Dealing with collection agents can be a confusing process when you’re trying to climb out of debt. Sometimes debt collectors can seem intimidating or even threatening over the phone. And letters full of legal jargon are hard to understand. Knowing what creditors can and can’t do will make things a lot less scary when it comes to settling your debt.
In a previous post, we laid out when a debt collector can contact you and how often. In this post we look at what types of unfair or deceptive practices are off limits for debt collectors.
It’s important to know that The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the Fair Debt Collection Practices Act (FDCPA), which prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you.
According to the FTC, here are some of the things creditors and debt collectors can’t do when trying to collect.
Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:
* use threats of violence or harm;
* publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);
* use obscene or profane language; or
* repeatedly use the phone to annoy someone.
False statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:
* falsely claim that they are attorneys or government representatives;
* falsely claim that you have committed a crime;
* falsely represent that they operate or work for a credit reporting company;
* misrepresent the amount you owe;
* indicate that papers they send you are legal forms if they aren’t; or
* indicate that papers they send to you aren’t legal forms if they are.
Debt collectors also are prohibited from saying that:
* you will be arrested if you don’t pay your debt;
* they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or
* legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.
Debt collectors may not:
* give false credit information about you to anyone, including a credit reporting company;
* send you anything that looks like an official document from a court or government agency if it isn’t; or
* use a false company name.
Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:
* try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge;
* deposit a post-dated check early;
* take or threaten to take your property unless it can be done legally; or
* contact you by postcard.
Can I control which debts my payments apply to?
Yes. If a debt collector is trying to collect more than one debt from you, the collector must apply any payment you make to the debt you select. Equally important, a debt collector may not apply a payment to a debt you don’t think you owe.
Can a debt collector garnish my bank account or my wages?
If you don’t pay a debt, a creditor or its debt collector generally can sue you to collect. If they win, the court will enter a judgment against you. The judgment states the amount of money you owe, and allows the creditor or collector to get a garnishment order against you, directing a third party, like your bank, to turn over funds from your account to pay the debt.
Wage garnishment happens when your employer withholds part of your compensation to pay your debts. Your wages usually can be garnished only as the result of a court order. Don’t ignore a lawsuit summons. If you do, you lose the opportunity to fight a wage garnishment.
Can federal benefits be garnished?
Many federal benefits are exempt from garnishment, including:
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Social Security Benefits
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Supplemental Security Income (SSI) Benefits
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Veterans’ Benefits
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Civil Service and Federal Retirement and Disability Benefits
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Service Members’ Pay
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Military Annuities and Survivors’ Benefits
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Student Assistance
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Railroad Retirement Benefits
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Merchant Seamen Wages
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Longshoremen’s and Harbor Workers’ Death and Disability Benefits
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Foreign Service Retirement and Disability Benefits
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Compensation for Injury, Death, or Detention of Employees of U.S. Contractors Outside the U.S.
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Federal Emergency Management Agency Federal Disaster Assistance
Federal benefits may be garnished under certain circumstances, including to pay delinquent taxes, alimony, child support, or student loans.
Dealing with creditors and collectors should be easier now that you know more about your rights. In our next post we’ll take a look at how you can report a debt collector that’s violated the law and what you can do if you’re sued by a debt collector.
Ignoring collection agencies is never a good strategy for resolving your debt issues. CCRNow is a true attorney driven program that can help you deal with creditors to get out of debt safely, legally and with peace of mind. Click here to learn more about settling your debt without bankruptcy, or call 1.888.674.6540 to get advice from an enrollment specialist right now.
