What Are Your Rights When a Debt Collector Calls?

Anya Kamenetz

Have you been plagued by debt collectors? Help is on the horizon. There's a new government regulatory agency called the Consumer Finance Protection Bureau, created last year by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Last month, the CFPB gained new powers to regulate and censure everyone's least favorite part of the financial industry: debt collection.

The Fair Debt Collection Practices Act, which currently regulates the industry, was passed in 1977. A number of changes are on the table. The industry, represented by the Association of Credit and Collection Agencies, wants the right to contact you by cellphone and email. On the other hand, the National Consumer Law Center, which advocates for borrowers, wants to increase damages under the act; currently, if a debt collector is found to be harassing you, you can't get more than $1,000 in compensation.

While new rules are being drafted, here's a review of your current rights under the law and what to do if you believe a debt collector has acted unfairly.

How, When, and Whom

A debt collector is not allowed to call you before 8 a.m. or after 9 p.m., or at work if you've told them not to. They can't call multiple times an hour. They can't send postcards, which could be read by others. They must deal directly with your attorney if you have one. As for any third parties (family, neighbors, boss) they are allowed to get in touch with them exactly once, to find out your whereabouts.

Fighting Words

Debt collectors can't use obscene or profane language; threaten violence, to take your property or that you'll be arrested; or make empty threats of legal action (they can inform you of actual plans to take legal action.)

Pants on Fire

Debt collectors can't pretend to be someone else, such as attorneys, representatives of a court or government agency, or of a credit-reporting agency. They can't give a false company name or send you fake official-looking documents. Interestingly, it's been reported that some debt collectors do give personal pseudonyms over the phone.

Stopping the Calls

When you first hear from a collector, it's a good idea to hear them out to find out if the matter can be resolved. Then, write a letter explaining your side of the story, such as a suggested time frame for repayment, or a reason you believe there's been a mistake with the terms or amount owed. You have the right to demand in the letter that the collector not contact you again about the debt. Make a copy of the letter and send it certified mail with a "return receipt" to prove that the collector received it.

After they get this letter, collectors may not contact you again, except once to agree on no further contact, or to inform you of a specific action such as filing a lawsuit. .

Disputing A Debt

If you think the collector is wrong for any reason, put it in writing. A collector is required to verify debt information if you dispute the debt in writing within 30 days after they contact you. Until they provide verification, which means a copy of the official judgment against you or other supporting documents or records, and the name and address of the original creditor, they are supposed to stop collecting on the debt.

In your dispute letter you should include identifying information such as your date of birth and last four digits of your Social Security number, and any receipts or records you have to show that the debt has been repaid already. The letter should be sent certified mail with a return receipt.

Filing a Complaint

Debt collectors get more complaints than any other industry. To file a complaint, get in touch with the Federal Trade Commission. They have a website at FTCComplaintAssistant.gov.

Personal Finance - What Are Your Rights When a Debt Collector Calls?