Debt Collecting Guidelines

Collection agencies must follow federal guidelines when collecting debt from consumers.

Debt collection agencies must follow federal guidelines dictated by the Fair Debt Collection Practices Act when recovering overdue consumer debts. Failure to follow the appropriate legal guidelines could result in a lawsuit or a fine from the Federal Trade Commission.

Significance

Legal guidelines for debt collection were first put into place in 1978 as the result of a multitude of consumer complaints regarding harassment by collection agencies. The guidelines protect each debtor's consumer rights while also granting debt collectors certain permissible methods of collecting unpaid debts.

Features

The federal guidelines for debt collecting cover how, when and where debt collectors may contact debtors; provisions by which debt collectors must validate the debts they are attempting to recover are accurate; and specific penalties for violating any of the guidelines.

Considerations

Certain states have additional guidelines that debt collectors must follow. For example, in Pennsylvania, debt collectors may sue a debtor and garnish money from his bank account, but not from his wages. A collection agency must follow both the federal guidelines and the guidelines present in the debtor's state of residence.

References

• Federal Trade Commission: The Fair Debt Collection Practices Act (Section 805/806/808/813)
• Credit Attorney Greg Artim: PA Garnishment Law FAQs

Resources

• Cardreport: Collection Agency FAQ
• NEDAP: Debt Collection Basics
• Privacy Rights ClearingHouse: Frequently Asked Questions About Debt Collection