Dealing With Collection Agencies

What is a collection agency? A collection agency is any person or company whose main purpose is the collection of debts for other companies. An attorney who collects a consumer debt for a creditor is considered a collection agency under federal law. Typically, a collection agency will represent several different creditors. Collection agencies are governed by several different laws. Each state has its own laws to govern collection agencies, ranging from requiring state licensing and licensed managers to virtually no state regulation whatsoever. However, every collection agency is governed by a federal law called the Fair Debt Collection Practices Act (15 U.S.C. §1692). We will focus on the rights that this law grants every consumer when dealing with a collection agency.

It is important to remember that if you are contacted directly by your creditor, even if it is the credit or collection department of that creditor, they are not a collection agency by law and are not governed by the laws that govern collection agencies. This means that a creditor will play by different rules than the collection agency. Each creditor has internal guidelines that determine how it will treat your account. Different creditors will keep your past due account for different periods of time before sending it to a collection agency or an attorney. They are not required by federal law to keep your account any certain amount of time, nor are they required to notify you if they sell your account or if they send it to a collection agency or attorney. Many people have the misconception that they will get “one last chance” to bring their account up to date before it is sent to a collection agency. This is simply not true.

Collection agencies, however, are required under the Fair Debt Collection Practices Act (FDCPA) to notify every consumer of their right to dispute the debt if they do not believe that they owe the amount the collection agency is trying to collect. If the collection agency first contacts you by telephone, you should insist that they also communicate with you in writing. The first written communication from a collection agency must include:

  • The name and address of the collection agency.
  • The amount of the debt, stating the original debt and a breakdown of other costs or interest.
  • The name of the creditor to whom the debt is owed.
  • A statement that unless you dispute the debt within 30 days after you receive the notice, the agency will assume the debt is valid.
  • A statement that, if requested within 30 days, the collector will provide the name of the original creditor, if different from the collector.
  • A statement that if you notify the debt collector in writing within 30 days of receiving the notice that you dispute the debt, the collection agency will get verification of the debt and mail it to you.

Additionally, every communication from a debt collector must state that it is from a debt collector and that the purpose of the communication is to collect a debt and any information obtained will be used for that purpose.

What does this mean to you? First of all, if you do not feel that you owe the debt you must send a letter to the collection agency disputing the debt as soon as possible and asking for verification of the debt. The law gives you 30 days to send this letter, but it is always best to send the letter as soon as possible. I would recommend sending the letter even if you are not sure whether or not you owe the debt. Often your debt may have been sold from one creditor to another, and each creditor may have added on additional interest and/or fees that you are not liable for. The best move is to send a letter asking for verification of the debt. This will do two things for you: 1. The creditor cannot take any further action to collect the debt until it has sent you verification of the debt; 2. The verification that you receive will show you what information the collection agency has about your debt and allow you to evaluate the next steps you should take. There is an example of letter disputing a debt and requesting verification of the debt in the chapter of this book entitled Forms.

Once you have received verification of the debt from the collection agency, the agency is free to contact you again to attempt to collect the debt. Whether they contact you by phone or in writing they must include a statement that the communication is from a debt collector, they are attempting to collect a debt, and any information obtained will be used for that purpose. If this statement is not included in the communication, the collection agency has violated the FDCPA and they could be held liable for the violation.

What if you don’t want the collection agency to contact you any more? You have the right to send the collection agency what is known as a “cease & desist” letter informing the agency that you do not want them to contact you any longer. You can send them this letter whether or not you owe the debt. This letter must be in writing and an example of a cease & desist letter is in the Forms chapter of this book. Basically, the letter must include your name and address and, if available, your account number with the agency and with your original creditor; the date of the letter; a statement that you are exercising your rights under the Fair Debt Collection Practices Act; and a statement that you want the collection agency to stop calling you or writing you, or both. The only communication that the collection agency is allowed to do after receiving such a letter is to advise you that it is stopping its effort to collect the debt or to advise you that the collection agency intends to take action such as filing suit. It is important to remember that a collection agency or an attorney is not required to notify you prior to filing suit that it is about to file suit.

The following are common examples of violations of your rights under the FDCPA that can result in recovery for you against the violator:

1. The collection agency threatens to tell your employer or neighbors about the debt, or actually does tell them about the debt;

2. The collection agency calls at unreasonable hours (after 9:00 p.m. and before 8:00 a.m. is considered unreasonable under the FDCPA

3. The collection agency threatens to take action against you that it cannot legally take (for example, threatening to take money out of your Social Security check,
taking other exempt property, or threatening arrest, or jail)

4. The debt collector communicates with the debtor or anyone else in such a matter as to harass, intimidate, threaten, or embarrass the debtor.

5. The debt collector communicates with the debtor or the spouse more than three times in a single week.

6. The debt collector communicates with the debtor through the use of notices that simulate the form of government documents, or the appearance of a telegraphic or emergency message.

7. The debt collector is prohibited from soliciting a postdated check in order to threaten criminal prosecution. A collector may not deposit a postdated check before the date on the check. Additionally, a collector’s acceptance of a postdated check violates the law unless it gave the consumer who wrote the check 3 – 10 business days’ notice prior to depositing the check.


  • Request that all communications be in writing.
  • Send a letter asking for verification of the debt.
  • Send a letter asking that all communication be ceased.
  • If possible, send all letters to the collection agency certified, return receipt requested so that you know that the collection agency did in fact receive your
  • Keep a copy of all letters that you send to the collection agency.
  • Keep a copy of all letters and other documentation sent to you by the collection agency.
  • If you see that the agency has violated the Fair Debt Collection Practices Act, contact a local attorney to see if the collection agency can be held liable.
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