Can a Collection Agency Suspend Your Licenses?

Some collection agencies use threats and other tactics to get individuals to pay outstanding debts. While debtors are bound to their contracts, they do not have to be subjected to practices that are either illegal or go beyond a debt collector's authority. The Fair Debt Collection Act lists restrictions for debt collectors, including their ability to threaten a debtor's licenses.

Collection agencies have no authority over state licensing offices and cannot tell the authorities what to do with an individual's driving privileges. They cannot act on threats to suspend your driver's license and only make them to scare debtors into sending a payment. However, a failure to honor certain government- and auto-related obligations can lead to your license being suspended or cancelled. These include court-ordered child support payments, license and registration fees and auto insurance.

Debt collectors have no control over other types of licenses, such as those permitting certain types of business operations or professional work. These licenses are government-issued and only government and legal agencies can order a suspension or cancellation. However, while collection agencies might not have any authority over licenses, they can file a suit against a business or individual, obtain a judgment to collect the debt and use this judgment to secure a garnishment order. This order would allow the collector to have your wages garnished or money taken out of your account until the debt is paid.