Bankruptcy Information Center

Frequently Asked Questions about Debtor-Creditor Law

Q: Are there limits on what debt collectors or collection agencies can do when they attempt to collect delinquent debts?

A: Yes. The main federal law regulating debt collectors is the Fair Debt Collection Practices Act (FDCPA), first passed in 1977. Congress was concerned about ongoing abusive debt-collection practices that negatively impacted the lives of consumer debtors both personally and financially. Congress also wanted to level the playing field between honest and upright debt collectors and those using deceptive collection practices. Your state laws also may provide additional regulation of debt collection.

Q: What are the main provisions of the FDCPA?

A: The FDCPA forbids debt collectors, both attorneys and nonattorneys, from using certain questionable methods when attempting to collect consumer debts of a personal or family nature. Basically, debt collectors may not use unfair practices, harassment or false statements.

Q: What can I do if I am the target of an abusive debt collector?

A: A written letter from you to the collector requesting that he or she stop contacting you should stop the communication, except that the collector still may tell you the contact will stop or that a certain action will be taken against you. You can report the situation to the Federal Trade Commission (FTC), the federal agency charged with enforcing the FDCPA. You also can contact the Attorney General's office in your state. An attorney with knowledge of debtor-creditor law can advise you about your legal rights. For example, you may be able to bring a lawsuit under the FDCPA, other federal law or state law.

Q: What if I do not owe the money?

A: After the initial contact from the collector, it must send you within five days a written notice providing certain basic information about the debt, including direction about what to do if you contest it. Within 30 days of receipt of this notice, you can stop the collector's attempt to collect from you by sending a written letter stating that you do not owe the debt. If the collector can provide sufficient proof of the debt, it may resume its attempt to collect.

Q: Are consumers protected from discrimination when they apply for loans?

A: Yes. Another federal law from the 1970s, the Equal Credit Opportunity Act (ECOA), prohibits discrimination at any point in the lending process on the basis of gender, marital status, race, color, national origin, religion, age and status with regard to receiving public assistance. Discrimination also is prohibited against those who in good faith have exercised certain federal or state consumer protection rights in the past.

Q: What about consumer credit billing or credit card problems?

A: The Fair Credit Billing Act (FCBA) is the primary federal law dealing with consumer billing and credit cards. The purpose of the FCBA is to ensure that consumers have easy access to clearly explained credit terms and "to protect the consumer against inaccurate and unfair credit billing and credit card practices." 15 USCA § 1601(a). The FCBA provides a framework for resolving billing error disputes without negative consequences to the consumer. For detailed information about the FCBA, go to the enforcing agency's Web site: Federal Trade Commission.

Q: What is garnishment?

A: One option for a creditor trying to collect from a nonpaying debtor is the legal procedure called garnishment. The creditor requests a court to order a third party either in possession of the debtor's assets or who owes money to the debtor to release the debtor's property to the creditor in satisfaction of the unpaid debt. If the debtor's wages are garnished, federal law and some state laws restrict the amount of wages that may be seized. Garnishment anticipates a future court judgment on the debt or satisfies a judgment already obtained.

Q: What is attachment?

A: Attachment is another creditors' remedy similar to garnishment, except that a debtor's property is seized to satisfy an outstanding debt directly from the debtor, rather than from a third party. The procedures for and laws governing both garnishment and attachment vary from state to state.

Copyright ©2009 FindLaw, a Thomson Business

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.

Return to Main