Dealing with Debt Collectors

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A debt collector is a person or company that tries to collect money you owe. They might work for the company you owe or they might work for a collection agency hired to collect the debt or a debt buyer that bought your debt.

The rules that apply depend on which type is contacting you.

Who is a debt collector?

There are three types:

Employees of the original creditor

These are people who work directly for the company you owe money to, like a bank, medical provider, or credit card company. The original creditor’s employees have fewer legal restrictions on how they can contact you.

Collection agencies

A collection agency is any company or attorney hired to collect a debt for someone else. They do not own the debt. They are paid to collect it. Collection agencies must follow a federal law called the Fair Debt Collection Practices Act (FDCPA). This law limits what they can say and do.

Debt buyers

A debt buyer is a company that purchases your debt from the original creditor, usually for much less than you owe. Then they try to collect the full amount from you, plus added fees and interest. Debt buyers must also follow the FDCPA.

Debt collectors may contact you by phone, letter, email, or text message. They will try and get you to pay them money.

Why is a debt collector contacting me?

You might owe money to a company. That company hired a debt collector to get the money from you or the company sold your debt to a debt buyer. Debt buyers buy your debt for pennies on the dollar and then try to get you to pay them the entire amount owed, plus added fees and extra interest.

Common debts that go to collectors:

Credit card bills
Medical bills
Phone or utility bills
Personal loans
High-cost loans

What are debt collectors allowed to do?

There are limits on what debt collectors can do to you. Federal and Virginia laws protect you.

Debt collectors cannot:

Harass you or threaten you
Call you at unreasonable times
Contact you at work if you tell them not to
Lie about what you owe
Pretend to be a lawyer or government official
Tell other people about your debt (except your spouse)

What should I do?

Your next step depends on what's happening. Here's how to figure out what to do:

I'm getting calls or letters about a debt

You have rights. Debt collectors must follow rules. You can ask them to prove you owe the money.

I got court papers

This is serious. Figure out what you need to do next.

I missed my court date

If you missed your court date, you automatically lost the case. This is called a "default judgment." You may be able to reopen your case and get a second chance. But you need to act quickly.

The debt is very old

There's a time limit for suing you. After 5 years, they might not be able to sue you for some debts.

I have medical debt

Medical debt has special rules. Hospitals must offer financial help before they can sue you or take money from your paycheck.

Debt collectors are harassing me

You can report harassment. Some attorneys specialize in suing debt collectors who break the law.

Can they take my car or other property?

It depends on what kind of debt you have.

Car loans

When you take out a car loan, you give the lender a legal claim on your car. This is called a secured debt because the loan is "secured" by your car. If you don't pay your car loan or have given a creditor the right to your car, they can repossess (take back) your car. Don't keep important documents in your car if you have trouble making car payments.

Credit cards, medical bills, personal loans

These are unsecured debts. That means the debt is not tied to any specific item you own. To take your car or other property for an unsecured debt, a creditor would first need to get a court order and post a bond. This rarely happens. Even if they do, the first $10,000 of your car's value is also protected. Mobile homes not attached to land have $10,000 in protection. Houses have $25,000 in protection.

Can I be arrested?

No. Debt collectors cannot have you arrested simply for owing money. You will not go to jail for credit card debt, medical bills, or personal loans.

There are only two exceptions:

Child support: You can face consequences for not paying child support. As soon as you have a life event which means you then can't pay child support, you need to modify the order immediately. Talk to legal aid or go to the court right away.
Fraud or stealing: If you stole money or committed fraud, that's a crime. This is very rare.

If a debt collector threatens to have you arrested, they are breaking the law.

There is one more situation where a court date matters: If you get a summons for a Debtor’s Interrogatory, you must go. This is a court hearing where you answer questions about your finances and what you own. If you do not go to this court hearing, you could be arrested for disobeying the summons. (You would not be arrested for having a debt you can't pay.)

What about my bank account or paycheck?

Debt collectors might try to take money from your wages or bank account. This is called garnishment. This means they take money directly from your paycheck or freeze money in your bank.

Some income is protected from garnishment for most types of debts:

Social Security benefits
SSI (Supplemental Security Income)
Veterans benefits
Some other government benefits such as unemployment compensation

There are also limits on how much they can take from your paycheck.

Will this hurt my credit?

Unpaid debts can show up on your credit report. This can lower your credit score. You can check your credit report by requesting it online at annualcreditreport.com.

Annualcreditreport.com is the official website. Only use this website. Other sites can trick you into giving away your personal data.

If a debt on your credit report is wrong or not yours, you can dispute it. Read more about how to fix a mistake on your credit report.

If the credit bureau doesn't fix the mistake, contact an attorney. Putting someone else's debt on your credit report is illegal.

Where can I get help?

Free legal help may be available if you can't afford a lawyer: Call 866-LEGLAID (866-534-5243) or visit virginialawhelp.org/get-legal-help to find a legal aid office in your area.
If you live outside Virginia, you can also find help through LSC’s find-legal-aid tool or the Senior Legal Hotline Directory.
If legal aid cannot help you, look for an attorney using the National Association of Consumer Advocates search tool. Be sure to ask in advance if there is a charge for the initial consultation.

Things to remember

Don't ignore court papers: If you get sued and don't respond, you automatically lose. The debt collector wins by default.
Don't sign anything without understanding it: Signing papers can restart the clock on old debts. It can also create new problems.
Keep records: Save all letters, emails, and notes about calls from debt collectors. Save voicemails. If it is hard to save everything, take a screenshot of your call log and any voicemail transcripts. This helps if you need to report harassment or challenge the debt.
Act quickly if you get sued: Some court cases have very short deadlines. Get help right away.
Report bad behavior: Debt collectors must follow the law. You don't have to put up with harassment or threats.