Debt Collection Laws & the Statute of Limitations

Debt Collection Laws

Stories about harassing debt collectors and collection agency scams seem to be a hot topic in today’s news. With all of the corruption out there, it makes many people wonder if there are any laws keeping collection agencies accountable for their actions. The good news is that there are in fact several laws and regulations that third party collection agencies must abide by, especially the Fair Debt Collection Practices Act.

What are the Laws for Debt Collectors?

According to the FDCPA, there are number of different protocols an agency must follow when dealing with a consumer’s debt. We’ve written a brief overview of the laws below and you can find more detailed information on the Federal Trade Commission’s (FTC) website or on the Consumer Financial Protection Bureau’s website.

Laws About Communication

  • Debt collectors may not contact the consumer at any “unusual time”. The appropriate time for calling someone who owes a debt has been defined as any time between 8:00am and 9:00pm. Any contact outside this time frame can be considered a violation of the FDCPA.
  • Collection agencies are not allowed to contact you at work if they have been notified that your employer does not approve of personal calls to your work number.
  • Debt collectors are only allowed to discuss your debt with you, your spouse in some states, your attorney, and consumer reporting agencies.
  • If you would like the collection agency to stop contacting you, you may formally request this in writing. Once this is done they may only contact you to tell you that they will stop communication and may use other methods to collect your debt.

Laws About Harassment

  • Debt collectors may not threaten violence in any form including property damage, physical harm or defamation.
  • Use of obscene language and profanities is strictly prohibited when attempting to collect a debt.
  • Collection agencies may not publicize the identities of consumers who will not pay their debts.
  • Debt collectors may not annoy or harass consumers with continuous and persistent phone calls.
  • Agencies should not threaten to advertise selling your debt in order to convince you to make a payment.

Laws About False Information

  • Debt collectors cannot falsify information or present themselves in a way that is deceptive including making false claims about the amount of the debt, who they work for, or what they will do if you do not pay the debt.
  • If requested in writing within the first 30 days after being contacted by a debt collector, a collection agency must provide written verification to validate your debt including the amount owed and information about the original creditor.

Laws About Payment

  • If you send in a post-dated check, the collection agency may not cash it until the date marked on the check.
  • Debt collectors may not collect any amount other than what is explicitly specified by the contract.

Statute of Limitations

What if a debt collector contacts you about an old debt, do you still have to pay it? This can depend on the state that you live in. There have been a lot of articles lately talking about the “statute of limitations” for debt collection, but deciding not to pay a debt based on this principle may cause you more problems down the road. As long as your state laws allow, the statute of limitations on an old debt does not prevent the collection agency from trying to recover the owed amount. The only thing it prevents is the collection agency suing you for the money. This can get tricky because the statute of limitations varies by state, and there are several things that can reset the timeframe; like making a payment. Aside from this, having old unpaid debts can diminish your credit and make it very difficult to buy a car, house or anything else that requires a loan.