Debt Collection Laws and Scams

Debt Collection Scams; FAQs, Your Rights and Actions You Can Take!

If you use credit cards, owe money on a personal loan, or are paying on a home mortgage, you are a "debtor." If you fall behind in repaying your creditors, or an error is made on your accounts, you may be contacted by a "debt collector." Yes, some people run up debts and fail to pay what they owe.  But there are also debt collection agencies and debt collectors who perpetrate scams on honest people who owe nothing; and debt collectors who clearly violate the law in collecting debts. Debt collectors generate more complaints to the FTC and state Attorney Generals offices than any other industry. Some debt collectors engage in illegal conduct. Some collectors harass and threaten consumers, demand larger payments than the law allows, refuse to verify disputed debts, and disclose debts to consumers' employers, co-workers, family members, and friends. Debt collection abuses cause harms that financially vulnerable consumers can ill afford. Many consumers pay collectors money they do not owe and fall deeper into debt, while others suffer invasions of their privacy, job loss, and domestic instability.You should know that in any situation, the Fair Debt Collection Practices Act requires that debt collectors treat you fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debt you owe.

  1. See this page for what to do, step by step
  2. What may a debt collector NOT say or do?
  3. You need to know your rights, which are primarily spelled out in the Fair Debt Collection Act.  Click on the link to read it!  It is not too look and is not hard to read! 
  4. You can file a compliant against a debt collector with the FTC - Use this form to submit a complaint to the Federal Trade Commission (FTC) Bureau of Consumer Protection about a particular company or organization..
  5. You can fight back with a lawsuit - First, see the answer to this question, then see Handel on the Law to find a recommended lawyer near you. You may also be able to file a lawsuit in small claims court yourself.
  6. Beware of debt collection scams, like the "Bureau of Defualters" scam

Commonly asked questions about your rights under the Fair Debt Collection Practices Act.

What debts are covered?

Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.

Who is a debt collector?

A debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis.

How may a debt collector contact you?

A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.

What should I do if a collector calls me?

The most important thing to do is to remain calm; arguments do not solve anything. If you get angry you may forget important information. In responding to complaints that bill collectors were abusive, it is often discovered it was actually the consumer who was abusive.

If you are contacted

    • Find out the name, address and phone number of the company calling you.
    • Find out the name of the business you owe money to, if different from the caller.
    • Get the exact amount they claim you owe.
    • Confirm that this debt is owed by contacting the business on whose behalf they claim they are collecting, and ask that business if they have authorized this agency to collect the debt for them.

Can you stop a debt collector from contacting you?

You can stop a debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.

May a debt collector contact anyone else about your debt?

If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.

What must the debt collector tell you about the debt?

Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.

How do I dispute a debt?

If a collection agency is involved, write them as soon as possible (write within 30 days of receiving the initial notice) and inform them you are disputing the debt. The collection agency must then halt collection activity until a copy of the verification is sent to you. It can then resume collection efforts. If the debt cannot be verified, the collection agency must cease activity on your account. During this time you are disputing the debt, the collector may not disclose any information about the debt, without also stating that it is being disputed.

May a debt collector continue to contact you if you believe you do not owe money?

A collector may not contact you if, within 30 days after you receive the written notice, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.

What types of debt collection practices are prohibited?

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.


What is considered harassment?

Harassment is difficult to describe in exact terms, but it usually means that a collector used obscene or threatening language with you. This includes calling you names, demeaning your occupation, or questioning the decisions that lead to your account being placed with a collection agency. It is also considered harassment to contact you at unusual hours (usually defined as before 8:00 a.m. or after 9:00 p.m.), or to call so often that it becomes harassing. Remember it is not against the law to be rude, and there is a distinction between rudeness and harassment.

The creditor called yesterday and threatened to sue me if I didn't pay my debt. Is that legal?

