Debt collectors may fall short of carting you off to jail, but there are several less extreme steps they can take in order to collect what may be owed.
Here are seven things they generally can do and a few things to know about your own rights.
Attempt to pressure you into paying
The Fair Debt Collection Practices Act (FDCPA) expressly prohibits debt collectors from harassing you — which may include using profane language, calling excessively in a manner that’s intended to harass, annoy or abuse you, or threatening violence. However, they are allowed to apply pressure in order to convince you to pay according to NerdWallet. This could include:
Threatening legal action
The Federal Trade Commission says that debt collectors may be within their rights to threaten you with legal action but only if it’s an action they are legally allowed to take. So while they may be able to threaten you with a lawsuit, for instance, they couldn’t threaten to have you thrown in jail for a consumer debt, according to Nolo.com.
Contacting you regularly
According to the Consumer Financial Protection Bureau (CFPB), there is not a specific limit to the number of times a debt collector can try to contact you. However, under the FDCPA, they may not call “repeatedly or continuously with the intent to annoy, abuse, or harass any person at the called number.”
Trying to get you to pay on the spot
Obviously the goal of any debt collector is to collect payment. But while they can try to convince you it’s better to pay the debt in full immediately, the CFPB explains debt collectors are required to provide you with certain information about the debt. Generally, the debt collector is required to give you basic information like the amount owed and the original creditor, either over the phone or in writing within five days of your initial contact, according to the CFPB.
Call you at work — at least initially
Unfortunately, debt collectors may potentially be permitted to call you at work — however, there are stipulations they must follow. According to Nolo.com, they are not allowed to call you at work if…
- They’ve been told (by you, your employer, or coworkers) you are not allowed to receive phone calls at work.
- They should reasonably know your employer would not allow you to receive personal phone calls at work (based on the type of work you do, etc.).
The good news? If you do receive a phone call from a debt collector at work, Nolo.com indicates that you should be able to ask them to stop and they’ll have to comply.
According to the FDCPA, without your consent, “[a] debt collector may not communicate with a consumer in connection with the collection of any debt . . . at the consumer’s place of employment if the debt collector knows or has reason to know that the consumer’s employer prohibits the consumer from receiving such communication.”
Allow you to pay less than what is actually owed
According to Investopedia, debt collectors often acquire debt from delinquent accounts through a bidding process. On average, they pay about 4 cents for every $1 worth of debt owed. So while they can still attempt to collect the original amount, large profit margins may mean they’ll be flexible with the settlement amount they are willing to accept.
This also means it may be in your best interest to negotiate and see if they’ll agree to less than what was originally owed. If you are able to do so, it is also widely advised that you get it in writing to avoid being charged for the remainder of the debt down the road.
Ask people you know for your contact information
Here’s where it gets a little tricky. The CFPB says that debt collectors are allowed to contact people you know — including family members, friends, and your employer — for certain information including your phone number, address, and place of employment. However, they are generally not allowed to discuss anything regarding your debt unless the person is your spouse, parent (if you’re under the age of 18), guardian, or attorney according to the CFPB.
In addition, the FDCPA provides that they are generally not allowed to contact the same person again, “unless requested to do so by such person or unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information.”
Review your credit reports
While not everyone can access your credit report without authorization, there are some business organizations that can. According to Equifax, these are businesses that are considered to have “permissible purpose” — including debt collectors looking for information to use in collecting payment.
Unfortunately, according to NerdWallet, this could potentially result in a hard inquiry on your credit report since debt collectors are directly related to financial transactions. In turn, a hard inquiry could lower your score approximately 5-10 points.
Come to your house
Considering the logistics involved with physically showing up on your doorstep, debt collectors are probably not likely to conduct a home visit. However, they might.
According to The Balance, there is not a stipulation within the FDCPA that prevents debt collectors from showing up at your house, but what they do once they get there would likely have to adhere to, among other things, FDCPA requirements. The FDCPA provides that they would generally not be allowed to:
- Show up outside of hours that are considered “reasonable.” (Not before 8 a.m. or after 9 p.m.)
- Threaten violence or harm to you or your property.
- Use obscene or profane language.
- Falsely threaten legal action or threaten to have you arrested.
- Misrepresent who they are or what you owe.
- Speak to neighbors, friends, or family members about your debt (excluding your spouse or parent if you’re under the age of 18).
- Be evasive about who they are or why they’re there.
Garnish your wages
According to the CFPB, it may be possible for debt collectors to garnish your wages, but it’s not quite that straightforward. First, according to the Federal Trade Commission (FTC) — the federal agency charged with the enforcement of the FDCPA — they generally must have a court order before they may be permitted to move forward with wage garnishment. If this has been granted — usually by suing you first — then they must follow state and federal laws that dictate how and how much can be collected.
Fool.com notes that some states don’t allow wage garnishment for consumer debts — including Texas, North Carolina, South Carolina, and Pennsylvania. While other states either follow federal guidelines entirely, federal guidelines with some exceptions, or state guidelines.
Under Title III of the Consumer Credit Protection Act, 75% of disposable earnings, or 30 times the federal minimum wage — whichever is greater — is exempt from wage garnishment, according to the U.S. Department of Labor.
Here are few examples of wage garnishment stipulations by state:
Note: According to the Department of Labor, in this case “disposable earnings” means “the amount of earnings left after legally required deductions are made… Examples of such deductions include federal, state, and local taxes, and the employee’s share of Social Security, Medicare and State Unemployment Insurance tax. It also includes withholdings for employee retirement systems required by law.” (Read what else may be included here.)
Alaska: 75% of disposable earnings, or $473 per week, or $743 per week if the debtor’s earnings alone support the household –– whichever is greater –– is exempt from wage garnishment.
California: 75% of disposable earnings or 40 times the state’s minimum wage are exempt from wage garnishment.
Florida: Follows federal guidelines. However, the debtor is exempt from wage garnishment if they are head of household and make $750 or less per week.
New Hampshire: 75% of disposable income or 50 times the federal minimum wage –– whichever is greater –– is exempt from wage garnishment. However, continuous wage garnishment is not allowed in New Hampshire, so creditors must receive permission from the court for every subsequent check they wish to garnish.
You can find your state’s wage garnishment rules here.
The bottom line
Even with the tactics debt collectors are able to use, there are several they are generally not able to use. The key is to do your research, know your rights, and don’t be afraid to confirm any information before making a payment.