers often pose as debt collectors, always confirm with the company you owe the money to that it has turned over collections on your account to that debt collector. Never pay anyone or any company that you have not verified as legitimate.

Reporting a Debt Collector

If you are pursued by a debt collector who is breaking the rules of the FDCPA, you can report them to your state attorney general's office, the Federal Trade Commission, and the Consumer Financial Protection Bureau.

You may also be able to sue the debt collector if their actions violated the law. As the Federal Trade Commission explains, "You can sue a collector in a state or federal court within one year of the date the law was violated. You can sue for damages, like lost wages and medical bills. If you can’t prove damages, you can still be awarded up to $1,000, plus reimbursement for attorney’s fees and court costs."

The Bottom Line

If you have to deal with a debt collector over unpaid bills or accounts, know that you have legal rights. Always be sure to safeguard your financial information and don't assume the debt collector is legitimate until you've verified that with the creditor in question. If the debt collector breaks the rules, you can report them to both state and federal regulators and possibly sue for damages.