This guide explains the federal Fair Debt Collection Practices Act (FDCPA) and other laws that apply to debt collectors. We provide information about how to stop calls from collectors and how to correspond with them about your account or to dispute a collection action. We also explain your right to privacy, and how debt collection efforts may affect your job, your credit report, even information in your medical files.

• Says it will garnish your wages or sell your property if it is not legal to do that.

• Says it will sue you, if the collector doesn't intend to sue.

• Is not truthful about the amount of money you owe.

• Says you will be arrested if you don't pay the debt.

• Threatens you with violence. 

Does a creditor have to tell me before it sends my account to a collection agency? What about credit bureaus?

You have no right to be notified under the FDCPA that an account will be referred to a collection agency. However, your state may have a law that requires notice in some cases. In California, for example, you must be notified before a health or fitness club refers a debt to a collection agency. If you are threatened with such a referral with no sign of your creditor carrying through on the threat, the creditor may have violated the law.

The Fair and Accurate Credit Transactions Act (FACTA or FACT Act) requires financial institution creditors to send notice that negative information may be posted to your credit report. Sample notices are available from the Federal Reserve Board, www.federalreserve.gov/boarddocs/caletters/2004/0412/CA04-12Attach4.pdf .

For summaries of the new FACT Act, see PRC Fact Sheet 6(a), FACTA: The Fair and Accurate Credit Transactions Act: Consumers Win Some, Lose Some , www.privacyrights.org/fs/fs6a-facta.htm . Also, visit these consumer web sites:

• National Consumer Law Center, www.consumerlaw.org/initiatives/facta/nclc_analysis.shtml

• Consumers Union, www.consumersunion.org/pub/core_financial_services/000745.html

Does an agency have to contact me in writing before it calls me?

No. A collection agency may contact you first by telephone. Within five days after the phone call, the collector must send you a written notice. The notice must tell you how much you owe and the name of the creditor that says you owe the money. The written notice must also tell you how to file a dispute if you don't agree that you owe the money. For more on disputing a debt that is not yours, see Part 6.

Does a debt collector have to tell me anything else?

The person who calls you from a collection agency has to give you his or her name and the name of the agency. The caller cannot pretend to be someone else. A collection agency cannot lie about who it is or send documents that mislead you.

I'm receiving phone calls from a collector. Can I stop the collection agency from contacting me by phone?

You can write a letter to the agency telling it not to contact you by phone, not to call at certain times or locations, or not to make any further contact at all. This last request does entitle the collector to contact you one more time to inform you of what, if any, action it intends to take to collect the debt, but not to threaten you. (See Part 6). You should send such a letter by certified mail and request a return receipt. If the company has a fax number, send the letter by both fax and by mail. Understand, telling the collection agency not to contact you should stop the phone calls, but it won't stop the collection efforts.

The FDCPA says discussions about the debt can only be held with (1) the individual, (2) the creditor, (3) an attorney representing one of the parties, and (4) a credit bureau. Public airing of your business intended to shame you into paying a debt is not allowed. Debt collectors:

• Cannot exchange (with other agencies) information about individuals who allegedly owe a debt.

• Cannot distribute a list of alleged debtors to its creditor subscribers. 

• Cannot advertise a debt for sale.

• Cannot compile a list of debtors for sale to others.

• Cannot leave messages with third parties, asking them to have the debtor call the collector.

May a collector send me mail in care of another person?

Only if you live at the same address or receive your mail at that address. Even when communicating with you directly by mail, a collector is not permitted to use a postcard. The outside of an envelope sent to you by a debt collector should not include language to indicate that the mail is from a debt collector or that the letter relates to the collection of a debt. In short, the collector should take reasonable measure to assure your privacy. For example, if the collector knows that you share your address with others, it may be required to mark the letter "personal" or "private" and not give any outward appearance of the nature of the letter.

May a debt collector contact my neighbors or family members about my debt?

Not if the collector knows your name and telephone number and could have contacted you directly. When contacting your family members including minors or neighbors to find out how to locate you, the collector:

• Cannot tell others you owe a debt or discuss details of the account.

