FAQ: What a Debt Collector Can and Cannot Do

Can a debt collector collect on an illegal loan? Back to top

Maybe. If the debt collector sues to collect on an illegal loan and the consumer does not defend against the lawsuit, the collector will get a judgment. That judgment may be enforceable. In our legal system, it’s up to the consumer to defend against the lawsuit and prove that the debt is illegal.

Can a debt collector collect on a charged off account? Back to top

Yes, so long as the debt is within the state’s applicable statute of limitations. Just because a debt is charged off by a lender does not mean that the lender has abandoned its right to that debt. It simply means that the lender, while following industry guidelines or tax practices, is determined that the debt is not presently collectible. By charging off the account, the lender may be entitled to certain tax advantages. However, the debt remains the consumer’s obligation.

Can a bill collector do a background check? Back to top

Yes, but then again, anyone can perform a background check on just about anyone else. The real question is whether a bill collector can pull your credit report. The answer is yes. The Fair Credit Reporting Act dictates the specific circumstances for when a person or entity can pull a consumer credit report. Under the law, a user of a credit report must have a federally permissible purpose to pull a credit report or it may face civil and criminal penalties. Collecting on debt is one such federally permissible purpose that allows a debt collector or a creditor to pull one’s credit report.

Can a bill collector refuse payment? Back to top

Yes, they can. But, they rarely do. Most debt collectors get paid a percentage of what they collect. By refusing a payment, they are not acting in the best interests of their client nor are they making any money. However, when a bill collector refuses payment, it may be in the context of a proposed payment plan that is just too low to accept. For example, if you owe $10,000 on a credit card and offer to pay $5 per month, a debt collector would likely refuse that deal. Still, if you send money to the debt collector to apply towards your debt, it’s highly unlikely that the debt collector would refuse that money in front of him.

Can a Bill Collector Show Up at your job? Back to top

Yes, but he must be very careful if he does. First of all, he is not allowed to disclose that he is a debt collector to third parties, nor can he disclose that you owe a debt to third parties. By showing up at your job, he may arouse suspicion from your employer and fellow employees. Secondly, he is not allowed to make threats that he has neither the legal right nor intention of taking. For example, if he does not have a judgment against you and threatens to garnish your wages, he has broken the law. Finally, if you tell a debt collector, in writing, to cease and desist from contact you then, no, he may not show up at your job.

Can a bill collector threaten to have you put in jail for not paying your bill? Back to top

Absolutely NOT. Under the Fair Debt Collection Practices Act, a debt collector may not threaten to take action that he does not have the right to take. Most states in America did away with “debtor’s prison” over a hundred years ago. Hence, threatening a debtor with jail for not paying a bill is a violation of the FDCPA. In our experience, this is a technique used by debt collectors who operate outside of the United States and outside of the law. If a debt collector threatens you with jail, chances are excellent that they are not a legitimate debt collection company operating in the United States. You can laugh at them and hang up. They can do anything of the sort to you.

Can a Bill Collector legally call your family? Back to top

Sometimes. As a general rule, a debt collector cannot disclose your debt with third parties other than credit reporting agencies, the creditor, your lawyer, your spouse, and anyone that you may authorize the debt collector to speak to about your debt. There is also one other exception called the Location Information Exception. If a debt collector does not have your home address and your telephone number, it can call anyone once to obtain this information. In that conversation, the debt collector cannot disclose the debt, or that you owe a debt. He must also avoid identifying the name of his employer if that would notify the third party that the consumer owes a debt. He must tell the third party that he is attempting to update or correct his records on the consumer and that that is the reason for his phone call. He is allowed to call this person once unless he has reason to believe that the third party was not candid with him.

Can a collection agency add the same debt twice to your credit report? Back to top

No. However, the debt may appear more than once on your credit report if was handled by more than one collection agency. Only one such agency can report the debt as currently owed.

Can a collection agency charge interest? Back to top

Only if the contract between you and the credit grantor provides for interest. Under the Fair Debt Collection Practices Act, a debt collector can only charge you for those items that are authorized by the contract are authorized by state law. Many times that collectors violate the FDCPA by charging interest when the contract between the consumer and the merchant does not provide for such charges.

Can a collection agency collect offshore payday loans? Back to top

A better question is whether a collection agency can collect an illegal debt. The answer is no. If that is legal then it doesn’t matter who holds that if it’s enforceable, a collection agency can collector. Something else to consider is whether an offshore collection agency can collect on a payday loan. Many of these offshore collection agencies operate in a very illegal fashion. They threaten people with actions they cannot take because they know they cannot be sued in the United States. If you get a call from an offshore collection agency writing you regarding a payday loan, you can reasonably ignore them. You can simply tell them that you will not pay the debt and hang up. There’ll ultimately lose interest and move on.

Can a collection agency leave a message saying they are a collection agency? Back to top

Yes but it would be foolish to do so. If a third party heard the message, then the debt collector will have violated the fair debt collection practices act. Is that a lot of litigation in this area. One part of the FDCPA requires a debt collector to identify itself in talking with the consumer. Another part of the FDCPA prohibits a debt collector from identifying himself as a debt collector to a third-party.

