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What Are Your Rights When You're in Debt?

4 key things to know about what debt collectors can't do.

by Kit Stone
March 3, 2020 | Work

Money matters are a touchy subject for a lot of people, and for good reason.

It’s not fun trying to balance a checkbook with limited funds and a mountain of debt. Credit cards, car loans, student loans, personal loans, mortgages — even when you're being careful it can pile up.

According to Northwestern Mutual’s 2018 Planning & Progress Study, the average American is living with approximately $38,000 in debt, not including their mortgage.

Illustration of a man sitting on a chair behind the desk, working on a computer. Rewire PBS Work Debt anxiety
Arming yourself with knowledge is the best defense against debt anxiety.

Most people feel helpless and overwhelmed by debt especially with collection agencies calling, visiting and in some cases texting to corral you into payment.

But even though you're the one who owes the debt, there are still guidelines creditors must follow when seeking payment. Enter the Fair Debt Collection Practices Act (FDCPA), a federal law passed to govern debt collection practices. It's designed to restrict the behavior of debt collectors when pursuing money they're owed.

Understanding the FDCPA and exercising your rights is the first step in reducing your debt anxiety and confronting your debt head-on. Here are four key rights to keep in mind when dealing with debt collectors:

1. They can’t tell your employer about your debt

Have you ever had a family member or friend call and tell you that there’s a creditor looking for you?

Under the law, however, collection agencies don't have the authority to share your financial information with others.

“Many debt collectors have historically used tactics such as threatening to tell your family, significant other or place of employment about your debt if they aren’t immediately paid,” said Los Angeles-based CPA and personal finance expert Logan Allec.

If someone makes that threat, let them know that you’re aware of your rights and that they're not allowed to speak with anyone other than you about your finances.

In most cases, collection agents will change their tune once they realize you know their tactics aren’t allowed.

2. No harassment allowed

You have the power to tell the collection agency how you’d like to be contacted. And, if requested, you can stop their communication altogether.

Bill collectors are not allowed to call or visit you anytime they want. Part of their tactic in getting you to settle your debt is bugging you, making your life so miserable, you’ll pay just to stop the harassment.

But, that’s just what it is — harassment, which is illegal. Harassment goes beyond obsessive phone calls. It also includes threatening violence, profanity, hiding their identity, and other overly aggressive behavior used to coerce you into paying.

If you have a debt collector who continues to harass you outside of their governed 8 a.m. to 9 p.m. hours, then you have the right to report them for breaking the law.

Your first step to report the harassment: the collection agency itself.

“You should attempt to contact your creditor first, explaining how you would like to be contacted regarding the debt and have this in writing as proof,” said Andrew Taylor, director of Net Lawman, which sells legal document templates.

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3. Debt collectors must tell the truth

Debt collectors aren’t allowed to lie about your debt.

They can’t lie about the amount owed, the repercussions or whether the statute of limitations has run out.

One of the most common lies used is that they’re calling to serve you with a subpoena or they tell you about supposed other legal ramifications for not paying your debt.

If you ask a question, they have to answer truthfully, but they can also decline to answer.

4. They have to give you the details

Yes, you know that you owe money, but you also have the right to a written notice detailing your debt. This information gives you a rundown of not only what you owe but who you owe it to, the amount of the payment due and any other details.

You also have the right to ask for the debt collector’s name.

It’s similar to a court of law. If you were being arrested or sued, you’d have the right to know what you’re being accused of doing. In the same manner, if someone is insisting you make a payment on your outstanding debt, you can insist they show you proof that the debt exists.

“Contact the collection agency within thirty days of being notified of the debt, and it’ll have to provide verification of the debt in writing before it can continue its collection efforts,” said Sean Messier, of Credit Card Insider.

Arming yourself with knowledge is the best defense against debt anxiety. Exercising all your rights over your debt can help you calm your nerves and regain control over the situation.

Kit Stone
Kit Stone is a multimedia storyteller from the West Coast. If she's not working on the next stamp in her passport, you can find her spending time with her family, tucked away with a good book or binge-watching her favorite shows.
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