• Must identity himself, (by name, but not as a debt collector).

• Must identity the name of the collection agency only if asked.

• Can only contact the party once unless the collection agency has reason to believe the person has new information.

• Cannot leave information about a debt on a third party's answering machine or voice mail service.

Contacts with a spouse, the parent of a minor, a guardian, co-signer, executor, or administrator are considered the same as contacts with the debtor under the FDCPA.

I am being contacted by a collector looking for my former roommate, neighbor, or relative. Can I stop this?

No. Here are examples of debt collection activities that are not subject to the FDCPA:

The type of debt, such as a student loan, may affect whether all of the rights you would otherwise enjoy may be afforded you in this particular situation.

• Process server, that is someone attempting to serve a copy of a court order enforcing payment of a debt, is not covered by the FDCPA, provided its efforts are limited to the service of process.

• Consumer credit counseling services are not subject to the FDCPA if the service is:

                     1) A nonprofit organization, and

                     2) Receives payments from the debtor for distribution to creditors.

Despite the many collection activities that fall outside the FDCPA, the FTC recently reported to Congress that abusive debt collection practices not subject to that law may still be subject to an FTC enforcement action under the Federal Trade Commission Act. Similarly, such activities may be subject to the provisions of other acts prohibiting unfair business practices. The FTC is required to submit an annual report to Congress about debt collection complaints. The most recent report can be read at: www.ftc.gov/opa/2006/04/fyi0621.htm.

Are attorneys subject to the FDCPA?

An attorney that regularly collects or attempts to collect consumer debts owed another, directly or indirectly, must comply with the FDCPA. The law also applies to attorneys who act as in-house counsel and who send dunning letters or make telephone calls on behalf of their employer/client. For more information about debt collection efforts that are and are not covered by the FDCPA, see the Federal Trade Commission's Commentary on the FDCPA. www.ftc.gov/os/statutes/fdcpa/commentary.htm

The status of attorneys as debt collectors may vary under state collection laws. To find out what the laws are in your state when an attorney acts as debt collector, contact your state Attorney General through the web site of the National Association of Attorneys General (NAAG), www.naag.org and see Part 5 below.

What is the Debt Collection Improvements Act?

California's Fair Debt Collection Practices Act (California Civil Code § 1788, et seq.) adds to the federal law in several ways. Unlike the federal law, the California law applies to third-party collectors as well as creditors that collect debts for themselves.

California law also gives you added protections against unwarranted contact with your employer. In California a debt collector may only contact your employer to:

• Verify your employment status.

• Verify your business address.

• Garnish your wages when a court issues a judgment against you

. Under California law, the debt collector must first attempt to contact your employer in writing for any one of the allowed purposes (except for verification of employment, in which case a single oral contact is permitted). The collector may only telephone or make a personal contact with your employer regarding the issues listed above if after 15 days there has been no response to the written inquiry.

For more on debt collection in California, see the California Attorney General's publication, "Collection Agencies," www.ag.ca.gov/consumers/general/collection_agencies10.htm.

Does a collection agency need a license?

There is no federal license or registration required for collection agencies. However, in some states debt collectors must register or apply for a state license. Licensing requirements vary from state to state. Many states also require collection agencies to be bonded. In some states, such as California, there may have been prior requirements for licensing of collectors, resulting in state regulations being retained on the books of the state even after the regulatory agency has been disbanded. These regulations may provide additional details and support for legal arguments of what is considered proper. To learn more about the licensing and bonding requirements for collection agencies operating in your state, link to your state's collection law through Attachment A, www.privacyrights.org/fs/fs27plus.htm. If your state is not listed, contact your state's attorney general through the National Association of Attorneys General web site, www.naag.org.

There are many reasons to write to a collector. There are also certain things to look for when a debt collector writes to you. Here are just some things that might lead you to write a letter to a collector:

• It is not your debt. The collector has you confused with someone else.

• You are a victim of identity theft - someone used your identity to run up charges.

• You already paid the debt.

• The creditor sent the bill to an old address, even though you told the creditor you moved.