Can a collection agency sue you for old that? Back to top

Yes, so long as the debt is within the state statute limitations. In Michigan, the statute limitations for a contract is six years from the first date of its breach. If you live outside of Michigan you’ll have to check with your state statute limitation is. If the debt is outside the statute of limitations, and the debt collector will have violated the FDCPA by filing a lawsuit on a debt that is outside the statute of limitations.

Can the company and the debt collectors collect at the same time? Back to top

Yes they can, but it rarely happens. It’s just too easy to violate state and federal laws by having both debt collectors collect at the same time on the same debt. The debt collectors, not afraid I collection practices act. The company to which the debt is owed, may be covered by state collection loss. Third-party debt collectors typically instruct their clients to stay out of the debt collection process once they are in it.

Can a credit bureau garnish my wages? Back to top

Sometimes yes. Student loans are collectible without judgment. A debt collector collecting on the student loan simply has to send the notice to your employer anything garnish of 15% of your take-home pay. Before they do this, they usually like to verify your employment and they do it by facsimile. Student loan debt collectors will typically send him to fax your employer asking if you are employed there. The facts do not have the name at the top indicating that it’s attempting to collect a debt. The other rules of the FDCPA still apply. All other debt collectors are forgiven for making these sorts of phone calls because there cost of third parties in connection with the collection of debt.

Can a debt collector call my work before they try to garnish my wages? Back to top

Sometimes yes. Student loans are collectible without a judgment. A debt collector collecting on the student loan simply has to send the notice to your employer anything garnish of 15% of your take-home pay. Before they do this, they usually like to verify your employment and they do it by facsimile. Student loan debt collectors will typically send him to fax your employer asking if you are employed there. The facts do not have the name at the top indicating that it’s attempting to collect a debt. The other rules of the FDCPA still apply. All other debt collectors are forgiven for making these sorts of phone calls because there cost of third parties in connection with the collection of debt.

Can a debt collector call you everyday? Back to top

Yes. But the easiest way to stop the debt collector from doing that is to send a written letter to it directing it to cease-and-desist from having any further contact with you. If a call to after it receives the cease-and-desist letter it will have violated the fair debt collection practices act.

Sometimes that collectors are overzealous civil and will call you more than every day. Sometimes a debt collector may call you multiple times per day. The FDCPA prevents debt collectors from engaging in conduct the tendency of which is to harass or abuse you. Some courts have held that these multiple calls during the day amounts to harassment and abuse.

Can a debt collector find out when you receive unemployment? Back to top

I doubt it. But even still unemployment is not garnishable.

Can a debt collector from another state sue me? Back to top

Yes. It only needs to hire an attorney and is licensed in the state in which you live. That lawsuit. Sometimes, people sign contracts in which they agreed to be sued in the state in which the creditor resides it does business. According to the fair debt collection practices act, a debt collector may only sue you in the state in which you reside or which you signed the contract.

Can a debt collector garnish my spouses wages? Back to top

A debt collector may only garnish her spouse’s wages if the debt collector has a judgment against him or her. Just because a debt collector has a judgment against you is not entitled to collect money from your spouse. As a matter fact, under the FDCPA and debt collector can talk to your spouse about your debt, but may not ask your spouse to pay the debt.

Can a debt collector garnish her tax return in Michigan? Back to top

Yes. A debt collector can garnish her tax return refund in Michigan. It may not garnish your federal income tax refund. These sorts of garnishments can get tricky because if the debtor is married part of that refund belongs to the spouse. If your tax refund that’s garnish, it’s important for you to object quickly and to present evidence to the judge that most of the refund belongs to your spouse.

Can the debt collectors to call you when you tell them to stop calling? Back to top

Maybe. Under the FDCPA, a debt collector may not contact you at times that it knows are inconvenient for you. The debt collector calls you were to tell the debt collector you’re not allowed to receive calls it, a further content is a violation of the statute. Moreover the FDCPA requires you to inform the debt collector in writing if you wish it to cease-and-desist from contacting you any further. Your best bet is to get the debt collectors name and address. The first phone call and fax numbers possible. And fax over a letter telling it to cease-and-desist contacting you. Any contact it makes with you (except for the statutory requirement letter ) after that date, is a violation of the FDCPA.

Can the debt collectors sue me on debt that is past statute of limitations? Back to top

Yes and debt collector can see you but that doesn’t mean it’s going to win. If a debt collector sees you on a debt that’s beyond the statute of limitations it has violated your rights under the FDCPA. You have to be sure to answer the complaint and assert the statue limitations as an affirmative defense if you fail to do these two things, the debt collector will get a judgment against you irrespective of the statue limitations.

Can the debt collector take my car? Back to top

Possibly. After debt collector obtains a judgment against you as a right to seize your assets. It may seize your car if you have enough equity in it. The value of the car less the outstanding liens and any costs of the action might make a car valuable asset to seize liquidate. If you lease your vehicle and the car is not yours enhance the debt collectors cannot seize it. If you have an older car with high mileage on it says very little value a debt collector may not be interested in taking the vehicle.