Yes. A creditor can threaten legal action against you. This includes threats to garnishee your wages or seize collateral. However, such action can only be threatened if it is taken in the regular course of business or is intended with respect to your particular debt. Only the creditor has the authority to decide whether legal action should be taken. A collection agency cannot initiate legal action on its own but can recommend legal action to the creditor.

Is a collection agency allowed to contact my employer?

The collector can contact your employer only for the following reasons  to verify employment or the amount of your earnings, or to communicate with an employer who has an established debt counseling service or procedure.

Collectors can also contact an employer after a final court judgment has been made on the debt.

What do I do if I simply can't afford to pay off the debt?

Try to propose to pay off the full debt in regular but specific payments. Be prepared to provide evidence concerning your current financial condition. Make sure that the payments are in an amount you can afford. Write both the creditor and collection with your proposal, and you might want to consider including a payment with that letter in the amount of the proposed payment. The payments should be in an amount that would pay off the debt in a reasonable amount of time. Offering to pay $5 a month on a $1,000 debt probably would not be accepted by a creditor or collection agency. If the collector approves these new payments, it is extremely important that you do not miss any payments.

I've had problems paying my bills and I'm trying to set up payment plans but the collectors are demanding full payment. Can they do that?

Yes. Once your account goes into default, a creditor or collector can demand any amount they wish, up to full payment of the debt. Although many collectors might accept smaller payments on a regular basis, they are not obligated to accept any offer you make them.

What control do you have over payment of debts?

If you owe more than one debt, any payment you make must be applied to the debt you indicate. A debt collector may not apply a payment to any debt you believe you do not owe.

The collector threatened to tell my neighbor about my debt. Can he do that?

No. A collector cannot disclose, or threaten to disclose, information about your personal or credit reputation to anyone, without a legitimate business need to know it. Remember, however, that collectors can report accurate information to the credit bureau and that information could end up on your credit report. That can make it hard to get loans, mortgages, credit cards and good rates on any of these.

The collector called my neighbor and asked if I live here. I thought collectors couldn't call anyone except me.

A collector can contact a third party only to determine if you reside at the location listed on the account. If you've moved, they can also ask for the new address, phone number, and where you are employed. Any further discussion between a third party and a collector is prohibited in most states..

What can you do if you believe a debt collector violated the law?

You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, you may recover money for the damages you suffered plus an additional amount up to $1,000. Court costs and attorney' s fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of the collector' s net worth, whichever is less.

Where can you report a debt collector for an alleged violation?

Report any problems you have with a debt collector to your state Attorney General' s office and the Federal Trade Commission. Many states have their own debt collection laws, and your Attorney General' s office can help you determine your rights.

Old collection scams

Collectors and collection agents may call pressuring people into paying money for past debts. An old debt is one that is older than 7 years or your state's statute of limitations, whichever is longer. Check the statute of limitations for delinquent debt in your state at this chart from

You may not even owe the money. But the collector has gone to a bank and bought debt that someone owed from the 1980's or 1990's. Then, the collector looks up the name in a database, calls the person listed and starts screaming at him or her to pay this debt. Anyone with the same name could be contacted.

A debt collector may call you and ask you for payment for this forgotten account, but he can't take you to court or threaten to sue you over it. If he does, he's violating the Fair Debt Collection Practices Act. But be careful how you handle a call about an old debt. In some states, making a partial payment to a debt collector or even acknowledging that you owe the money is enough to make an old debt new again.

Some people get so intimated by the collector that they pay. It is illegal to try to collect a debt in bankruptcy, so, if you have debt from a a bankruptcy and get a call, that is a scam. However, if you get a letter in the mail, you have to dispute the claim. You MUST respond in writing and tell the organization that the debt is not yours. Otherwise, it becomes your debt automatically. And, even if you do owe a debt, never give your banking information, or a postdated check, to a collector. Instead, pay via credit card that is not associated with your bank.

More Resources

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

If you believe you may have fallen victim to an internet scam and wish to report it, please file a complaint with the U.S. government Internet Fraud Complaints Center



For a comprehensive list of national and international agencies to report scams, see this page.

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