• The collection agency says you owe more than you think or says you owe an exorbitant amount in fees and extra charges.

• You need to clarify your conversation with a collection agent. 

• You would like to stop phone calls to you or others.

You may also want to create a written record of your dealings with the collector. A record could prove particularly useful later on, especially if you are dealing with a problem collector or one that refuses to put its agreements with you in writing.

Some things you would record in a letter to a debt collector:

• Promises.

• Terms of payment.

• Commitments to adjust entries in credit history.

• Proper crediting of payments.

• Instances where the collector failed to keep a promise to you or failed to act within the agreed upon time.

• Instances where the collector or its representative engaged in abusive practices such as threats, abusive language, or contact with third parties.

How do I dispute a collection action?

Your first contact with a collection agency is likely to be a telephone call. The law requires a collection agency to send you a written notice five days after it first contacts you. The FDCPA requires a collection agency to tell you how to contact the collector in writing.

The written notice must also tell you how to dispute the debt and give you the information you need to lodge a dispute. The FDCPA (§1692g(a)) says the written notice should also tell you:

• The amount of the debt.

• The name of the creditor.

• A statement that if you notify the debt collector in writing within the 30-day period that you are disputing the debt, the collector will obtain verification of the debt or a copy of a judgment against you.

• A statement that, if you request it, the collector will provide you with the name and address of the original creditor, if different from the current creditor.

• A warning informing you that, "This is an attempt to collect a debt and any information obtained will be used for that purpose."

If you do not receive the notice within five days, call the collection agency and ask for its address and fax number. Then, send a letter to the collector noting its failure to send you the required notice. As a minimum, make a note for your file.

What information should I include in a letter?

We have developed several debt collection letters that you can tailor to fit your specific situation in Attachment B, www.privacyrights.org/Letters/letters.htm#Debt. We include suggested wording for disputing a debt as well as giving the collector notice to stop contact with you, people you know, or your employer. The sample letters are not intended to confer legal advice and are only offered to provide guidelines. In Part 7 we offer guidance on how to write a complaint letter to a government agency. The same suggestions apply when writing to a collection agency. It is particularly important to get organized, get to the point, and maintain a business-like tone.

It is a good idea to include a date in your letter by which you expect to hear back from a collector, for instance, that either it is investigating your dispute or will no longer contact you about another person's debt. Usually, a date of two to three weeks is sufficient.

It is also very important to send correspondence to a debt collector by Certified Mail, Return Receipt Requested. This way, you will receive a signed and dated notice that the collector has received your letter. Without confirmation, it may come down to your word against the collector. You may also want to fax your letter before mailing it.

What happens after I dispute a collection?

After you file a dispute, the collection agency then must stop collection efforts until it has conducted an investigation. This means the debt collector cannot put the debt on your credit report. It must validate the debt by obtaining a verification of the debt or a copy of a judgment from the creditor. A copy of documents that verify the bill should then be mailed to you.When you send the collector proof that the debt is not yours or has been satisfied, ask for written confirmation that the collector is not holding you accountable for the debt. Some accounts, even though properly disputed with one collector, may be sold to another. This can happen years after you have successfully disputed an account.

This makes it all the more important to create a record of your experience with the prior collector. Keep your file indefinitely, especially if it contains correspondence that states you are not responsible. State law may keep a collector from suing you after a given period of time. However, there is no statute of limitations on collection efforts. What you thought was a closed file, may later come back to haunt you.

How long does the collection agency have to conduct its investigation?

There is no set time, but, again, the collection agency cannot resume collection action unless it confirms the debt.

May a debt collector report negative information on my credit report?

Yes. However, collection agencies are not consistent when it comes to reporting. Some collectors report only larger collection amounts while others report all collections. For a discussion about inconsistent reporting and other issues that arise when collectors report to credit bureaus, see the Federal Reserve Board Study, Credit Report Accuracy and Access to Credit , www.federalreserve.gov/pubs/bulletin/2004/summer04_credit.pdf.

If you dispute a debt with a creditor or a collector, any notation on your credit report should also state that you dispute the debt.

Am I liable for the debt if I don't dispute it in 30 days?